How to Compare the Banks that Give Student Loans

Banks that give student loans are somewhat different when it comes to loan terms, payments, interest rates and other loan conditions. Choosing a bank that you want to become your loan holder is vital. Comparing each bank's student loan is the first thing you need to do. These are the major factors that you should consider when selecting a bank:

  1. Interest rates - Always consider banks that offer lower annual percentage rates. The interest rates between banks that give student loans should be examined carefully because in the long run, this will affect your ability to repay the loan. The bigger the loan amount, the faster the interest rate accrues. Also, there are banks which based the loan's rates on your creditworthiness. If your credit history is not that good, look for banks that are not too strict on their credit-based policy and see if their APRs are better.
  2. Loan fees and penalties - Review the costs of fees each bank applies on their student loans. Some banks charge fees for application, origination, reservation, administration, disbursement and repayment. On the other hand, there are banks which do not collect fees on penalties like prepayment if you want to pay your loan in advance.
  3. Loan amount - Pay attention to the limitation of loan amount that you can borrow if you are applying for graduate, medical, law, and business student loans. Most banks have set specific amount of money that you can borrow for these types of loan. On other type of student loans, most lenders will allow you to borrow the total costs incurred in school minus the financial assistance borrowed from other student loan providers.
  4. Loan terms and payments - Take note of how long you can repay the whole amount of loan and the accumulated interest rates. Some banks that give student loans allow you to pay the loan up to 25 years. Furthermore, consider each bank's repayment alternatives. There are banks that offer the "pay interest only" option while you are still in school, after the grace period given, or a specified period of months. At the same time, there are lenders that give flexible repayment financing options when you are in financial trouble.
  5. Eligibility qualifications - Evaluate each bank's eligibility requirements and criteria. Aside from the most basic requirements like citizenship, age, enrollment and academic standing, some banks will oblige you to have a cosigner with good credit standing. Others would require you to have an acceptable credit history to avail the student loan.
  6. Rewards promotions - Compare the benefit options offered by each bank. Many banks that give student loans present reward promotions to entice borrowers. For example, Wells Fargo offers a 0.50% interest rate reduction if you graduate the course study and 0.25% when you allow them to automatically withdraw payment from your savings or checking account. Other large banks also offer similar rewards with their AutoPay option or ThankYou Network programs.

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