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How to choose an installment loan

How to choose an installment loan
How to choose an installment loan

Even though there a lot of people who probably don’t even know the definition of an installment loan, there’s a pretty good chance they would need to take out one some day.

What is an installment loan?

What is an installment loan?
What is an installment loan?

An installment loan is a type of loan in which you pay back the amount you’ve taken out in a set number of scheduled payments over a certain period of time. A lot of different types of loans fall into the category of installment loans, that includes mortgages and auto loans. Even though credit card requires a monthly minimum payment, it is not an installment loan.

As we already said, installment loans require a number of regular payments over a certain period of time. Compared to payday loans, installment loans normally last longer (they could last several years) with each payment evenly spread over the whole period of the loan with interest included.

No doubt, taking out an installment loan can be quite beneficial, especially if it is for big purchases and also for any other situations where you are in need of cash. Installment loan lending companies not only provide borrowers with much lower interest rates on their loans compared to other types of loans, their clients also build credit if their credit history is poor or if they don’t have a credit history at all.

If you are considering an installment loan, the first thing you should probably do is get information about every type of installment loans to find the one that is best suited for your situation. After that, you should find a reliable installment loan lending company to work with. We are going to share some insights on how to choose an installment loan that works for you.

Different types of installment loans

Before you decide to take out an installment loan you must know the different types you can choose from:

  • Unsecured Installment Loans

Student Loans
Student Loans

Normally, unsecured installment loans are loans for a small sum with high interest rates. They are some of the most popular types of loans you can find. With unsecured installment loans, you get your money from the lender and you have to pay it back over an agreed period of time. Going for this type of loan makes the most sense when you need money only for a short time period – 4-5 years or less. It is also worth mentioning that if your payments are on time, it can really help you with rebuilding your credit.

  • Student Loans

Student loans are a type of installment loan where you get a set amount of money for your educational expenses. Once you are out of college, you have to pay back the loan by paying a set amount of money each month. Student loans also give you the option to defer your payments for a period of time when you are unemployed but once you’re employed again, you will have to pick up the repayments again.

  • Mortgage Loans

When taking out a mortgage loan, what you are able to do is to finance your house and pay back the loan over a set number of years. It is of great importance that you do your repayments on time or you will be at risk of losing your home and badly damaging your credit.

  • Car Loans

Car Loans
Car Loans

If your car has broken down or you just want to buy a new one but you don’t have the cash, probably a car installment loan is the answer for you. Keep in mind though that much like mortgage loans, if you are not able to pay the money back on time, you risk your car being taken back.

Choosing the right lender

Once you’ve decided what type of installment loan you want to take out, it’s time to choose a reliable lender who is best able to meet your needs and apply for your loan. To do so, here are a few steps you could take:

  • Make a good financial portfolio

Make a good financial portfolio
Make a good financial portfolio

The application process itself does not create as much stress as the documents you have to prepare in order to ensure your application for the installment loan will be approved. What you need to do first is to collect all the data (your credit records and financial status). Perhaps your liabilities and assets are what your potential lending company may be interested in, so you must not forget to take them along with you.

Even though traditional banks are way more strict when it comes to your documents, installment loan lenders also require some paperwork, so you should keep that in mind.

  • Think the whole thing through

You shouldn’t apply for an installment loan if you are not completely sure that you need one. If you decide to apply for one, you should ask yourself whether you can afford to repay it. Your ability to pay back the installment loan should be your main concern.

  • Few things you may want to do before you proceed with your loan:

  • Ask which are the types of installment loans you qualify for
  • See if there are any hidden fees or charges you’ll have to pay apart from the interest rate

Doing those things will help you find an honest and reliable lender.

Apply for your loan

Once you’ve decided which type of loan you want and you have found the right lender, there’s only one thing left to do – submit your application and get the cash you need.

