Repaying Personal Loans
Personal loans are becoming more prevalent as a supplement to Federal financial aid. Below are some things to keep in mind if you've taken out a personal loan to help with the costs of your online educational program.
Loan Counseling
Completing your online educational program is quite an accomplishment. As you breathe a sigh of relief make sure your loan repayment information doesn't get lost in the shuffle. Contact your lender to take advantage of free counseling so you understand your repayment options and timeframes. You should also check to make sure you won't be penalized for paying your loan off early. In some cases, lenders offer incentives for electronic and on-time payments.
Repayment Plans
You will probably have a grace period of up to six months following graduation (or when you are no longer enrolled) before you are obligated to start making loan payments. After that time, you may be eligible for a variety of repayment plans. Depending on your lender, you may be able to make graduated payments, which increase over time, or income sensitive payments, which are based on your yearly salary. If you've borrow over $30,000, you may also be eligible for an extended repayment plan, which stretches your repayment period up to 25 years. Contact your lender for more details.
Protecting Your Credit
Failure to make on-time monthly payments can result in default, which will affect your credit for up to 7 years. If you had a cosigner for your loan, they may be pursued for repayment, and the default will also show up on that person's credit report. If you have trouble making your loan payments, contact your lender immediately to discuss deferment or forbearance options, which can temporarily postpone or reduce your monthly payments.
Prioritizing Your Loan Payments
When it comes to paying off your debt, it's crucial that you create a budget and stick to it. Because personal loans generally have variable, market-linked interest rates, the interest is likely to be higher than that of your Federal student loans. For loans with high interest rates, you may want to contact your lender to discuss accelerated payments, so you can repay those loans quicker. If you have more than one personal loan, a debt consolidation program may also be available. By creating a budget and exploring all of your repayment options, you can protect you credit and your financial future.
