Ben Todd | Jun 3, 2017 | 2
How to Get a Private Student Loan Without a Co-Signer
As you may imagine, getting a student loan without a co-signer is very difficult because the lender has to take a bigger risk, and many see no reason to take a bigger risk. Lenders on mass are not chasing student-loan business. They know that students can get a federal loan very easily, and they know that some students who opt for private loans are doing so because they have to and not because they want to. Nevertheless, since this is eCheck (your free library of advice you would normally have to pay thousands for), we offer you a series of methods for getting a private student loan without a co-signer.
You Need a Consistent Income With a Good Credit Rating
Many private bank lenders are looking for students who earn at least $25,000 annually according to LendEdu. That is why older students tend to take student loan without a co-signer because younger students do not have that sort of income, and younger students are usually able to get federal loans so easily that they do not need private student loans. If you are looking for a student loan without a co-signer and you need a place to start, then try the list of lenders on our article called, How to Apply for Private Student Loans.
You Need Some Assets to Secure Your Loan
You are more likely to get a secured loan than you are a private student loan. Even if you do not tell your lender that you intend to use the loan as a student loan, you are still no more likely to get a personal loan than you are a student loan. If you can secure the loan against an asset you own, or if you can offer some sort of collateral, then you stand a better chance of getting your student loan without a co-signer.
You Many Need to Be Older to Have a Good Credit Rating and Income
Let’s face it, if you do not have any collateral and you have no assets with which you may secure your loan, it is probably because you are a cash-strapped teenage student with no assets, no credit rating, no full-time job, and no real collateral besides maybe a car. The hard fact is that if you want a private student loan, and you want a private student loan without a co-signer, then you may have to get a full-time job, work on your credit rating, buy a few assets that you can secure your loan against, and then start your college education.
Having a Large Deposit May Help You Get a Student Loan Without a Co-signer
This point comes with a very big MAYBE attached. If you look at it from a lender’s point of view, if you can lower the lenders risk, then they SHOULD be more inclined to give you credit. However, this is not always the case, and it is less common with things such as a private student loan without a co-signer. If you were applying for a mortgage, then a hefty deposit would go a long way to convincing a lender to decide in your favor, but the same rules do not apply to student loans.
On the one hand, if you have a large down payment, then you are investing more, the lender is investing less, and they have a clear indication from you that the project you are undertaking is important to you. Plus, the project of becoming more educated increases your chances of getting a higher paying job one day, which increases the likelihood of you paying off your debt.
On the other hand, a deposit from you goes to the college and not into the pockets of the lender. It is true that you are borrowing less from the lender, but they are still risking money on you. There is a chance you will fail your qualification, spend the rest of your life in debt, and go insolvent or bankrupt at some point. There is still a lot of risk for lenders to the point where a large deposit may not sway some of them.
Pay for Your Degree in Sections and Get Smaller Loans
Both online colleges and offline colleges allow you to pay for your education in bits. You may pay for a certain number of credits and then pay for another number of credits. It allows people the study, take a break, and study again at a later date. It is far easier to get smaller loans and pay them off before apply for smaller loans.
Let’s say your degree is in eight parts, and each part costs $8000. Your first unsecured loan without a cosigner may be very tough to get and the interest rates may be through the roof. However, once you have paid it off, it will be a little easier to get the same loan again with the same company. By the fourth and fifth section of your qualification, you will be able to get unsecured loans from a number of different lenders. By the time you need your eighth and final installment, your credit history will be so fantastic that lenders will be falling over themselves to offer you a loan, be it a student loan, car loan, or any other type of loan.
Please Take Note Of The Logic Here
As a wealth accumulation expert, I would be willing to suggest you pay for your college education the way that is detailed above if you do not opt for a federal loan (which should be your first choice). I would also highly suggest you find a very cheap degree rather than opting for a big-named college because 90% of employers don’t care where you got your education so long as you can prove you know your stuff and that you will add value to their business.
Paying for your education in sections will take a long time, and it will involve working while trying to study. It is difficult, but there are some very powerful benefits. The downside is that it takes longer, that you have to work while you study, and that you will enter the job market later than your peers. The upside is that you start your new career debt free, and you start it with a very good credit rating. Not only can you start wealth building far sooner than your peers, you may also start building your credit rating to get a very favorable mortgage rate in a few years.
- It takes years to pay off student loans, but you will have yours paid off.
- Sometimes, it takes years to build a good credit rating, but yours will already be good.
- It takes years to get a credit rating for a good mortgage rate, and you are already years ahead of your peers.
- Other people your age will still be paying off their student loans, where you will be wealth building with the money you would otherwise be putting towards your student debts.
- While others your age are struggling to pay their student loans and save for a mortgage deposit, you may save with ease because you are out of debt already.
