Student’s life is never easy with all financial responsibilities everyone has. Unless you come from a family with a good financial background, you should consider getting some financial help.
This can be done by requesting a student loan which you will pay off either while still studying or once you start working after graduation.
There are many options that banks actually offer you and some of them mention so-called loan forgiveness, but you should ALWAYS reconsider twice all of your decisions and further steps, read carefully the agreement if you are making one and, of course, stick to your plan of paying off the loan or otherwise you may find yourself in bad financial situation.
If you are thinking of asking for a loan, this is a good time to evaluate your financial situation.
Asking for a bank loan involves much more than filling out an application and praying. Among other things, you need to consider the status of your personal and business accounts. You must think about how you are going to repay the loan and how much money you really need. These are some of the key questions you must ask yourself before applying
Know what your financial situation is and think how it will look like in future
To determine if you are ready to take on new debts, compare your credit situation with the criteria that lenders use when reviewing your application.
When applying for a new credit account, lenders evaluate your application based on key factors commonly known as the “5 C of the credit”.
A good credit score shows that you have managed your debts responsibly and that you have made the payments on a timely and regular basis each month.
Your credit score is important because it can affect your interest rate, deadlines and credit limit. The higher your credit score, the higher the amount you could borrow and the lower the interest rate you can receive.
For example, with a good or excellent credit score, you could qualify for a lower interest rate and monthly payments for a $ 15,000 loan.
Is it possible that I qualify for the loan?
If you apply for a loan that you will not receive, you will only damage your credit (as happens if you reject the credit card). “If they reject you, the next bank will consider you a risk”, says David Gass, business consultant and CEO of Anderson Business Advisors. Gass, suggests asking the credit institutions about the requirements necessary to apply. Many will let you know the minimum credit points that are required, the cash flow you need to demonstrate and other factors.
How much do I really need?
Before approaching the bank, make sure you have a good idea of the cash you really need. The best way to determine this is to create a monthly cash flow projection.
Adam Hoeksema, co-founder of Muncie, Ind. ProjectionHub, a web application to help entrepreneurs to make financial projections says: “If you go to the bank to request $ 50,000, and at the moment they ask you to create a cash flow projection you find that you really need $ 100,000, you will see very wrong”. You should know how much you need and how you will use the funds before approaching the bank.
Do I have all the necessary documentation to apply for the loan?
Some studies have shown that up to four out of five loans never close not because the business does not qualify, but because of the lack of documents. When applying for a business loan, you will need a large amount of documentation.
Set the term of your loan depending on its purpose. The higher the cost, the longer the term must be so that your fees are affordable, but only what is necessary! Otherwise, you will be paying interest for a longer time.
Eligibility
Almost all long-term careers are covered by student loans, but it never hurts to check if the financial institutions you plan to attend have criteria of choice. For example, vocational and language courses are not usually guaranteed by this type of financial aid.
Punctuality in payments
It is extremely important to cancel the installments on time, in order not to suffer penalties or legal problems. When you apply for the loan, try to calculate how long you intend to pay it, considering the duration of the course and the salary you estimate to earn when you get a job. Make a payment scheme and comply with it literally, since it will depend on you to keep a neat banking record that will serve you in the future when making any financial operation; including new loans to do an MBA, a postgraduate or a PhD.
Guarantor
Usually, when the amount of money requested is very large, banks require that a guarantor will be responsible for payment in case the student fails to comply with the agreement; and this responsibility is usually assumed by one of the parents. That reason is more than enough for you to cancel on time and strive to finish the race successfully, because you could affect the life and savings of your loved ones.
Do not stop reading each clause
As we mentioned at the beginning of the article, take your time to carefully review all the paragraphs (especially those of smaller letters) of the bank loan agreement. Find out about prepaid possibilities, extension of the payment scheme in case you do not get employment when you graduate, structure of charges and interest, etc. Speak with your financial adviser to clarify doubts.
Apply for scholarships
Even if you have received a bank loan, it does not hurt to apply for scholarships and student aid; especially if you are a good student and you are sure to obtain them. The extra money is never left over, and you can use it to pay off the debt you have acquired with the bank.