Loans Debts And Students
Archive for April, 2009
Shoud you choose secured or unsecured loans?
Apr 21st
The first thing that someone thinks of when the word loans is mentioned is money. This is definitely the most common type of loan but the truth is that a loan can be for many things and not just money.
There are also many types of loans with many different terms and durations as well as ways to pay them back.
A loan can be secured by collateral. These loans are usually offered when making a large purchase such as a house or a motor vehicle. In this type of loan, if you do not pay the loan back within the specified guidelines, the item that you purchased with the loan can be taken from you by the entity that has loaned you the money.
You may also obtain a secured loan by offering a house or a car that you have purchased as a type of insurance that you will pay the loan back. Once again, if the loan is not paid back within the guidelines your home or car can be taken by the entity that loans the money. They will then sell the home or car to pay back your loan.
Another type of loan is an unsecured loan. This type of loan carries more risk for a lender so the amounts loaned are usually smaller than what would be given with a secure loan. Credit cards are unsecured loans. If the balance on a credit card is not paid there is no collateral that can be confiscated to pay back this balance. However, no matter what type of loan that you decide to receive or give it is imperative that you note the details of repayment, as this will vary with every individual loan.
About the Author:
Tim writes about finance and loans. He also writes about leningen, geld lenen and lening in Dutch.
You Should Consolidate Your Student Loans
Apr 21st
So now that you have graduated you find yourself in the same boat as many other recent grads You have a number of student loans, the terms of which require you to start repayment upon graduation, and you have no job. Or you may have a job, but the prospect of managing so many different bills with different variable interest rates which adjust at different times is just too overwhelming to handle. Student loan consolidation may be just the answer for you.
What does it mean to consolidate a student loan? It means that you have arranged, with a financial institution, a different repayment schedule for your outstanding debt. Typically they will either buy your outstanding notes or arrange to make payment to the originator of the loan on your behalf. In turn, you pay them monthly. Debt consolidation results in a lower overall monthly payout by you, the borrower. However, the repayment schedule for the loan is often longer, meaning you will wind up paying more in interest over the life of the loan. Many people seek out debt consolidation loans because they cannot make their monthly payments and need to try to lower these. If you are in a situation like this, a student loan consolidation can be the answer to your problems.
You may also want to consider consolidating your student loans if your credit rating has improved since the time you attained your original loans. Banks and other financial institutions offer better loan terms to people with better credit scores. The reason behind this is because people with better credit scores are less likely to default on a loan, and are therefore a lower risk for the financier.
If your student loan has a grace period (most student loans do) you may not have to start repaying your loan for a few months after graduation. Typically your interest rate is lower during the grace period than it is after the grace period has expired. Since the interest rate on a consolidated loan is based on the rates of the outstanding loans being consolidated, it may be a good idea to consolidate your loan during this period. Bear in mind however, that consolidated student loans usually require immediate monthly payments, which means you will have to start paying on your new loan immediately instead of a few months down the road.
If you decide that you need or want to consolidate your student loans, it is important to carefully research the loan agencies you are considering. You school will be able to assist you through their financial aid office. They may even be able to suggest a number of different lenders for you to consider. Just make sure to do your due diligence. Check the lending agencies out via the Better Business Bureau, your state Attorney Generals Office and do an online search. If there are consumer complaints, you will easily turn them up via these avenues.
You may be able to consolidate your loan with your original lender. But even if this is the case, it is always wise to shop around. You may be able to find better terms through another lender.
Another thing to consider are the fees associated with consolidating your loan; interest rates and monthly payments are not the only expenses you will incur. In addition to any loan origination fees you should understand if there are any pre-payment penalties or other hidden fees. These can make your loan considerably more expensive over the long run.
Consolidated student loans are the answer for many students. A consolidated student loan can be a good way to keep your monthly expenses more manageable. But before signing on the bottom line, do your homework. Research your lender beforehand and make sure you understand the terms of your loan.
About the Author:
Garrison Galbraithe, who has been writing about loans and financial issues for almost three decades, has created a guide to obtainingsignature loans online. He offers all sorts of information about obtaining a signature loan and other financial matters at his site.
The Truth About Student Loans
Apr 20th
Taking advantage of the right college loans can help students cover their higher education costs without going into major debt. And, both online degree and traditional college students may avail themselves of these loan programs.
It is critical that students understand that making poor student loan choices can be very costly. Here are a few of the things they should know to avoid financial problems.
Student loans may be subsidized or unsubsidized. Subsidized loans require students to have financial need as defined by a formula set by Congress. There is a ceiling on subsidized loans, but interest rates are very low because the government subsidizes the lenders. Typically, students begin repayment not later than six months after leaving college.
Unsubsidized loans, however, are available to all students, regardless of their financial standing. Overall, unsubsidized loans are available for larger amounts than are those which are subsidized, and unsubsidized interest rates are somewhat higher.
Generally, students who are eligible for for unsubsidized loans require the maximum they are allowed to borrow. If they require additional funds, they may also take out unsubsidized loans.
The Perkins Loan and the Stafford Loan are most popular. Students begin repaying these loans 6 months after leaving college. The “grace period” of 6 months is routinely extended to students, as a courtesy, by individual lenders.
Another option is the PLUS loan, or so called Parent Loan, which can be given to parents with appropriate credit. The PLUS loan, like most others, features a fairly low interest rate. Repayment begins sixty days after the loan award date.
It is important to understand that student loans must be repaid. Dropping out of college or declaring bankruptcy, for instance, does not materially impact the repayment obligation. However, lenders do work with borrowers who contact them if they are facing economic difficulty. Those who avoid contact with lenders and fail to meet their obligations, conversely, may have their income tax refunds withheld or their salaries garnished.
Traditional college students and online college, students alike can benefit from the wise use of student loans. In fact, most students find that student loans…investments in themselves…are among the the best investment they make. But borrowers must remember two things. The first is that borrowing should be limited to cover the costs of educational necessities (not for luxury items). The second is that there are likely to be serious consequences if they do not repay their loans as agreed.
About the Author:
Marti Bloom is a writer, editor, and adjunct instructor at a New York State community college. She particularly enjoys writing about issues of importance to online college, online degree, and traditional college students.