FAQ
1. What are the age limits for those ones who is going to apply for a student loan?In case with private student loans, the applicant must be at least the age of majority in the state where he or she is a permanent resident at the time of the loan application, or at least 17 and the presence of a qualified cosigner is required. The legal age for entering into contracts is 18 years of age in every state except Alabama and Nebraska (19 years old), and Mississippi (21 years old).
2. Where one can apply for a student loan and in what cases the presence of co-signer is needed?
Generally, student loans are provided by the government. But there are several Banks that offer student loans. If you choose to apply for a private loan, you need to visit the website of your potential lender and fill out the application for an online student loan. You can apply for direct student loans by completing an application for Federal Student Aid. Canadian students can obtain the appropriate loan application materials from the Canada Student Loan Program.
There are two cases in which the presence of a creditworthy co-signer is helpful. First, if you haven't built your credit history yet, and want to apply for a private student loan, the presence of a co-signer may improve your chances to get a loan. Second, even if you have your own credit history, many lenders will offer lower rates and fees if your co-signer has positive credit.
3. In what way should I do my loan payments?
Once you start repaying your student loan, there are a few important things to realize. First, make sure that you have reliable communication with your lender. It may happen that you will need to move, or change your name, etc – so be sure to inform your creditor of all such changes. Also, contact them any time you have any questions regarding your repayments. Second, if you face any financial problems, keep in mind that making timely payments should be your priority. Also, make sure you are aware of deferment options, and loan consolidation, in case you find yourself in the predicament. And the last – don't mind applying for professional help, whatever problems you may face. I'm not saying it will be a pleasant experience, but I'm saying it will be a wise decision.
4. I am going to get a loan, what should I do so as to prove my income?
In order to obtain a loan, you typically need to prove both your monthly income and income-earning history. For the employees, the following information is usually required: current pay stub showing year-to-date income; current W-2 Form. For the self-employed the information required includes: current, signed business and personal income tax returns covering a two-year period; current balance sheet; year-to-date profit and loss statement.
5. Do the interest rates change over the course of the loan?
Interest-rates changes are usually determined by the laws of supply and demand. If the demand for loans grows, so do interest rates. If the demand for loans goes down, then so do interest rates. Your interest rate is never safe until it is locked. Depending on the term of your lock, your loan must close and fund before the lock expires. If you don't lock your interest rate, you are likely to get a higher rate than what was initially negotiated.
6. What are the benefits of debt consolidation and what is the most right way to do it?
Debt consolidation means consolidating all of your debts into one new loan in order to make it easier for you to pay off your debts. The benefits of debt consolidation are as follows:
- You can get lower interest rates
- Your debts can be reduced up to 50%
- You are able to put an end to calls from creditors
- You make only one reasonable monthly payment
7. What is refinancing?
Refinancing means applying for a secured loan in order to replace a current loan secured by the same assets. One may opt for refinancing to get lower interest rates, to ease paying off their debts, to reduce monthly payments, etc. However, refinancing may lead to larger total interest rates since it presupposes longer repayment term. Besides, refinancing increases the risks run by the borrower, and it should be considered only if the borrower is confident he/she will be able to pay certain amounts monthly without defaults.
8. In what way it is possible to reduce monthly payment and the whole loan term?
You can considerably lower your monthly loan payment by refinancing at a lower interest rate. If you have multiple credit cards generating monthly bills, you may want to consider a debt consolidation loan. Another way to reduce your monthly payment is to increase the repayment term of your loan; however, in this case you will usually increase your total overpayment.
9. If the loan is defaulted what consequences should I expect?
If you fail to repay your loan on time, you will be considered in default and may expect the following consequences: reporting to credit bureaus, that may have negative impact on your credit rating; assessment of late charges; you may be denied additional federal or state financial aid; placement of the loan with an attorney agency – costs brought by collection of the loan will be added to the amount of debt; you may be exposed to force payment and be responsible for court and attorney fees if judgement decides so.
