Student loans – The best of 2019!
What can be financed with student loans
In general, when we talk about student loans, the first thing we think about is the credits that some banks offer to finance the enrollment of the university. But the truth is that with these products you can pay many other expenses related to the studies, always depending on the conditions of each offer. In the following list we see what we can finance with a loan of this type:
The cost of a degree. Here we can distinguish between two types of loans for university studies: those that allow only to finance tuition and those that cover all expenses related to studies (fees, transportation, stay, material, etc.).
The price of post-graduate studies, such as a master’s degree, a postgraduate diploma or a doctorate. As in the previous case, depending on the credit we can only finance tuition or all expenses associated with the course.
Studies abroad, such as a language course, a master’s degree, etc.
Other specialized courses, such as a medium or higher level training course, computer classes…
Do you want to know what are all the financing options available to you? In the following free guide you will find all the information about the different types of credits for students:
Do you want to continue with your training and need the capital to do it?
If you want to do a degree, a master’s degree or a graduate degree and you do not have sufficient liquidity to be able to carry it out, you can resort to the different alternatives offered by the market to raise capital.
In our free guide we show you the different options at your fingertips:
- Public and private scholarships
- Financing for the different amounts of the training
Discover all the possibilities to obtain the money that allows you to continue developing so that the lack of savings does not suppose a brake in your professional life.
View and download guide
Are student loans cheaper?
Student loans tend to have a lower interest rate than personal loans for any purpose, although it must be said that everything will depend on the conditions offered by each financial institution. As a general rule, the average APR of these products ranges between 4% and 6%, while the average of consumer loans exceeds 8%. Also, they usually present other advantages, such as somewhat longer terms (up to 10 years in some cases) or, in exceptional cases, interest of 0%.
Of course, we must always be careful with the commissions that may include our loan studies, as there are many banks that charge them. The opening, for example, is usually between 1% and 2%, while the early repayment can not exceed 1% (or 0.5% if capital is advanced in the last year of the term).
As for the conditions of attachment, the credits to study may include some insurance, such as a life insurance or a payment protection. In certain occasions, in addition, they will ask us or our guarantors to have their income domiciled in the bank.
As we can see, there are many variables that must be taken into account, so we should always compare several loans to make sure we get the best offer.
If you need money for your post-graduate studies, the loan conditions may be different (higher amount, longer term…). You will find more information on our product page to finance a master’s degree.
There are credits to study that can be paid later
If we request a loan for studies, it is likely that the entity offers a period of total or partial lack, that is, not pay anything or pay only the interest part during the first years of the contract life (between two and five, for the general). This option may be convenient in certain cases, because we will not have to worry about the fees while we are studying and we can start paying them when we are already working.
It must be said, however, that a credit with deficiency is more expensive than one that is returned conventionally. For example, imagine that we took out a loan of 7,500 euros to finance a full degree, with an interest of 5% TIN and a term of 8 years. This is what we would pay if amortized in the conventional manner or with a total or partial lack of four years:
|Fee in the first 4 years||Fee in the following years||Final cost of credit|
|Without lack||€ 94.95 / month||€ 94.95 / month||€ 9,115.13|
|With partial lack||€ 31.25 / month||€ 172.72 / month||€ 9,790.55|
|With total lack||€ 0 / month||€ 210.87 / month||€ 10,121.88|
As shown in the table, the lack causes that, in the long run, more money is paid in interest. Therefore, it is only advisable to use if we really do not see ourselves able to face the monthly payments while we study and we are relatively sure of being able to pay them as soon as we enter the labor market.
Can I borrow a loan if I do not work?
It depends. There are entities that, if the student does not work, allow you to add guarantors or co-owners (parents, for example) to guarantee the repayment of the loan in case it can not. Others, on the other hand, require that there be only one owner, in which case it will be necessary to have a payroll to show that we can pay the monthly payments throughout the repayment period.
Warning: endorsing student loans is a significant risk, because if the owner does not pay, the person who supports the operation must do so.
Non-payment of credits for students: what can happen?
Not paying the fees of a loan studies has consequences, as it could not be otherwise. In the first place, the financial institution will charge us commissions and interest for delay that will increase still more the debt that we have. In addition, it is more than likely that you enter our data in a delinquency file, in which case we can not get bank financing until we pay what we owe.
If the default persists, the personal guarantee will be executed, that is, the seizure of our present and future assets will be requested: our accounts, our income, etc. Therefore, if at any time we believe that we can not pay the fees, it is essential that we contact the entity to find possible solutions.
Finance other purposes with loans
The credits to study are one of the cheapest credits of the moment, although according to the purpose to which we go we can also find another type of specific credits for each project with their own offers and commissions.
Financing of reforms: it is possible to find specialized offers to finance a renovation of our home. Depending on the type of reform we carry out, there will be different types of credits that will be better adapted to our project.
Financing trips: both for vacations and for a wedding trip, for example, we can obtain financing for this purpose, although generally (being a whim) they are usually more expensive than other loans with more primary needs.
Financing celebrations: weddings, baptisms, communions… there are a lot of loans to finance this type of party.
Financing ecological projects: whether they are a reform, an electric car or buy ecological home appliances, there are ways of financing us with an interest that is usually the lowest of all the consumer loans that exist.