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Reducing Private Student Loans

admin — Mon, 12 Apr 2010 10:34:41 +0000

When looking for debt consolidation student loans, you must consider all or as many of the moving parts that make up the cost of the money borrowed. Just like any loans, there are three (3) general areas where the lender can charge that will raise your costs. These areas are the fixed costs, the interest rates, and penalties. Additionally, there is a fourth area, promotions, that you must heed in order to reduce the total cost of consolidation for private student loans.

FIXED COSTS

You’ve heard of these as application fees and/or origination fees. These are generally explained as covering the paper work to process your loan. Application fees are usually fixed so that a consolidation for private student loans totaling $25,000 will have the same fee as a $100,000 loan.

On the other hand, origination fees are a percentage of the total loan, typically 1%-3%. In the mortgage industry, the origination fee, also called “points”, depends on the interest rate. Lower interest rate means higher origination fees and vice-versa. There’s a term in the mortgage industry that you can “buy down the interest rate by paying higher points”. This is one way to lower the monthly payments. Additionally, the origination fee is a major source of the broker’s commission. The student loan industry seems to have the same mechanics. So it is best to understand how they work.

Because of the current competitive nature of the student loan services, many lenders are discounting the fixed costs. Some are even slashing them off completely. So if you’re in the market for consolidation of private student loans, look first to the program with no origination and no application fees. Make the lenders compete!

INTEREST RATES

Another area of cost is the interest rate. Furthermore, this is where the lender gets most of its income for the life of the loan. Again, because of the competitiveness of the student loan consolidation services, many lenders give incentives that will lower the interest rate.

The most common way to reduce a private student loan interest rate is through an automatic payment plan. In this plan, the lender will deduct the monthly payments directly from your checking account with your authorization. Since it’s done electronically, it will be timely. And that leads to a second opportunity to reduce the interest rate — consecutive “no late” payments for a stated time period. For example, some lenders will lower your interest rate if you make 48 consecutive monthly payments without being late. Over the life of the loan, that could be significant. You must learn these incentives and take advantage of them.

Also, not necessarily a rate reduction plan, but could nevertheless reduce the total cost of the student loan is the option of a fixed rate over that of a variable rate. A fixed rate private student loan consolidation program gives you a predictable monthly cost. A variable rate adjusts according to typical financial factors, such as the federal interest rates and economical conditions. In the early years of the new millenia, interest rates have been its lowest just hovering around 4-7%. However, from the 70’s to most of the 80’s, interest rates were in double digits. Opting for a student loan consolidation with fixed rate can avoid the cyclical high’s of the interest rate roller coaster. But you must catch it at the lowest student loan consolidation rate at that time.

PENALTIES

Just like many mortgages written in the 90’s and older, some student loans have pre-payment penalties. These are money that you owe if you were to pay the loan ahead of schedule. They were industry standard so that the lender does not lose money in the transaction. The penalty is typically a percentage of the remaining balance. Imagine if you paid a 10-year loan in 6 years. There would be a percentage of the 4 remaining years to pay over and above what you already paid.

However, as the student loan consolidation services get more competitive, many lenders have been giving up prepayment penalties to attract credit worthy borrowers. Hence, when speaking to a student loan consolidation counselor, you must ask if you’ll be assessed a pre-payment penalty because there are many programs out there that do not have such penalty.

PROMOTIONS

Lenders are competing for your business. Hence, they give incentives such as a student loan consolidation credit that could lower the total cost of your loan. Typically, these are rebates where the lender will write you a check once you finished paying off the loan. Another popular method is a “no last month payment” where you don’t owe the last month of your bill. Since these are promotions, they are normally given in a limited window of time. But sometimes, it helps to ask your counselor if the lender he’s representing is offering any promotion.

SUMMARY

When times are tough economically, you need all what you can do to relieve the stresses. One way is to take control of your finances, including your debts. For student loans, the opportunities are there to save money. But you must know what they are. When looking to consolidate your private student loans, be aware of the costs. If you have to compromise, understand the advantage you’re gaining and the benefit you’ll be losing. And most of all shop for the right lender and ask the right questions.

