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Guide to Every Type of Student Loan Offered

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Our goal here at Credible is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, no one dictates what we write on our blog. All guidance given is unbiased and all opinions are our own.

If you’re headed off to school, it’s a good idea to learn about the types of student loans you might need first.

In 2017, two-thirds of students who graduated with a bachelor’s degree had to take on debt to pay for school, borrowing $28,500 on average. Graduate and professional students took on even more debt than that, too, so it’s likely you’ll need student loans before finishing your degree.

Here are the major types of student loans you should know about:

Federal student loans

A federal student loan is a type of loan that’s backed by the U.S. government. Federal student loans don’t require a credit check but do require you to complete the Free Application for Federal Student Aid, or FAFSA. After you submit the FAFSA, your school’s financial aid office will send you a financial aid award letter, which might include various student loan options. This offer letter is usually the starting point if you want to apply for student loans.

Direct Subsidized Loans

Direct Subsidized Loans are for undergraduate students with financial need. With this type of loan, the government covers the interest while you’re in school and during deferment periods. The current interest rate on subsidized loans is 5.05%. You can borrow up to $23,000 in subsidized loans if you’re a dependent student or $65,500 as an independent student.

Direct Unsubsidized Loans

Both undergraduate and graduate students can qualify for Direct Unsubsidized Loans. With unsubsidized loans, interest accrues while you’re in school. That’s the big difference when it comes to subsidized vs. unsubsidized loans. For undergrads, the interest rate on unsubsidized loans is 5.05%. For graduate and professional students, it’s 6.60%.

Dependent students can borrow up to $31,000 between both subsidized and unsubsidized loans. Independent undergraduate students are limited to $57,000 between both types of loans, while independent graduate students can borrow up to $138,500 in total.

PLUS Loans

Parents and graduate students can take out PLUS Loans. Unlike subsidized and unsubsidized loans, PLUS loans require a credit check.

There are two types of PLUS Loans:

  • Grad PLUS Loans are disbursed between Oct. 1, 2019, and Oct. 1, 2020, and charge 4.236% interest.
  • Parent PLUS Loans are disbursed from July 1, 2019, to July 1, 2020, and come with 7.08% interest.

With PLUS loans, you can borrow up to the cost of attendance for your school (but this isn’t always a good idea when it comes to paying them back).

Private student loans

If you need more funding beyond federal student loans and scholarships, private student loans could help. They’re available to both undergraduate and graduate students but also require a credit check. If you (or a cosigner) have excellent credit, private student loans might cost you over time less than some federal student loans. Keep in mind that interest rates and loan limits vary depending on the private student loan lender.

Undergraduate student loans

Limits for undergraduate private student loans vary by lender. Interest rates also depend on the lender. Your rate could fluctuate based on your credit history, too.

International student loans

If you live outside of the U.S., you might still be able to get international student loans for your studies at a U.S. college or university. You’ll need to show legal U.S. status to qualify and will likely need a cosigner from the U.S., depending on the lender.

Keep in mind that if you don’t have a credit history in the United States, you might have to pay higher interest rates — or you might struggle to get approved in the first place.

Graduate student loans

Federal student loans don’t always cover the total cost of school. If you need cash between terms or need to borrow more than your financial aid package offers, private student loans could be a good fit. And if you have excellent credit, you might qualify for lower interest rates with graduate student loans than you would with federal student loans (particularly PLUS Loans).

MBA student loans

An MBA can be an investment in your long-term career success — but depending on your school, it can also be quite expensive. Like other private student loans, limits vary for MBA student loans based on your cost of attendance and credit history.

Medical student loans

Medical school can come with a six-figure price tag. If you have a positive credit history, medical student loans could help. You might also consider medical residency loans to cover the costs of your continuing medical education.

Law school loans

Law school is another expensive degree for many students. Law school student loans can help you pay for tuition, fees, textbooks, and other costs. And once you finish your degree, bar exam loans could bridge the financial gap until you land a paying job.

Learn More: Student Loans for Bad Credit

Private student loans can be used to fill in the gaps of federal loans

Federal student loan applications have rigid application deadlines, but you can apply for private student loans at any point in the school year. Private loans could be a good way to cover any education-related costs left over after you’ve exhausted your federal student loan, scholarship, and college savings options. There are also student loans for living expenses available.

If you’re considering PLUS loans, keep in mind that some private student loans might have interest rates. Once you factor in origination fees, the annual percentage rate for PLUS loans can be higher than private student loans.

