Even if you have bad credit,a private student loan is still attainable. Sallie Mae's smart option student loan offers loans at a maximum of 100% of the school approved cost of education.However the lowest amount that can be borrowed is $1000. To qualify for this loan the applicant should be a U.S. citizen enrolled in a programme from a degree granting institution. If the applicant is not a U.S. citizen,however, you will need a cosigner who is a U.S. citizen/permanent resident, with a good credit score.A Sallie Mae loan has the benefit of allowing the student to have a Upromise account.With this account,rewards are earned when the student partakes in certain activities such as shopping at certain online stores. These rewards can then be used to offset payments on their private student loan.
Interest Rate
The interest rate advertised is Rates from LIBOR + 2.00% (2.25% APR) to LIBOR + 9.88% (9.37% APR)( August 2011).Students with bad credit usually obtain loans with higher interest rate than those with good credit. If you have bad credit, to improve your chances of getting a loan with a lower interest rate,its advisable to get a cosigner.It usually increases you chances of getting loan approval and a lower interest rate. A reduction in the interest rate can be obtained from the student's choice to allow the bank to make deductions from their bank account.However,if it occurs that deductions cannot be made from the student's bank account due to insufficient funds,the benefit will be suspended.The interest rate of the student loan is applicable to students enrolled in degree granting institutions. If the program isn't one that grants degrees , the interest rate may be higher. Its important to be aware that the interest rate of the student loan may change even after documents have been signed.
Repayment Options
There are three repayment options available for this loan . You can pay the interest while in school, or another option, make payments of a set amount while still in school of finally, make no payments until 6 months after graduation.Each has its associated advantages and disadvantages.
Interest only option-requires that the student makes payments while in school.This will lower the overall interest rate paid on the loan.When the student is finished with school,they will have less to pay than if all the payments for the student loan was deferred until after graduation.
Also since you will pay less overall, the time given to repay the loan after graduation is also less than if all payments were deferred until after graduation.
Fixed repayment-With this loan repayment option, students pay a standard amount monthly,$25 USD,while still attending school. Students will also save on overall interest rates with this plan.Compared to the plan where all payment is deferred,the student will make savings on interest rate and time spent repaying the loan after graduation. However, students save $200(on average) than with the interest only option.
Deferred payments-All payments are deferred until after graduation.Payments become due to be paid 6 months after graduation. The benefit is not having to make payments while in school. However, the overall interest rate that has to be repaid over the lifetime of the loan is greater than the other loan options. Also of all the loan options, you will have a longer time to pay back the loan.
