Here is some information you need on private student loan rates. With rising college costs today, taking out private student loans is a critical decision. In actuality, federal loans should be considered first since they offer the best rates. Of course a private student loan is your decision and they are on the rise. Private student loan rates are at 25% and the rate of lending on federal student loans is at 8%.
First, you should a Federal Stafford Loan before getting a private student loan since one loan rarely covers all expenses. You should also file a FASFA application. You may be surprised to learn that you qualify for a grant (which you don’t have to repay). After that application, then apply for the private student loan.
Before you apply for the private student loan, first check out the rates charged by the lender. Shop around for the loan the same way you would shop for a car. Check into the lenders credentials and see how long they have been giving out loans. Keep in mind that a low interest rate looks tempting but also find out if what kind of fees they charge. It could instantly turn out to be more expensive if the private student loan rates do not justify the higher fees involved. Also find out if they charge a penalty for early repayment. If the loan has higher interest rates then the fees are usually already added in. Compare repayment plans as well. If you have a longer term loan, then the APR will be reduced. This will mean lower fees on the private student loan rates.
The best loans that you can get from private lending institutions offer interest rates which have the prime rate minus 0.50% or the LIBOR plus 2% and there will be no fees at all. In case you don’t know what LIBOR is, it’s the interest rate that banks charge each other for different types of loans. However, only those with the best credit ratings are able to get the LIBOR rates. Rule of thumb is to check with your financial aid office first before doing anything else.Also be sure and make the repayments on time. The private student loan does have a little looser conditions but still you should use caution. It is easier, though, to get a private student loan than it is to get a scholarship. Private student loans do not have to be repaid until after graduation and you can always consolidate your loans.
One thing that is vital to remember..never, ever make your repayments with a credit card. This will drive up the interest rate on your credit card and that will make for even worse financial problems. Consolidate if necessary. You may prefer a grant such as the Pell Grant which never has to be repaid. Don’t let private student loan rates become a nightmare which ruins your credit. Take your time choosing a private student loan lender. But be sure to apply before the application deadline.