Whether you are a parent looking to help your child attend college or you are a student seeking financing, it is important to understand how private student loans work. Private student loans can help to bridge the gap between the cost of attendance at a college or university and the federal aid package. However, private loans tend to have higher interest rates than federal loans. Also, many private lenders require cosigning on the loan, which can be a disadvantage for students without a credit history. Fortunately, there are some private lenders that don’t require a cosigner.
One lender that doesn’t require a cosigner is Funding U. Instead of focusing on a student’s credit history, Funding U focuses on their academic achievements. Applicants can get prequalified in about two minutes. The lender will then check their credit report to ensure there is no fraud.
Another loan provider that doesn’t require a cosigner for a loan is Ascent. Unlike other lenders, Ascent doesn’t charge fees for applications. Applicants are also eligible for an income-driven repayment plan. However, Ascent’s loan term is only 10 years. This makes it less flexible than other lenders. Also, it is only available in select states.
Another option is the Stride income-sharing agreement. This loan is based on the assumption that a student’s income will increase over time, and therefore, the repayment term will increase. However, the income-sharing model is a bit of a gamble. For example, the first two years of repayment, borrowers are required to make only 2% of the loan amount. The repayment cap is twice the principal balance. Despite these limitations, the income-sharing agreement is still a good option for students without a credit history.
Another option is LendKey. They offer 5, 10, or 15 year repayment terms. However, they charge a high origination fee. They also offer an 18 month forbearance period. This is longer than most peers. However, they only work with a limited number of schools. They also offer a fixed APR on Federal Plus loan rates.
One of the most important aspects of a private student loan is the total cost of the loan. The best lenders offer flexible repayment plans and interest rates that are competitive. They also don’t charge prepayment penalties or late fees. Additionally, they allow for deferred payments while in school. However, there are also some private lenders that require repayment while you are still attending school.
If you don’t have a credit history, a cosigner can help you qualify for a private student loan. However, most lenders require a parent to cosign the loan. A cosigner can also improve the terms of the loan, which can lower the interest rate. If you do not have a cosigner, you’ll want to shop around for the best rates. Also, check to see if your lender offers rate discounts or other benefits. If you have good credit, you can qualify for competitive private loan rates.
Finally, if you’re a student with poor credit, consider alternative installment loans. These look a lot like payday loans, but they are much easier to obtain. They tend to charge high interest rates, so be sure to do the math.