But no matter what type of student loan you choose, take care not to borrow more than you need. You’ll have to pay your student loans back eventually, and smaller loan amounts are much easier to handle.

Lender Fixed rates from (APR) Variable rates from (APR)
ascent 4.09%+ 3.14%+
citizens 4.40%+1 2.65%+1
collegeave 4.54%+2,3 2.84%+2,3
discover 5.09% – 12.49%6 3.15% – 11.37%6
edvestinu 4.52%+8 3.54%+8
invested 4.09%+ 3.12%+
mefa 3.95%+ N/A
4.74% – 11.85%9 2.75% – 10.65%9
3.82%7 2.40%7
Compare rates without affecting
your credit score. 100% free!

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Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Bank Disclosures | 2,3College Ave Disclosures | 7SunTrust Bank Disclosures | 8EDvestinU Disclosures | 9Sallie Mae Disclosures

Citizens Bank Student Loan Rate Disclosure

Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of March 1, 2020, the one-month LIBOR rate is 1.62%. Variable interest rates range from 2.65%-10.98% (2.65%-10.83% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.40%-12.19% (4.40% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co- signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.

Compare your student loan rates to make the right choice for you

Most students end up using a mix of federal and private loans to pay for college, as well as scholarships and grants.

Do your best to avoid taking out more loans than you need. While it might feel good to have extra cash on hand today, larger loans can be a serious financial challenge after graduation.

If you’re looking for private student loans, be sure to consider as many lenders as possible. Credible makes this a breeze — you can compare multiple lenders to find the right loan for you, all without affecting your credit score.

Compare student loan rates from top lenders

  • Multiple lenders compete to get you the best rate
  • Get actual rates, not estimated ones
  • Finance almost any degree

See Your Rates
Checking rates will not affect your credit

About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a Credible expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

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Can My Cosigner Take My Car?

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Cosigners don’t get any rights to the vehicle they signed the loan for. However, if the cosigner is trying to take your car, it may be time to take some action.

Cosigners and Ownership

Can My Cosigner Take My Car?Cosigners can’t take the vehicle they cosigned for because their name isn’t listed on the title. A cosigner isn’t responsible for making the monthly payments, maintaining car insurance, or really anything else. Cosigners simply lend you their good credit score to help you get approved for the auto loan, and if you can’t make payments, the lender can require them to pick up the slack.

Since you’re the primary borrower on the vehicle and your name is listed on the car’s title, you have ownership rights. Your cosigner can’t come to your residence and take possession of the vehicle – even if they’re the one making the car payments right now.

If you do default on the loan and the vehicle is repossessed, the cosigner still can’t take the car.

But My Cosigner Did Take My Car!

If your cosigner did somehow take your keys and your vehicle without permission, it’s considered theft. If you want to take action, you can report the car as stolen.

However, a better first step is probably contacting the cosigner and letting them know that they don’t have any ownership rights (if you want to maintain a relationship with them). You can ask them to return the vehicle and explain that their name isn’t on the title.

Removing a Cosigner From a Car Loan

If things are dicey with your cosigner, then it may be time to consider removing them from the auto loan. The easiest way to remove a cosigner is by refinancing.

Refinancing is when you replace your current loan with another one. You can work with your current lender or another one, but most borrowers look for another lender to refinance with.

You don’t need a perfect credit score to refinance your car loan – it just has to be good or better than it was when you first got the loan. Another common requirement of refinancing is that you’ve had the loan for at least one year.

Other common requirements for refinancing are:

  • You’ve stayed current on payments throughout the loan
  • You have equity or your loan balance is equal to the vehicle’s value
  • Your car has less than 100,000 miles and is less than 10 years old

Most borrowers usually refinance to lower their loan payments. Since you’re replacing your current auto loan with another one, many borrowers try to qualify for lower interest rates or extend their loan to lower their payments. If your credit score has improved, you may even be able to get a better interest rate and remove your cosigner!

Can’t Refinance to Remove the Cosigner?

Refinancing isn’t in the cards for everyone. However, another efficient way to remove a cosigner is by selling the car. Cosigners don’t have to be present at the sale of the vehicle, since they don’t have to sign the title to transfer ownership.

If you sell the car and get an offer large enough to cover the entire balance of your loan, you and the cosigner can walk away from the auto loan scot-free.

However, many borrowers need cosigners because their credit score isn’t the best. If you want to sell your vehicle to remove your cosigner, but you’re worried you can’t get a car loan by yourself, consider a subprime auto loan for your next vehicle.