By: RL Aguirre

Where to Get a Private Loan For a Student With Bad Credit

admin — Mon, 29 Mar 2010 06:03:12 +0000

One of the best options to get a private loan for a student with bad credit is the loan sourced from federal funding. This loan facility offered by the federal government is intended for the students who badly and are considered the neediest in a particular state. But for any student who will find it hard to get this loan is when he or she had a previous loan and had defaulted the loan granted to the borrower. This is when the bad credit factor is highly considered and would push the lender to strictly study the loan application if it is worth approving.

One way to easily get a federal private loan for a student with bad credit is by using his parents as guarantor for the said loan. Parents who have clean credit record are most likely given the best offer for a loan. But in this case, the parents are granted with the loan and not the student since this loan facility is intended for qualified parents.

But the federal funding for a private loan for them is much easier to process than any other loan offered in banks. The requirements would be lesser and won’t do much burden to the borrower.

In cases that the federal funding is not offered or if you are not qualified to get a federal loan for a student with a bad credit, the second best choice is look for a private company that offers this facility or the private loan for a student with this. It may charge higher interest rate than any available loan source, but the said loan will definitely help the student get through his schooling and be ensured of a high-paying job after graduation. This makes this loan facility an attractive option for borrowers.

By: Arturo Ronzon

Private Auto Loans For Non Dealership Purchases

admin — Mon, 08 Mar 2010 19:04:44 +0000

Buying a used car directly from an owner will get you a much better deal than you would get from a car dealership. This is especially true in cases where the car owner and the car history are well known to the buyer. It eliminates the possibility of hidden surprises. On the whole, private auto loans have a lot in common with other methods of car financing. However there are also certain differences that can be important when deciding to purchase a car.

Higher Rates For Used Cars

When it comes to used cars, the rates for person-to-person or private auto loans invariably prove to be higher than those for a new car. To take an example, rates for private party sale auto loans from online auto loan lenders will usually be about two points higher compared to what is charged for traditional new auto loans and about one and a half points higher than the interest rate being charged for used car loans for vehicles purchased from dealerships. Moreover, the rates will fluctuate according to your credit history and other aspects concerning your loan application while new car loans from dealerships usually have fixed rates providing you qualify for them.

Repayment Schedules

Loan term may be less than that of a new car. The standard duration for financing a new car can be up to seventy-two months. In the case of private auto loans, it may not be possible to finance a vehicle for the same time period. Usually lenders are ready to finance private auto loans for up to forty-eight months, though there may be exceptions. However, auto loan financing should be done for as short a period of time as you can possibly afford. This is to ensure that you don’t end up in a situation where you owe more on the car than its value (upside down car loan) and to minimize the amount of interests you are required to pay.

Down Payments and Fees

With many lenders a down payment may not be required for person-to-person auto loans. Despite not being required, it is better to put money down. Doing this will reduce your chances of overpaying for your car loan in the future. Taxes, title and registration have to be paid separately when you purchase a new car from a dealership. The dealer normally combines taxes, title and registration fees into the loan amount. For private auto loans, the lender will not allow you to finance the fees and will require you to pay for them out of your pocket.

Title Transferring

On purchasing a new vehicle, the title is put in your name almost immediately. When it comes to person-to-person or private auto loans, it could take longer. The owner of the car you are buying from may still owe money on the car and it could take a week or longer for completing the payoff process. His lender needs to receive the payoff amount before he transfers the title to the car owner and then it can be turned over to you. The duration of this process is mainly based on the location of the lender. For a local bank, this process should not take more than a few days. However if the lender happens to be in another state, it could take much longer for the transfer to be done.

To briefly sum it up, private auto loans make a good option if you are a creditworthy borrower. However if your credit happens to be less than perfect, it may be better to turn to your local dealership as the best source for an auto loan.

By: Sarah Dinkins

Loan Against Car Title – Mayday Payday

admin — Wed, 30 Dec 2009 14:32:38 +0000

Are you experiencing the burden of an unexpected expense?

Do you need some cash now?

Do you have a paid off vehicle?

What to do?

No need to wonder, there are ways to get money when you need it. One option is to apply for a title loan. A title loan is a loan that is given to the borrower in exchange for temporary possession of their car title. Yes, the borrower gets to keep their car and get money into their pockets!

Here at Mayday Payday when you are in need of a payday loan we make it possible for you to take out a loan against your Car Title. You can use your paid off vehicle as collateral for your Payday Loan. So, whether it is an unexpected bill, your car broke down or whatever the reason may be that you need cash a loan against your car title will get you the money you need quickly.

