How to Obtain a Private Low-Interest Student Loan

Student loans are often a major component of financial aid packages prepared for students. Oftentimes grants, scholarships and even federally subsidized student loans may not be enough to cover all the expenses of a college education. In such cases, a student may have to resort to private student loans. The funds from these loans can be used to fill the gap between the financial aid package and the tuition amount as well as for expenses such as books, transportation, living costs and even a laptop. Because private student loans are not federally subsidized, the interest rate is usually higher. There are a couple of ways a student can obtain a low-interest private student loan.

Instructions

1. 

   Credit Sign

   Strengthen your credit standing by making all of your current payments on time, maintaining low credit balances and refraining from applying for new credit. Credit standing is a major criterion for all loan applications. It affects not only your chances of getting approved, but also the interest rate that you're charged by the lender. Therefore, it is important to keep your credit intact before applying for a private student loan.

2. 

   Income

   Disclose any income sources. It doesn't have to be a full-time job; it could also be income from a part-time job, scholarships, stipends and allowances/financial support from parents. The more income you have, the better your chances of getting approved.

3. 

   Bank

   Research multiple lenders to see which offers the best rate. Ask your local bank, credit unions and other financial institutions. You can also get quotes from an online credit exchange.

4. Add a creditworthy co-signer to your application to improve your chances of getting the loan at a lower rate. Your parents or any other family member who has strong credit history and good income could co-sign the loan application for you.

5. Sign up for automatic electronic payments if the lender offers the service. Many lenders give additional interest rate discounts to borrowers who sign up for such services.

References

• Finweb.com: Getting a Private Student Loans