Bad Credit Auto Loans

Since many traditional car lenders don’t work with borrowers who have poor credit histories or lower credit scores, they often ask them to bring a cosigner. But what if you don’t want a cosigner (or can’t get one) on your next auto loan? Enter subprime car loans.

Subprime lenders are teamed up with special finance dealerships, and they operate remotely. When you apply for financing with a special finance dealer, you work with the special finance manager who acts as the middleman between you and the lender.

You need documents to prove you’re ready to take on an auto loan – typical things like check stubs, proof of residency, valid driver’s license, a down payment, and other assorted items depending on your credit situation. If you qualify, the lender determines what your maximum car payment can be, and you choose a vehicle you qualify for from there.

What sets subprime auto loans apart from traditional car loans is that they assist borrowers in tough credit situations and offer the opportunity for credit repair. Some in-house financing dealerships that don’t check credit reports don’t report their auto loans, which means your timely payments don’t improve your credit score.

Finding a Car Dealership Near You

The best way to improve your credit score is by paying all your bills on time. Payment history is the most influential piece of the credit score pie. There are many lenders willing to work with bad credit borrowers, you just have to know where to look!

Here at Auto Credit Express, we’ve already done the searching, and we’ve created a nationwide network of dealers that are signed up with subprime lenders. Get matched to a dealership in your area, with no cost and no obligation, by filling out our car loan request form.

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United Way hoping to raise thousands of dollars on Giving Tuesday –

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“We have partnered with Carter Meyers Associates in the community and developed what we call Driving Lives Forward, an automobile loan program to help families that maybe have no credit or bad credit to access resources to have an affordable loan to purchase a reliable used car,” said Barbara Hutchinson, the Vice President of Community Impact for the United Way of Greater Charlottesville.

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Loans for Bad Credit: Alternatives to High-Interest Loans

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In the face of unexpected events, most Americans don’t have enough cash to cover their needs. Statistics estimate that more than half of all Americans have less than $1,000 in a savings account.

It’s challenging to get through everyday life without expecting anything to go wrong. Any emergency — be it a car accident, a hospital visit, or even a broken refrigerator — will put Americans in trouble.

To add insult to injury, poor credit can make an emergency even more challenging. That’s where installment loans come in.

For consumers that have a bad credit score (below 630), installment loans can be the best option to get quick money. Installment loan funds are distributed all at once. Afterward, the repayment of the installment loan follows either a fixed monthly payment.

Online installment loans are ideal for emergencies as access to fast cash. Here’s everything you need to know before taking out an installment loan.

Online Installment Loan Basics

Installment loans are actually a broad category that includes many different kinds of loans, such as mortgage loans, car loans, and other personal loans. They tend to be long-term loans that require credit checks.

Payday loans are another type of installment loan. However, its structure is different. They must be repaid over a shorter period, have higher interest rates, but require no credit checks.

Installment Loans

As stated above:

  • Installment loans deliver quick cash in one lump sum

  • Installment loans require a credit check

  • Installment loans describe many different loan types

Furthermore, installment loan terms depend on the type of loan and can range from 3 years for car loans to 30 years for mortgage loans. In contrast, a personal installment loan lasts for approximately 12 months.

To get approval for any of the above loans, the individual will be subject to a credit check (more to know on that here: https://www.wisegeek.com/what-is-a-credit-check.htm ) and a fairly long application process.

Installment loans offer an APR of 36% or below, and user payments can be made online, over the phone, or by check.

Another advantage of installment loans is that they help borrowers improve their credit rating — as long as they pay on-time. It provides immediate access to cash, while at the same time, it’s a means to an end toward recovering a bad credit score.

How well individuals can do often depends on the terms of the installment loan that they receive. Keep reading to get more advice on how to choose an installment loan that is right for you.

Choosing an Online Lender

Like any other loan, picking a lender requires a fair amount of research and work. It’s not going to be a simple task, and there are several factors that individuals need to look out for when picking the right loans.

Below are the most important features that individuals need to keep in mind when choosing an online installment loan.

Compare Rates

All the different installment loan options out there are going to offer different percentage rates. These range from 6% to 36%, and you should sift through all possible options to get the most favorable rates.

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Ideally, individuals should opt for the lowest rates to ensure that the monthly payments are as low as possible.

Online lenders can offer potential borrowers their interest rates ahead of time. This usually requires a soft credit check, which does not impact a borrower’s credit score.

However, applicants need to be careful, as different vendors have different requirements. Understanding these requirements will help avoid any mishaps.

