Thus, in order to know whether you’ll be able to obtain a student loan with no security you need to know the different loan types offered and whether you meet the requirements needed to get approved for federal or private unsecured student loans. Also, if you can provide collateral to secure a student loan, you should rethink your decision of not doing so.
Federal Student Loans And Private Unsecured Student Loans
Federal Student Loans are student loans subsidized by the government, the interest rate they charge is significantly low since they are meant for promoting education and handled by government agencies with that purpose. The interest rate charged by these loans is even lower than the rate charged for home loans or home equity loans. However, the rest of the loan terms are not so advantageous. Though the repayment program can be long, usually, the loan amount you can obtain through these loans is not good enough to cover all college expenses.
Besides, these loans are awarded according to the needs of the applicant because they are meant to promote education for underprivileged applicants and thus, not everybody can apply for these loans and get approved successfully. Only those that meet these particular requirements of federal student loans should contact the government agencies to obtain further information on these loan programs .
Private unsecured student loans don’t require collateral either. Thus, non homeowners can easily apply for these loans. However, the interest rate charged for these loans is usually high. Thus, only those that can afford the monthly payments on unsecured student loans will be able to get approved for them.
Unsecured student loans subsidized by private non profit organizations charge a lower interest rate but suffer the same restrictions as government loans. These loans are either awarded according to the needs of the applicant which excludes those with repayment capacity or according to merit. This last group of loans is meant to promote those who have had an outstanding performance on previous studies and thus, the institution wants to support their career.
Reconsidering Secured Loans
As you can see, getting approved for unsecured student loans is not that easy. So, if you are a homeowner or you have relatives or friends willing to offer an asset as guarantee of the loan, you should reconsider applying for a secured loan as you’ll get approved more easily and you’ll also get better terms on your loan including lower interest rates, higher loan amounts, longer repayment programs and thus, lower monthly payments that will be a lot easier to afford. As regards collateral, as long as you make sure you can repay the loan installments there is no reason to fear repossession of the property.
Jess Peterson writes finance articles for Yourloanservices.com where she shares her knowledge about how to get money for a starting-up business, consolidating any kind of debt, repairing a home even with a bad credit history and other financial subjects.