Our payday loan options can provide you with a quick way to get the cash advance you need, without the usual hassles you may find at banks or credit unions. Applying for a payday loan at your local loan center may allow others to listen in on your transaction. When you apply for a payday loan with us, we keep your transaction private. Start your application online, day or night by filling out our quick and easy online loan against car title application. The car title loan application process does not take long and you can have an approval within an hour. You can even keep driving your car while you work on paying off your loan. Don’t worry if you can’t pay your car title loan in full on the due date we offer you the option of only paying the interest to extend the term of your loan against your car title.

Get your Mayday Payday, Loan Against Car Title Payday Loan started NOW!

Start the process immediately by calling toll free (800) 979-1823 or by visiting our web site at: http://www.Mayday-Payday.com

By: Payday Loans, Cash Advances and Auto Title Loans

Private Student Loans Can Be Directly Given to the Students

admin — Sun, 25 Oct 2009 17:01:34 +0000

Private student loans are the loans that are given by the banks over and above the student aid that is given to the students. These loans are also called as the alternative student loans.

These loans are paid generally to the school in which you are enrolling. In general the banks prefer it to be directly given to then school. However since these are private student loans there are banks and credit unions which give these loans directly to the students.

The reason for this is simple as that will mean that the students can use these loans to buy books or a computer or even to pay their living expenses. This cannot happen if the loans are given directly to the school. That said before applying for the private student loans make sure that you check as to how the proceeds be given.

If in case the proceeds are not given to you directly then you can try another lender. Please make sure that when you apply for the loan that you specify the exact purpose for which you need the loan. This helps in getting the loan application approved. Once approved tell the approving bank for the person in whose name the check should be written by the bank. The side benefits of receiving the funds directly are that your school loan limits are not exhausted and it is as good as your personal loan.

Make good use of the loan and repay it back faster as these private student loans are very expensive.

By: Bruce Victor

Private Student Loans Are Often Necessary In Addition To Federal Loans

admin — Fri, 09 Oct 2009 10:30:38 +0000

A lot of the government student loan schemes need no credit check and provide a student with significant financial aid. But these programs are based on need and normally carry other criteria which may make it difficult to qualify. Even if a student does qualify, these loans only cover a proportion of the whole education bill in many instances. If students are caught in this position then they could look to private alternative college loans to make up the difference.

Private alternative student loans too have their own set of pros and cons. A credit check is almost universally required and this is not a problem as long as you have a good credit history. The problem is that ‘good’ is very much a relative term and if it is not good enough then you might find that you are paying higher than the normal interest rates.

Over and above the quoted rate of interest there are additional monetary implications to private alternative loans. Fees will generally be added on to nominal loan amounts and a reasonably small loan of $3,000 can easily have fees of 4% added before distribution. That means $120 of the total loan will not be seen by the student but nevertheless has to be paid back. As a very rough guide, every 3% of fees is equivalent to 1% added to the stated interest rate.

Private loans do have some advantages.

The first and probably the most obvious advantage is that funds are available. Private lenders make a profit from the interest and fees which they charge and so have a vested interest in making funds available to borrowers and they will try very hard to see that each and every applicant qualifies. Federal lenders on the other hand adhere to an inflexible set of criteria and there is generally no appeal if your loan application is turned down.

Not having to deal with that frosty and all too often irrational bureaucracy is another benefit of private loans. Private lenders have customer service departments which are there specifically to answer questions so that customers can get the answers which they are looking for. Federal loan schemes typically have contacts and help available as well but the answers one gets are hit or miss when it comes to quality.

Other considerations which make private alternative loans especially desirable include:

The fact that neither parents nor students have to fill out FAFSA (Free Application for Student Aid) forms and provide a lot of additional documentation. Private loan applications are a lot simpler and indeed the whole process is easier. However, interest rates and fees could be higher or lower according to the particular loan program.

The best private loans carry zero fees and interest rates which are roughly equal to the prime rate. This is the rate which banks charge each other or charge their largest and special customers. If you are able to get an interest rate at prime then this is a very good deal and locating a rate at 1% below prime is a truly great deal.

To obtain that sort of loan it is generally necessary for you to have a very good credit history or to apply for the loan with a co-signer to the loan who has a great credit history.

At the end of the day, the only way to find out whether an alternative loan will satisfy your requirements is to go out into the marketplace and see exactly what is available.

By: Donald Saunders