Private Student Loans for Bad Credit

You have learned about the many types of student aid available from the government, but what happens if the cost of tuition, books, and fees at your school is so high that you still need additional funding? For most students, this means they will have to take out a private loan. What happens if you also have bad credit? There are some private student loans for bad credit out there.

Private student loans for bad credit work the same way as traditional private loans. Banks offer private loans for students because they know the cost of school is so high. The interest rates on private loans for bad credit will typically be much higher than those for students with good credit, and higher still than the rates for Stafford loans. These loans often have higher borrowing limits than Stafford loans, which are fixed based on dependency status and credits earned. Private student loans for bad credit will need a cosigner with good to very good credit, and they do require a credit check. Remember, if you get denied, do not keep applying. Each application will lower your credit score more and more. Private student loans for bad credit will often let you defer payments while you are in school, but not always. Some will want payments while you are in school to help you build back up your credit.

There are many different loan options out there, and it is up to you to compare each one. You will find tools online to help you compare different loans. Look at the Annual Percentage Rate (APR), which is typically higher on private loans for bad credit. See if there are any origination or pay-off fees. All of these can factor into the total cost of the loan. What looks like a good loan due to a low monthly payment may end up costing you thousands more in the long run because of fees or other charges in the fine print. You also want to pay attention to how many months of repayment you will have.

Private student loans for bad credit are out there. Talk with your bank or credit union and see what options they have. Use loan comparison tools available online so you can see all of the ins and outs of each loan. Once you find the loan that best suits your needs, you can apply.

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