Loans can be a complicated subject to understand. Loans are more than just money borrowed and repaid. There is plenty of responsibility and fine print to read to understand exactly what you are signing up for when applying for a loan. What are the pros and cons of borrowing money for education? What kind of loan best suits you? Can you afford to pay back these loans? Where should you apply for loans? These are all important questions to ask yourself before applying for a loan.
There are many ways to research information about loans, beginning with the Internet. There are many websites with a large amount of information on all types of loans. If you decide to use the Internet, be sure to verify the websites you are using and confirm their legitimacy. Another way to find out more about applying for loans is going to a counselor at school or a financial advisor at a bank. Wherever you are trying to apply for a loan, make sure you consult with someone. Ask them as many questions that you feel you need to before signing anything. Make sure to take home pamphlets of information and review all of your options.
When you take out a loan, the amount you borrow will not be the only money you have to pay back. Loans come with interest. Over a period of time, say the four years or more it takes to graduate from college, the money you borrow will be collecting interest over all those years. The interest rate you agreed to at signing will determine the final amount you have to repay. Consulting with someone who has taken out loans before, whether friends or family, can be helpful in finding the lowest interest rate possible. Interest rates can really end up hurting you if you are not wise in finding the lowest one you can. Low interest rates will help in limiting the extra money you have to pay back when your payments are due.
Finding the best loan for you will take time and research but it will pay off in the end. According to American student Assistance, the basic types of loans are:
1. Stafford Loans. These are the most common federal student loans.
2. Perkins Loans. These are low-interest federal loans that schools offer students who are in serious financial need.
3. PLUS Loans. These can cover expenses not met by other federal financial aid.
4. Consolidation Loans. These combine one or more pre-existing loans into one new loan.
5. Institutional loans. These are non-federal aid that schools loans their students.
6. Private and State Loans. These are not federal aid which helps students who do not receive any or enough federal aid.
Some of these loans may or may not apply to you, but researching will help you find the answers you need before you sign. Once you agree to borrow that money, you also agree to pay it in full over time and on time as well.