Interest rates are part of the important factors to consider before applying for a student loan. As a student who wants to study abroad, there is a list of deciding factors you should carefully consider first. Some of them include:
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Interest is the amount of interest that is paid over a period. It is a proportion of the principal sum borrowed. The total interest rate on an amount is dependent on certain factors like the principal sum, the percentage interest rate from the lender and the amount of time over which the money is borrowed. There are different types of interest rates, they include:
A fixed interest rate means that you will have to pay the same percentage of interest throughout the repayment term of your student loan. When you opt for the fixed interest rate on your student loans, your monthly payment will not change all through the lifetime of your loan, even if you opt for the refinance option.
Also, fixed interest rates will not change regardless of the economic conditions. This means that if there is inflation, it will not affect the amount you get to pay back. With this, you get to know the amount to pay back every month and it helps with planning.
On the other hand, the variable interest rate is the direct opposite of fixed interest rates. This implies that variable interest rates are subject to changes when there is a change in the economic situation in the country. Also, monthly repayments could either increase or reduce depending on the deciding factors.
The annual percentage rate (APR) is the yearly interest accrued by a sum of money charged to borrowers or paid to investors/lenders. The APR is normally expressed in percent. And it represents the actual yearly cost of funds over a period earned on an investment. It includes any fees or any additional costs associated with the transaction. The annual percentage rate (APR) provides consumers with a bottom-line number which they can compare among lenders.
Below is a list of student loan providers and the interest rates they offer.
MPower is a popular loan option choice for students who want loans to further their study abroad. They do not require any cosigner or collateral and are available for international students. Graduate students can borrow with a fixed interest rate of 12.99% (13.98%APR). This is also the maximum limit as it will not be higher than this. There is also a 0.25% discount for students who make loan repayments through automatic withdrawal from their bank accounts.
Citizens Group on the other hand requires a cosigner. Applying for a loan from Citizen’s Group with a cosigner increases the chances of getting approved for a bigger loan with lower rates. They have a fixed interest rate of 6.03%-12.78% and a fixed interest rate of 6.03%-12.78%. In addition, they offer a repayment term of 5,7,10,15 or 20 years.
They are also a private loan company that offers student loans. Quorum offers a fixed interest rate between 4.74%-11.74% APR and variable interest rates between 3.25%-9.99% APR
They are also a private loan company and they require a cosigner too for international students. They also offer a fixed interest rate that starts from 4.48% to 15.51% and a variable rate of 5.94% to 15.83%. However, there is a 0.25% autopay discount. The repayment term is between 5 to 15 years.
Just like MPower, Prodigy Finance does not also require collateral or a cosigner. The minimum APR Prodigy Finance offers is 11.18%. The accurate rates differ according to circumstances, loan terms and the amount. Additionally, payment doesn’t start until 6 months after studies if you study abroad on a Prodigy loan. They have a flexible repayment term of 7 to 20 years but it is advisable to pay early so as not to incur any penalties or extra costs.
Earnest has a fixed interest rate of 4.42% to 15.90% with autopay and a variable interest rate of 5.39% to 16.20% with autopay. The repayment term is also between 5 to 15 years.
They offer loans with a fixed interest rate of 4.50% to 14.83% while the variable interest rates are 5.87% to 16.45%. The minimum amount you can borrow also starts from $1,000. The repayment term is between 5 years to 10 years.
When it comes to picking the right answer there is no ultimate answer as both options have their pros and cons. However, it is advisable to go through each of the loan services provided and pick the one that you believe is most favourable to you.
Your decision should be influenced by solid factors like the terms and conditions applied, the current market rate, your monthly income, your monthly expenses and so on. Moreover, it is usually advised that international students should not opt for the variable options, especially due to the current economic situation which is very much unstable and unpredictable.
While the interest on variable rates might look more attractive because it is lower, it might not remain so in the long run. It is also important to note that some loan service providers offer the autopay option which means that the amount is deducted from the source. If you opt-in for the variable interest loans and the price increases, it means that it will affect your budget.
Additionally, there are points to consider which will enhance the repayment of your loans, they include:
If you are currently making plans on how to further your studies abroad, but are uncertain about the right loan plan to opt for, you should reach out to an experienced educational consultant who can help you with this. At EdXtra, we are here to put you through and help you through the complexities you are likely to encounter as you proceed on this journey. You can reach out to us today to get started.
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This post was last modified on February 15, 2024 11:45 am