The Proper Way to Get a Student Loan

Regardless of where you live, the fact that college education is extremely expensive is undeniable. Unfortunately, some of the top universities in the country lock their studies behind expensive paywalls. In a sense, the better the education that you will get, the more it will cost.

While most families save up money over the course of 10-15 years in order to pay for their children’s college education, some do not have the resources to do this. When this happens, it is time to start looking at how you can get a student loan in order to pay for your college education.

This having been said, regardless of how much you feel that you need the money, it is important not to jump at the first opportunity that you get. A student loan is still a loan and a large one at that. Here is what you should do before borrowing the money that you need to advance your education:

Do the math and think about the future

You will have to repay the loan, at some point. Look at the line of work that you want to get into after finishing college and make a note of what you would earn on average. Then come up with a plan that will help you repay your student loan once you finish college.

Keep in mind that there are several types of loans to choose from and each of them has its particular advantages and disadvantages.

Getting a federal student loan

The first step towards getting a federal student loan is to submit your FAFSA or the Free Application for Federal Student Aid. This will enable you to learn what type of financial aid you qualify for. This amount is calculated depending on several factors, but it is important to keep in mind that each school that you apply will give you different figures. Furthermore, federal student loans do not have to be repaid, although they are harder to obtain than private ones.

Once you get the responses from schools, deduct the amount of money that they are willing to give you from the total cost of attendance. This will leave you with what you will have to pay out of your own pocket.

You will also have to remember that the FAFSA also serves as a federal student loan application, which means that you may qualify for a loan as well, not just the aid. When reading the financial aid award letter that you will receive, look for subsidized loans. These are regularly given to undergrads that have a financial need. The subsidy itself will cover the interest of the loan, for the time that you are in school. Alternatively, unsubsidized loans start accruing immediately.

Getting a private student loan

If you either do not qualify for a federal loan or if it is too small and would still need money to pay your attendance, consider getting a private student loan. These can be used in conjunction with scholarships, federal student loans, and grants, making them great for paying the rest of the cost of attendance.

These can all be obtained from banks, credit unions, and you may even find online lenders who offer private student loans. The fact that there are more companies and services offering these makes it easy to shop around until you find one that fits your needs and financial possibilities.

How to easily get approved for a private student loan

While federal student aids and loans are relatively easy to get, private ones are treated by creditors just as if you borrowed the money for any other purpose. In other words, you will have to have a job and earn enough money to make your monthly payments while also meeting the rest of your expenses.

Generally speaking, you have to have a low debt-to-income ratio, so that the creditors will know that you will be able to repay the loan. The second most important condition is to have a good credit score.

This having been said, if you do not meet these conditions, you can still qualify for the student loan by having a co-signer with good credit. Keep in mind that most private student loans are given to individuals that have a parent as a co-signer.

Conclusion

Both of these types of student loans can help pay for your education, however, you have to remember that you are essentially borrowing money that will have to be repaid. Get a federal loan, a private one, or both, but think things through and make sure that you have a strategy that will allow you to bay repay them.

Furthermore, when it comes to private student loans, do not be afraid of the system’s rigidity. Shop around and you are bound to find a service or a company that fits your needs and possibilities.

The 4 Most Important Types of Loans for Any Business Owner

The most important factor in deciding how well your company will develop is your ability to access capital. The funds can be used to develop the firm’s infrastructure or to increase its inventory, however, they can also be useful if you need resources in order to keep basic operations going.

When it comes to accessing capital, there are two main options that you have to choose between:

  • Bring in investors – Finding individuals and companies to invest in your company can be extremely difficult if it is still in its infancy and has not started generating a considerable amount of profit. Furthermore, investors usually demand that they have some degree of control over how you run the company;
  • Take out a loan – Borrowing the money is usually the preferred method of accessing capital because it does not require you to sacrifice any amount of control over your company, and banks are only interested in hard facts. Basically, as long as you prove that you will be able to pay the money back, in some shape or form, you will receive the loan with no questions asked;

This having been said, when it comes to borrowing money in order to develop your company, it is important to understand what type of loans are available to you. Each has its own advantages and disadvantages that must be taken into consideration to ensure that it will not have a negative impact on your business.

Take out a long-term loan from a commercial lender

Long-term loans are the most common types of loans in the world. They are distributed by commercial companies and are great for business expansion, acquisition, refinancing, or if you need working capital. This type of loan has to be repaid on a monthly basis and often have much smaller interest rates than short-term loans because they span over a long period of time.

It is usually easier to obtain a long-term loan if your business is well-established and can convince the lender that it will be around for enough time to repay the money. Alternatively, companies that are just starting out may still be able to secure a long-term loan, however, they will have to prove that they have enough resources that can be liquidated in case they are unable to make the monthly payments.

Short-term loans are more feasible for smaller companies

At the opposite end of the spectrum are short-term loans. Unlike other types of loans, these span over a short period of time and do not have to be repaid on a monthly basis. These are usually more useful for small projects that can yield profit in a small amount of time.

Seasonal businesses such as small hotels, farms, or ranches are the regular companies that regularly submit requests for short-term loans. This having been said, it is important to note that with these you can only get up to $100,000.

The main disadvantage of short-term loans is the fact that they often have larger interest rates than long-term loans, and they have to be repaid at once, not over time.

Lines of credit offer more flexibility

When accessing a line of credit, you do not get a large amount of money at once. What you do get is access to a credit account that has a very high limit, allowing you to take out the money as you need it and return it in the same way. Interest is typically paid depending on how much money is “missing” from the account at the end of each month.

Furthermore, lines of credit are offered for a specific period of time, at the end of which you have to return all the money, in bulk. This makes these loans useful only to use for emergencies or as running capital if you are sure that you won’t lose money over time.

Alternative Financing Solutions

Depending on the type of business that you are running, there have a variety of non-bank lending services that you can access. These include cash advances, leasebacks, asset-based loans, p2p loans, and crowdfunding. Most of these lending products can be accessed and tracked online.

While these are all regulated by the government, they are free to define their own eligibility requirements and protocols when it comes to lending money. This means that they will offer a lot more variety in terms of monthly interests and credit limits, making it important to shop around and know how they work before borrowing money.

Conclusion

These are the 4 most important types of loans that you should be aware of as a business owner. They all offer a reliable way to get capital for your company, however, each is suited for a different type of business. Research each of them and decide which one is better for you.