 

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The World of Student Loans Explained

young student girl holding and looking toward a pink piggy-bank

There’s no such thing as a free lunch and we all want the very best for our children in terms of education. By its very essence the American Dream sees education as the road to fulfillment for any individual who wants to build a good solid future and achieve complete happiness. Unless you’re very fortunate many people can’t meet all the fees up front and so they need to get some student loans. This in itself can be a bit of a minefield as there are quite a few available. You’ll need the loan most applicable to your own situation. By the end of this article we hope to have enlightened you further and maybe even helped you choose which is best for the student in your home! But always remember the debt has to be paid back in time.

Federal Student Loans

These loans are backed as the name suggests by the Federal Government and include many benefits like fixed interest rates and income-based repayment plans. This should really be your very first option and you don’t need to get a credit check for most of these loans except for PLUS loans.

The U.S. Department of Education will give Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.

federal student loans

These excellent Federal loans can also help you establish a good credit record in time. In most cases You won’t even need a co-signer and the great thing is you won’t have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time.

It means you can get through school without too many worries and concentrate fully on your studies.There are a number of repayment plans, including an option to tie your monthly payment to your eventual income. In order to get a student loan you must first complete the Free Application for Federal Student Aid (FAFSASM). Again there’s plenty of information available online, and you can even get professional help filling them in.

A Word on Student Loans without Co-signer

The good news is because federal student loans are not based on any form of credit, they will never need you to provide a co-signer, or submit to a credit check. So you can apply for this type of aid without a credit history, a job, references, or personal income of any kind and still qualify without any problems.

Student Loan Consolidation

making one solid block by combining 4 blocks

A Direct Consolidation Loan enables the student to combine a number of these loans into one solitary loan. This means a single monthly payment is required instead of multiple payments. Hopefully a single loan for students will suffice? But take the very best advice first!

BUT BEFORE YOU CONSOLIDATE STUDENT LOANS THINK THE PROCESS THROUGH VERY CAREFULLY!

Take time to view this:
studentaid.ed.gov/redirects/students-gov

Loans made through what we call the Federal Perkins Loan Program, often called Perkins Loans, are low-interest (5 per cent) federal student loans for undergraduate and graduate students who are in the greatest and exceptional financial need. The idea is to give those students even from the poorest families the chance to enhance their education!

Private Student Loans

These are just like taking out a personal loan from your local bank for anything else in life and some people take out a private loan on top of the government backed scheme. The only thing is these can have variable interest rates, some even greater than 18%.

And this is where some families get themselves into trouble. A variable rate may substantially increase the total amount you repay, so you must shop around for the lowest rate. Even talk to your own bank who may be able to help more. This can save you an awful lot of money in the long term. You’ll probably need an established credit history.

The cost of this loan will depend on your credit score and other factors. You’ll also need to start re-paying when you’re still at school or college too so you’ll need to be fully prepared for this! And it’s important to point out they cannot be consolidated into a Direct Consolidation Loan, and you’ll need a cos-signer.

ITS VERY IMPORTANT TAKE A LOOK AT THIS:

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The National Student Loan Database

The National Student Loan Database is in fact a massive and impressive set of records kept by the Department of Education containing the details of virtually every federal student loan disbursed by the government. This is also to protect identity and safeguard students and their families.

So you can have the best possible peace of mind. Every time a student takes out a loan backed by the Government the details of loan and the borrower payments on it are sent to the Department of Education National Student Loan Database.

The whole idea behind this national student loan data system is students don’t have to contact their school financial aid office or loan provider as they can get all the information they need directly from the NSLD. They can deal with any problems both quickly and efficiently and of course they are vastly experienced and understanding.

Student Loan Calculator

calculator with a grey background

This is a well thought out tool for calculating the monthly payments taking into account both the interest rate and the principal loan amount for private and federal loans. These clever calculators should also be used when comparing the various private loan programs to decide on which one is best for you and there are a whole host of them on the internet.

By plugging in values like the amount of loan required, repayment time, annual interest rate, and payments per year (usually 12), you can arrive at a ball park figure close to what will be your minimum monthly payment. Planning ahead can be all important and you can be clear in your mind you won’t get into trouble in the future.

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There’s a wealth of information online regarding the full range of student loans so make sure you take plenty of time to do as much good research as possible before making a final decision. Everyone wants the best for potential students and finance shouldn’t be a barrier to enjoying a really excellent education.

