This afternoon I helped Debbie who attends Bentley College as a first year student. She just realized that with tuition, books and food, her federal student loan wouldn’t get her through her first school year. After much research she decided to take out an $8,000 Act Education Loan through the Student Loan Network. She was hesitant at first because it is a non-federal loan with higher interest rates. However she did some shopping around and the other loan companies that she looked at had the same rates. She realized that this loan is necessary for her to survive her first year and it’s just something that she is just going to have to deal with. She applied for the loan over the phone in under 5 minutes, was approved and the loan check will be arriving to her home in 5 days.
For many taking out a private loan is the only option. I don’t actually think this a bad option because this is the only way for a student to go to school. Lets face it, nobody likes loans but there’s no better thing than investing in yourself and your own education!
Many students like Debbie face this situation every day as they try to make ends meet while attending school. Not everyone has parents that help out with their education and they must rely on grants and loans from various sources to be able to pay all of their expenses and get through college. Many will also take part time jobs to add a little bit of money to their education funds and scrape through. This is one of the reasons you see so many young people working in bars and restaurants as bar tenders and waiters and waitresses. The tips are really good and the hours are usually very flexible.
This is an investment in themselves for the future and that is why that many borrowers are going private when they are looking for loans. Many students do this as well as people who are out working in the work force. They may prefer to deal with someone who has money to lend instead of one of the financial institutions. Sometimes they can find better rates and terms that are also more flexible and able to match their lifestyle.
Brokers can often assist students and mature borrowers in finding lenders that will fit their requirements as well as lend money to people who may not have the best credit rating. Let’s face it if you are a student or newly in the work force, your credit rating will not be that great. It is not because you have been slow at paying bills or had late payments or reneged on a loan. It is not because you have a lot of credit cards which together add up to a large potential debt.
Instead your credit rating is not very good simply because you have no history of repaying loans or credit card debt. Lenders and the credit rating agencies like to see that you actually have a history of repaying your bills and debt and lenders have lent money to you which you have repaid on time. Until you have this kind of record your credit rating will not be bad, but it will not be great either.
Put simply it means that you may have a more difficult time finding a lender to lend money to you and that is one of the reasons to use a broker to help find you a loan. This is one of the reasons that borrowers are going private.
Another reason for going private and using a lending broker is that they are aware of all of the lenders who have the best rates and terms and who are willing to lend money under specific conditions. They can match your requirements and your financial profile up with a lender who is willing to lend money to people such as yourself. Borrowers go with private lenders for many reasons; however these are two of the big ones.
Sometimes families will lend their children money to get through college as well and this is another huge reason why some borrowers go to private lenders as well. Often the terms are excellent and there is some flexibility on repayment.