#best loan rate
7 Secrets to Getting the Best Student Loan Rate
12/15/2014 by Shawn Lindstrom in Applying for Student Loans Comments Off on 7 Secrets to Getting the Best Student Loan Rate
Your parents will tell you, a penny saved, is a penny earned. In today s economy, saving as many pennies as possible is more important than ever. Savvy consumers price shop for everything even milk. The same should be true for private student loans. There are a number of banks and other lenders that make credit-based education loans available to students, but how do you actually get the best rate? Well, of course we ll tell you the best place to start is by comparing student loans using our LoanFinder. However, we re leaving the choice of lender up to you, the borrower. We think we can do better so without further ado, here are seven things you can do to ensure you get the best rate on your student loans.
Like we already said, our student loan comparison tool is the first step you should take along the path to choosing a lender and loan program. It may not seem like much of a secret, but in actuality it turns out that it s really hard to compare individual student loan programs without using a tool like ours. The reason is that the questions we ask help us find programs that match your basic needs and determine your initial eligibility to apply to a particular program. Once we match you to programs, we help you understand the cost of the program for the academic year in which you will borrow. Besides taking in all of the banks and lenders program information, and minimum and maximum interest rates, we make assumptions that apply to all of the loan programs we compare. It s important to apply certain assumptions the same way to every loan program compared because, by doing so, we are truly showing you apples-to-apples comparisons. When you use our tool, you will be comparing programs by monthly payment, total cost and APR. You will also be able to review detailed side-by-side comparisons for up to four programs at a time.
According to the Consumer Financial Protection Bureau s Mid-year update on student loan complaints (pdf), 90% of undergraduates and 75% of graduate students apply for private student loans using a creditworthy cosigner. The most important factor in determining whether you will be approved for a private student loan is to determine your ability to repay the loan you wish to borrow. Most students don t have a long enough credit history or high enough income to qualify on their own. That s where a cosigner can make a big difference. A cosigner is a person who agrees to repay the loan if the student borrower does not. As such, lenders look at the cosigner s credit score, income, and other factors in determining whether or not to approve a loan. Plus, applying with a cosigner often means you may receive a much better rate even if you could be approved on your own.
When you use our LoanFinder to compare student loans, apply to each of the programs for which you re eligible not just one. It may be tempting to choose a lender you already have a banking relationship with or a lender that advertises the lowest interest rate or APR. Since we can t determine if you ll be approved, let alone what terms you may be offered, we can only tell you if you may be eligible to apply for a given program and show you the range of rates offered by the banks and lenders. The final decision to approve a loan, and most important at what rate, is determined by the lender. So, you can t simply pick the lender with the lowest advertised rate. Here s a quick example using a student looking to borrow $10,000 for her first year as an undergrad: