How to Apply for a Private Student Loan

Because college is expensive, most students apply for financial aid. There are several ways to obtain money for school. Federal loans are popular because they offer easy approvals and low interest rates. Unfortunately, Federal student loans feature an annual cap, in which some students need additional financing. In this case, private student loans from banks and credit unions come in handy.

Things You'll Need

• Private lender
• Co-signer
• Good credit

Instructions

1. Find a lender that offers private student loans. Several lenders provide private student loans. These include banks, credit unions and many private investors. Contact a few financial institutions and inquire about their loan requirements. The Internet also features a host of private lenders.

2. Maintain a satisfactory credit history for at least 18 months. Private student loan lenders differ from Federal lenders. Government loans don’t involve credit checks. Thus, persons with no credit history or a low score can qualify for financial aid. However, private loans involve credit checks, in which borrowers need an acceptable credit score.

3. Get a co-signer for the private student loan. Persons who don’t qualify for a private student loan due to bad credit can obtain an approval with a co-signer. This can include a parent, spouse or other responsible adult. Co-signers need good credit, and they become equally liable for the debt.

4. Compare private loan rates and terms. Since private loans vary, it’s best to make rate comparisons. Request quotes from three or four private lenders. Review the quotes, and pay close attention to the interest rate and terms of agreement. Pick the student loan that offers the lowest rate.

5. Apply for enough money to meet your education needs. Because private student loans don’t feature annual limits, borrowers can obtain money to meet the total cost of tuition and board. Tally the total educational cost before applying for a loan.