The different factors that affect the shopping for a loan are the financial charges, maturity period of the loan, total cost of transaction, collateral that the borrower have to pledge on the loan, terms and conditions in relation to time and date of interest payments, refunds on prepayments and penalties in case of nonpayment or delayed payment of interest.
The total cost of transaction can be arrived by summing up the total cost spent on purchase and total amount of monthly loan payments.
It is true that the cost of college is expensive and in fact increasing every year. Because of this, many students will need to borrow money in order to attain a higher education. Therefore, a student is wise to explore the different ways to reduce the cost of student loans.
There are a number of different ways to reduce the cost of student loans :
• First, borrow as little money as possible. Students are advised to use their expected future salary to determine how much they will be able to afford as a monthly payment. Then using student loan repayment calculators available free on the internet, the monthly payment amount can then be entered into the along with the expected interest rate on the loan to calculate the maximum amount that should be borrowed.
• Borrowers should also shop around different lenders for the lowest interest rate available.
• Students should research and apply for all available grants, scholarships, and federal student aid.
• After graduation, borrowers should explore payment assistance programs such as the Public Service Loan Forgiveness, Loan Repayment Assistance, and additional options to consolidate federal loans and to participate in an income-based repayment plan.
The federal government and some state governments have available several different types of subsidized educational loan programs. The different types of federally sponsored student loan programs are:
• Stafford loans (Direct and Federal Family Education Loans - FFEL)• Perkins loans
• Parent Loans for Undergraduate Students (PLUS)Stafford and Perkin loans are the loans which are directly issued and obtained by the student themselves whereas PLUS loans are the supplemental loans who do not qualify for Stafford and Perkin loans. It can be borrowed by the student's parents and guardians.
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