Finance 101: Overcome Student Loan Debt with Personal Loans
Most Americans have to take student loans to fund their education, especially if they’re not from a well-off family. This financing method has been around for generations, allowing millions of Americans to achieve quality education without facing enrollment fees every semester. Unfortunately, these loans end up limiting these students’ financial opportunities in the future.
Statista records that total US debt in the 2018-2019 school year alone reached 106.2 billion dollars, which is just one school year’s worth of loan amounts. Student loan borrowers typically range between 6-8 thousand dollars for one academic year, depending on their school. With a standard education requiring 52 months to graduate, this value can compound with interest over the years.
The Impact of Student Loans on Financial Standing
Students rarely have any time to take a gap year or do some soul-searching after graduating. This is because their student loans will start taking into effect after they graduate, leave school following a six-to-nine-month grace period. For this reason, millions of Americans are thrust into the workforce to get to work on settling their repayment plan immediately.
A student loan debt adds to the many complications a recent graduate has to deal with. This includes rent, utilities, and basic allowance for commuting and groceries. These expenses don’t even consider other forms of leisure costs, like travel, furniture, and appliance purchases. However, paying off your student loan doesn’t mean you can’t apply for other loans to finance your living needs.
The Benefit of Getting Personal Loans
Paying off your student loan can have a drastic impact on your debt-to-income (DTI) ratio, which limits your borrowing opportunities. Since a DTI is one of the vital factors affecting your credit score, you’ll have difficulty getting favorable loan rates from borrowers. Thankfully, not all loans are restrictive to your credit score’s value.
A personal loan is an unsecured loan that lenders offer to borrowers under the promise of a lender’s ability to pay. This means they won’t take collateral at stake if you miss your repayment schedule. Personal loans will look at your credit history and creditworthiness to gauge your validity as a borrower. For this reason, making payments on time will be a great look at your portfolio.
Since fresh-grads are a unique niche of borrowers, lenders will check your employment prospects to confirm your validity as a borrower. If you don’t have an employment history yet, a lender may assess your career prospects to see how much you can borrow at a certain rate. For this reason, creditors typically prefer borrowers with degrees or professional experience through paid internships. This lets borrowers feel more assured of their repayments if they have a better-paying job.
The Secret to Getting Approval for a Personal Loan
Student loans may push you back a bit before taking personal loans. However, you can still expand your financing options by using your repayment history as a reference. To get approved for a personal loan, it’s important to build credit by gradually paying off your student debt. This leads to a more appealing DTI and credit history.
Conclusion
One glaring drawback with personal loans is the potentially high-interest rate you’ll need to pay off in the long term. This is why it’s advisable only to seek personal loan offers from good loan companies. Otherwise, you could be putting your financial situation in a riskier position than necessary. Thankfully, you can choose from numerous loan providers in the market with advantageous terms and repayment terms.
If you’re looking for ,installment loans in Auburn, AL, you’re in the right place. Here at Opelika Finance, we offer a variety of personal loan sizes to fit your needs. Thanks to our fast service, our loans typically take 5-10 minutes to apply for! Call us at 334-319-9766 today!