Though many think that the idea of personal loans is the same for everybody it is not so. If you take the example of personal loans for students it has a lot to offer and to consider.
With the college expenses rising pretty high these days students often look forward to personal loans especially designed to meet their needs. There are of course options like student loans, government grants or part time jobs but most often they are not sufficient to meet the expenses. If you have to consider living expenses along with college fees you may have to take up personal loans someday or the other.
Considering such a situation, here are a few things that you should know about personal loan if you are likely to take it in the near future:
- The options available are limited: Personal loans can be very helpful in solving your financial crisis however they have some shortcomings. Unlike the government grants or school loans these do not have many options. Student loans for example offer you options like loan forgiveness, income contingent payments, deferment etc. With personal loans you can hardly expect these. The process is simple. You can take a personal loan from a bank or credit union to meet your expenses when you do not have enough money. After the loan term gets over you would have to repay the amount with the due interest.
- The loan approval process is not easy: If you want to take a personal loan you need to know that it is not easy to get such a loan approved. Many students find it a difficult procedure as you need to prove your capability of repaying the money when you apply for the loan. If you are working part time with a decent income it can help to a certain extent. But those who are still in school with little or no income may face problems in getting their loans approved. So having a decent credit is an essential criterion if you want easy approval.
- Conduct a research for the best deal: It would be a good idea to do some homework about personal loans before you opt for them. Conduct a research to find out the deals available in the market both online and offline. Try to shortlist the ones that you find affordable with easy repayment options. If there is a chance to lower the interest rates request for a better quote that you can afford. A good amount of research will certainly open up a few personal loans options that you had not considered before.
- Use collateral after careful consideration: Many times the personal loan lenders may look for collateral against a loan. You may be asked to secure collateral such as house, car, or bike against the personal loan that you wish to take. However you should be prudent in selecting the collateral that you put at stake. Avoid putting anything that is a necessary item of your daily life. You should remember that if you fall back on your payments the collateral will be used by the bank or credit union to retrieve the money.
- Design backup plans for repayment: If you want to stay safe with your repayments it would be a good idea to look for options that can help increase your payment amount. For example you can take up part time jobs during your leisure, give tuitions to kids or put your extra rooms on rent. Anything that can help you pay off your loans sooner can be a good idea.
Note: Taking a personal loan to cover up your college expenses can be a good idea but you should consider them only if you can afford them comfortably. Unlike other loans the repayment process of personal loans starts just after the term gets over. So it is important that you consider some of the basic things discussed in the article about personal loans for student before you take them up.