Best Personal Loans for Students • Benzinga

Federal and private student loans are the traditional route to funding your education and living expenses, but a personal loan can provide funding coverage wherever you are still short.

Use Benzinga’s list of the best personal loans for students to find lenders and loan comparison services to help you get the money you need.

Best Personal Loans for College Students

College is expensive. Life is expensive. And when you’re a student, you focus on your studies, not your weekends. That’s why it’s so common for students to need outside financial support, whether it’s a parent, loans, other help, or all of the above.

It’s always best to exhaust your federal loan options before moving on to other resources. Federal loans are generally low fixed rate loans with flexible repayment plans and deferment periods.

You can apply for federal loans through the Free Application for Federal Assistance Form (FAFSA). But you may not be eligible if you’ve reached your federal aid limit or if your program isn’t eligible for federal aid. If so, take a look at personal loans.

Personal loans can also offer low fixed rates, especially if you are a relatively older student with a good credit history. If you don’t have the best credit, services like BadCreditLoans.com can connect you with lenders who will still work with you. These loans are available for amounts up to $10,000 and can be a solid alternative to private student loans, which typically require you or a co-signer to have good credit.

A personal loan from a lender like Boro can also be ideal for college expenses. These are small loans up to $2,000 that can be repaid in less time. These can help you cover costs like books or a laptop without adding to your long-term debt load. If you repay these loans as agreed, this will also establish you as a reputable borrower and positively affect your credit report.

Take a look at the loan comparison among some of our recommended loan services.

Types of personal loans for college students

You can generally think of personal loans as general purpose loans repaid in installments. But there are certain characteristics that distinguish one type of personal loan from another, each with its advantages depending on your financial situation.

Learn about the most common personal loans to determine which one is right for you.

Secured loans

If you are approved for a secured loan, the lender asks you to provide collateral to secure the loan. This can be in the form of an asset like your house or car, or with a bank account. A lender may offer a secured loan if the loan is very large or if something in your credit history is perceived as troublesome but not necessarily a deciding factor for a lender.

Because a secured loan reduces the risk for the lender (your collateral could be seized if you fail to repay), you take on more personal risk. Make sure you can meet the terms of the loan before accepting it to avoid trouble.

Unsecured Loans

If you don’t have an asset to offer as collateral, look for unsecured loans. These are the preferred options for most borrowers, especially if the amount you need to borrow is relatively small. These loans are generally offered to borrowers with good credit which marks them as low risk.

Although you take less personal risk in theory with these loans, your credit integrity is at stake. It is important to stick to the terms of your loan so that your credit rating is not negatively affected. This will ensure that you save money by qualifying for low interest rates and favorable terms when using credit in the future.

Fixed rate vs variable rate loans

A fixed rate loan is generally preferable to a variable rate loan. Your interest rate remains static for the duration of your loan, so you know exactly how much the loan will cost you overall. The only real downside is that fixed rates can be higher than variable rates. Lenders issue high rates to ensure that the loan is profitable for them. Monthly payments can also be higher.

A variable rate loan may be a better option if your situation requires you to hold on to cash now. A variable rate loan can have smaller monthly payments with a lower interest rate. This might appeal to cash-strapped students or people working full-time while attending school.

Spending a little more on the loan can be worth the peace of mind of financial security throughout your education, especially if you believe the investment in your education will earn you a nice return in the form of increased income. .

Personal loan requirements and criteria

Contact a lender to find out their specific needs, but use the following as a general guide for the needs of personal loan borrowers:

  • Your FICO credit score
  • Debt to income ratio
  • Defects or negative remarks on your credit file
  • Credit usage (your credit balance against your credit limit)
  • Open accounts with a positive reputation (payments made on time, etc.)

A loan comparison service like Credible can also reduce the time it takes to research borrower requirements from individual lenders. By prequalifying, you can see the lenders standards you meet and go from there.

Personal loan considerations

If you are a student who cannot get federal aid or are a non-traditional student ineligible for financial aid, a personal loan is a valid consideration. Consider a personal loan as an investment and evaluate the possible financial return.

Don’t take out a loan if it will cost you more than it was worth in the end. And if you’re not sure you’ll earn enough to pay the monthly payments while you’re still in school, this might not be your best bet.

Be 100% sure that you can meet the terms of the loan before agreeing to anything. Even 1 missed payment can negatively impact your credit score and prevent you from using credit in the future.

Always be sure to watch out for sketchy lenders, especially online. It is best to use industry approved lenders like SmarterLoan.com.

A loan comparison service such as Even will connect you with lenders with established records of reputable loans. You will be able to view your individual offers and securely compare their rates and terms without harming your credit report.

Personal loans vs credit cards

Both personal loans and credit cards are useful when you need access to more purchasing power, but one may be more advantageous than the other in certain situations.

If you are looking to finance a large expense, a personal loan may be your best bet as it is a lump sum payment. Since personal loans generally offer low fixed rates, they are often a great way to consolidate debt at a lower interest rate.

Payoff personal loans are a perfect example of this – they will give you enough money to pay your debtors and you will pay 1 simplified monthly payment instead of following multiple payments.

Credit cards are a revolving line of credit, while personal loans have a set repayment term. When you pay off your credit card balance each month, your available credit is increased by that amount.

A credit card is great for covering small day-to-day or recurring expenses, as they tend to have higher variable rates, so you don’t want to find yourself buried under high balances. Credit cards can help your credit by increasing your credit age (the average length of your positive credit relationships) if you keep them open and pay them off regularly.

Alternative financing for college students

If you are a student who needs an alternative to federal or private student loans, consider a personal loan. Determine your financial needs and contact our recommended lenders or loan comparison services to explore your personal loan options today.

About Judith J. George

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