Before You Apply, Compare
Loans have become an integral part of a student’s life today. You just have to borrow to pay part or all of your educational expenses. But this doesn’t mean that you have to take up the first lender you come across. Just like any other type of loan, you can compare rates and options available before you select a lender for your Federal Stafford, PLUS and other education loans. This will not only help you take the loan on your terms, it will also help you save thousands of dollars. There are a few things you need to consider before you decide a lender is right for you:
Loan limits: Find out the limit of the loans offered by various lenders. In the case of Federal Stafford loans, your seniority determines your loan limit. So if you are a Freshman or Sophomore, your limit will be lower than that of the higher classes. In the case of private loans, they vary from lender to lender. So check all possible avenues before deciding on one lender.
APR: Acronym for Annual Percentage Rate, this is the annual cost of your loan. In addition to interest, APR includes fees and other charges. Your APR is calculated on the basis of your loan amount, time period that it will take to repay the loan, and other factors. The lower the APR, the more attractive the loan.
Repayment: If you are prompt in repaying your loans, quite a few lenders are known to offer incentives like reductions on interest rates. Check what incentives are on offer with various lenders. Also find out if your lender will allow you to defer payment while in school. Another thing you need to know is how long the lender will allow you to string out your payments. There are a few more things you need to check. I will discuss these points next time.
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March 14th, 2007 at 6:33 pm
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