Understand All Fees

Every vendor has different fees, these fees might have different names like an “organization fee” or a “service fee,” but they generally range from 1% to 6%.

In contrast, other vendors might charge a prepayment fee for early repayment. Under no circumstances should a borrower agree to a loan deal before the lender discloses all fees.

It’s up to the individual to be as vigilant as possible because certain vendors will keep some fees to themselves, and may not disclose them until the last minute.

To avoid any excess costs in the future, make sure to go over the contract in its entirety.

Choosing Manageable Terms

Installment loans offer a lot of advantages for needy consumers:

But, one thing to remember is this: the longer the loan term, the higher the interest individuals will pay. Taking longer terms might give borrowers more time to pay, but it also means that borrowers will have to pay more interest.

In contrast, shorter terms are harder to manage, but it means paying a lower interest rate. When choosing the right installment loan, individuals should calculate the monthly payment based on the term length.

Many online vendors offer software that automatically calculates the amount. Everyone should employ a strategy to assess different term lengths to see what monthly payments are the most manageable.

Vendor Perks

Not all vendors are the same, and it’s already established that they offer different rates for different prices. However, while already offering different rates, vendors also offer different perks — specific features tailored to the individual.

If the individual is consolidating debt, certain lenders will send loan money to creditors on behalf of the loanee. Other vendors offer the ability to change due dates or provide hardship plans if the borrower encounters any financial difficulties.

It’s crucial to consider all these factors before taking out an installment loan. It’s best to have everything working to your advantage with an already poor credit history before taking out an installment loan.

Our Top Picks for Online Installment Loans

There are hundreds of online installment loan options out there, and looking through all of them can be a hassle. Furthermore, those new to the industry won’t be able to identify scams or loans meant to exploit.

Upgrade

Upgrade is one of the best installment loan vendors for those with a bad credit score. They accept a minimum score of 600 and will provide potential applicants with an offer in minutes. Their APR rates range from 7.99-35.97% depending on the amount, duration, and purpose of the loan. Users can easily apply for loans and get ideas on rates using the company’s website.

Simple Fast Loans

Simple Fast Loans is also among the best installment loan vendors for individuals that have a bad credit score. They offer loans ranging from $200-$3,000. These loans have terms up to 5 years.There’s no prepayment penalty, and applicants will also get next day funding. To get an idea of the rates, users can easily apply using their website.

LendingPoint

For users that have a credit score below 600, a great option to choose is LendingPoint. They accept a minimum credit score of 585 and offer loans for $2,000-$25,000. The APR rates for these loans are on the higher side ranging from 9.99-35.99%. Money becomes available to the applicant the next day, and there’s no prepayment penalty on the loan.

Avant

Another installment loan vendor for users that don’t have a good credit score is Avant. They require a minimum credit score of 580 and offer loans for $2,000-$35,000. The APR rate is between 9.95-35.99%, and they offer the ability to change payment dates. However, applicants will have to pay a loan origination fee, and there’s no option to include a co-signer on the loan.

Online Financing Options to Avoid

Online installment loans are a great option for individuals with bad credit scores, and, if used correctly, are a way to improve credit scores.

However, the same can’t be said for all online financing options, and certain ones are important to avoid.

Payday Loans

Payday loans function similarly to installment loans. In addition, they have recently been rebranded as short-term installment loans.

The loans are usually under $1,000 and are due on the next payday. With payday loans, an individual will have to either submit a post-dated check or provide access to the bank account.

It might sound relatively okay, but the issue with payday loans is that it’s nearly impossible to pay them back. Lenders will let individuals roll over the loans with more interest to pay the next day. Interest rates are typically 400% APR on these loans, and individuals get caught in the payday loan debt cycle.

No Credit Check Loans

These loans might seem like a good idea for those with bad credit scores, but they’re essentially just a debt cycle. The combination of high-interest rates, short terms, and lump sum repayment means that borrowers are stuck in a cycle of ever-increasing debt. It’s best to find loans that offer some sort of credit check and security to get the best terms.

Upfront fees

While certain loans might require a small percentage to process the application, some can be a complete red flag. There are plenty of up-front loan scams, and there are several signs that borrowers need to address. If a vendor asks for money upfront, then there’s a good chance it’s a scam.

Additionally, these issues tend to arise the most with vendors that don’t offer credit checks. Lastly, do enough research to recognize an offer that seems too good to be true.

Conclusion

Keeping all these things in mind, online installment loans are the best option for borrowers with a bad credit score. They are a useful resource and, if managed correctly, are a path to recovering a good credit score.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes



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