Pay for Your Degree in Sections Advice
Paying for your education with a cheap and easy-to-get federal loan is the most preferable choice. Getting a private student loan with a co-signer is another preferable choice. If you are going the private student loan without a co-signer route, then consider breaking up your qualification into sections and doing it bit by bit as the example demonstrated.
Pick a degree that will get you a good job or the job you want. Degrees in TV studies, gender equality, and things of that nature may seem fun and new, but there are few jobs out there for a person with those types of degrees. Look at the job market and ask yourself what type of job you would enjoy, and look at how many of those jobs are available.
Doing your degree or qualification in parts may not be suitable for some qualifications. For example, if you are taking hard science qualifications or medical qualifications, then doing your qualification and working at the same time may be impossible.
Use a Guarantor Instead of a Cosigner
A co-signer is a person that takes responsibility for the loan along with you. When you sign for a loan, you are promising to repay the money you borrowed with interest. If you do not repay the loan, then your credit rating is affected, it leaves negative marks in your credit history, and the creditor may seek judgments against you that force you to pay or face prison and/or bailiffs taking your stuff. A co-signer takes on the same responsibility where the creditors will come after both of you with equal gusto.
A guarantor takes on a similar risk to a co-signer. The specifics and the way it works will vary depending on the type of contract that is presented to the guarantor and student. A guarantor may have to prove that he or she has assets and/or a good income. A guarantor’s credit rating is not at risk if payments are missed, but if payments are missed, the creditor may come after the guarantor for payments and associated fees. Only if the guarantor refuses will it start affecting his or her credit rating.
If the student does a runner with a co-signer, then both will have judgments placed on them, and both will experience credit history damage for defaults and missed payments. A guarantor’s credit rating/history is not affected by missed payments, but the student may get away clean with just a bit of credit rating damage while the guarantor is left to pay off the rest of the debt.
In other words, it is a better for the student if he or she finds a guarantor rather than a co-signer. However, for obvious reasons, it is harder to find a guarantor because few people are willing to clean up your debt mess when you decide to run away from your responsibilities.
Get a Terrible Loan and Then Refinance It Later
The idea of taking a truly awful student loan without a co-signer may make your skin crawl, especially when you look at the terrible interest rate they are charging. However, after your education is completed and you are earning a good wage, one assumes you will manage your finances well and build your credit rating up. If you do, you may refinance your student loan to something that saves you a lot find out money in the long-run. Here are a few companies that openly advertise the fact they allow students to refinance their student loans.
Their fixed APR rates range from 3.74% to 7.99% and their variable APR rates range from 2.21% to 8.00%. With this student loan refinancing company, you will need a credit rating of at least 781. Undergrads may refinance between $10,000 and $150,000. Graduate students may refinance up to $170,000.
Their fixed APR rates range from 4.65% to 8.84% and their variable APR rates range from 3.34% to 9.17%. With this student loan refinancing company, you will need a credit rating of at least 700+. Undergrads may refinance with amounts starting at $10,000 and going up to $150,000. Graduate students may refinance with amounts starting at $10,000 and up to $250,000.
Their fixed APR rates range from 4.15% to 6.75% and their variable APR rates range from 2.63% to 5.88%. With this student loan refinancing company, you will need a credit rating of at least 750+. Students may refinance for amounts between $5,000 up to $250,000.
Their fixed APR rates range from 3.49% to 7.64%, and with this student loan refinancing company, you will need a credit rating of at least 778. They will allow you to refinance in amounts between $7,500 up to $140,000.
Their fixed APR rates range from 3.50% to 7.74% and their variable APR rates range from 2.24% to 6.04%. They also have hybrid deals with APR rates that range from 3.82% to 6.26%. With this student loan refinancing company, you will need a credit rating of at least 750+. You have to refinance starting at $10,000 and there is no maximum amount.
Their fixed APR rates range from 4.95% to 6.85% and their variable APR rates range from 3.41% to 6.31%. With this student loan refinancing company, you will need a credit rating of at least 746. The refinancing group will allow you to refinance amounts of $10,000 and upwards.
The Potential Problem With A Bad-Loan Switcharoo
If you finish your college education and mess up your credit history in a way that damages your credit rating, then refinancing and consolidation companies will offer you terrible interest rates. In other words, you will be stuck with your terrible student loan and its terrible interest rate.
There are also some student loans companies that will force you to repay the full amount, even if you pay your loan back early with a lump sum. For example, their terms and conditions may not allow you to pay the loan back early, which may make refinancing a big problem. If you are going to get a terrible student loan with a nasty interest rate and ugly terms, then make sure it is a loan you are able to refinance in the future. Make sure the loan company isn’t locking you in somehow.