The future of the student always has to be paramount here. The problem is families or individuals can still get into a lot of trouble because they’ve either taken out the wrong loan or got in above their heads in some way. Loans backed by the Government should always be looked at first before going down any other road.

After all, this is what they were devised for and you should take full advantage of them. Private loans should be taken out with caution, and there are other alternatives available, so whatever you do don’t go rushing into things. Plan everything way down the line.

Take the very best advice!

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Student Loans

student loan

To become part of the ‘American Dream’ it seems a first rate college education is a necessity. But sadly it’s an expensive necessity as tuition fees charged by universities and private colleges can reach more than $60,000 each year. Thankfully there are various student loan options available, and its worth noting tuition fees at public universities are generally lower!

What Type of Student Loans are Available?

There are two types of student loan for undergraduates:

Federal Loans

This should be the first port of call for students as these are made by the U.S. Government directly. There are also federal loans made by other lenders including banks, and these are guaranteed by the Government. The interest on this type of loan is set at a fixed rate by the Government. All colleges and Universities should make this clear to students. Stay clear of those lenders who don’t carry government guarantees!

The ‘Stafford Loan’ of which there are two types is the most popular as these are available to everyone regardless of financial need. You can get them directly from the Government or through a lender. For those who can show sufficient financial need, the government will pay the interest on “subsidized” Stafford loans for individuals for as long as they stay enrolled at college. The flip side is loans accumulate interest while a student is in school. In this case the student can either pay the interest when it’s due or let it be added to the overall balance

happy girl with approved student loan

A ‘Perkins Loan’ is available to those students who have need for the greatest financial assistance. ‘Federal Pell’ grants are given to students from low-income families. Parents can take out federal loans. These ‘Parental Loans’ are also known as ‘Plus Loans’. Check out ‘The Federal Education department’ Interest rates can range from five through to eight per cent so make sure you shop around!

There are lenders out there who will offer discounts on the loan after for example you’ve made a certain amount of consecutive payments on time.

The government sets limits on how much money students can borrow under each loan program. This ranges from $5,500 in the first year of study up to $7,500 in later years. The highest amount an undergraduate can borrow from the Stafford loan program is $31,000.

‘Federal Student Loans are also available through the William D. Ford Federal Direct Loan Program.’

In the case of Plus Loans a family can get enough money to cover their full period of attendance, less other financial help they receive. This cost of attendance is set by law and also includes boarding, transport and books.

Private Loans

These are similar to a personal loan you’d get from a bank except interest rates will be higher and will fluctuate over time. Citi student loans are one such example. Underwriting these loans can also be a problem as many students don’t have a credit history. These private student loans however, don’t carry the level of protection you get can from a federal loan. Temporary deferment or forbearance are terms used to explain under various circumstances a borrower won’t have to make payments on the loan.

Look at: how to cope with repayment difficulties for federal loan borrowers.

 
You should know student loans taken out privately are open to special treatment in the rare occurrence a student should go bankrupt. In this case they won’t incur a total debt amounting to more than the cost of attendance. Non co-signer student loans are available for students who have a good credit score, but it’s rare for students not to be given a private loan without a co-signer anyway. Take a look at the websites of both Wells and Citi for more information

FAFSA Application Form

Every U.S. student who wants to be considered for financial assistance must fill out the Free Application for Federal Student Aid form or a (FAFSA). Financial aid offices at educational institutions use the FAFSA to work out if you are eligible for grants, loans, and work-study programs. You MUST file one of these forms every year in order to be considered for financial aid. In truth it’s a long form so you’ll need to be patient, but it can also be completed online. The good news is by filling this form in you could save hundreds of dollars in the long run so it’s worth the effort.

For those hoping to go to college there’s a wealth of information on the internet for would be students – check out ‘SimpleTuition’ and ‘Graduate Leverage’. Some of these sites are paid referral fees by the lenders themselves so make sure you do plenty of research.

For more information it would be a good move to seek out The Institute for College Access and Success (www.ticas.org).

Everyone should be able to enjoy a good further education and there are student loans to suit every background. Don’t miss out – check out!!