Private Student Loan Without Cosigner
If you’re in the market for a student loan, you might wonder if it’s possible to get one without a cosigner. After all, that’s how most people get their student loans. The answer is yes: You can get a private student loan without using a cosigner or guarantor. However, there are some important things to consider before applying for a private student loan on your own.
Research reputation of the lender
- Research the lender’s reputation. Look for a lender with a good reputation, and one that has been around for a while. You also want to find a lender that is licensed and regulated by your state’s Department of Banking or Securities, according to The Student Loan Report.
- Look for lenders accredited by the Better Business Bureau (BBB). In addition, you should check out the bureau’s rating for your selected student loan provider before choosing them as your cosigner alternative option.
Compare APRs carefully
You can also use the APR to compare loans. An APR is the annual interest rate you will be charged, so it’s important to look at before signing a contract. However, this figure can be confusing because there are many different kinds of APRs out there: fixed, variable and others.
- Fixed: This means your interest rate won’t change over time.
- Variable: This means it will change periodically based on an underlying index, like the prime rate.
Also keep in mind that an APR is not the same as a fixed or variable interest rate! The latter two figures refer specifically to how much you pay per month; they represent how much money you make or lose over time (e.g., $50 per month).
Review the loan terms and conditions
Before you sign, make sure you understand the terms of your loan. Look for any prepayment penalties and make sure you understand:
- The terms of repayment
- The terms of deferment and forbearance options
- Any other conditions or restrictions that could affect your ability to repay the loan
Do your homework on forbearance and deferment options
If you can’t make your monthly payments, forbearance and deferment are two options. Forbearance is a temporary postponement of payments that may be granted when you are experiencing financial hardship. It’s not a good option if you can make the payments; otherwise, interest will continue to accrue and increase your balance. On the other hand, deferment is a postponement of payments while you are in school (undergraduate or graduate), unemployed or serving in the military. Both options come with fees that vary depending on your loan type and servicer, so check up on those details before deciding which one works best for your situation.
Beware of the terms “variable interest rate,” “interest-only payments,” or “interest capitalization”
The terms “variable interest rate,” “interest-only payments,” and “interest capitalization” are all defined in the private student loan agreement. But what do they mean?
- Variable interest rates: The rates on your private student loans may be set at a fixed rate or one that changes over time based upon an index rate. A fixed rate means that the interest rate will not change until after a term of repayment has come to an end. An index is some measure used by lenders to determine how much you should pay them in order for them to make money off of you. Some indexes include: LIBOR (London Interbank Offered Rate), which measures the cost of borrowing from banks; Treasury bills; Prime Rate; Prime + 1%; Prime + 2%; Prime + 3%; etc. Each borrower’s contract will specify which index will be used as well as its current value at any given point in time during repayment of their loan..
- Interest-Only Payments: With these loans, only part or none of your monthly payment goes toward paying down principal (the total amount owed). Instead it goes exclusively toward interest due on your debt balance
You can get loans on your own.
You can get loans on your own.
As the name suggests, a private student loan means that you are borrowing money from a private lender (like a bank) instead of the federal government. The first step to take before applying for these types of loans is to ensure that you have exhausted all other financial aid options available to you. This includes:
- Federal student loans and grants
- State-sponsored financial aid programs (if applicable)
- Scholarships or grants from non-profit organizations
Once you’ve done this and still need more money, consider using one of several platforms for finding private student loans without cosigners or co-borrowers. Some companies specialize in helping students find suitable lenders who will approve their applications even when they don’t meet certain criteria (e.g., not having established credit history).
A private student loan without a cosigner can be a great option for students who don’t want to go into debt with their parents. The main drawback is that you will have to pay higher interest rates than if you had cosigned with your parents, but if your credit history is strong then this may not matter so much. Remember that research is key when deciding on a lender and make sure you understand all terms before signing any paperwork!