Tuition, accommodation, daily life, IT equipment … Being a student is expensive! To finance your studies without having to work like a madman, there is a solution: the student loan. How to get it from banks? Our advices.
What is a student loan?
The student loan is a consumer credit that is granted to finance your studies. His particuliarity? It is a credit with deferred reimbursement: the student begins to reimburse at the end of his studies. Another advantage of student credit: a reduced interest rate compared to a conventional consumer credit.
The amount of the loan can vary according to the banks, according to your income and that of your surety. The amount of your loan can vary from 1,000 to 45,000 $ for a repayment period spanning 2 to 10 years on average. While knowing that 2 years represent the legal minimum duration for this type of loan.
What conditions to obtain a student loan?
While many banking institutions currently offer student loans, the conditions for obtaining them are generally the same:
- to be of age ;
- be enrolled in an institution preparing for a higher education diploma;
- be under the age of 28 – sometimes 30 in some banks – on the date the loan is made.
To obtain this personal loan, it is often necessary to have a surety, that of the parents for example. If it is not the case, it is possible in certain banks to make guarantee its credit by the State for a maximum of 15 000 $. In the event of default by the borrower, the State will therefore be responsible for paying the monthly payments of the loan, through the intermediary of the public investment bank.
How to find the best student loan offer?
From one financial institution to another, the conditions of a student loan can vary considerably. In particular in terms of rate, PRA (prepayment penalties), maximum duration, maximum amount and handling fees. To find the best student credit, do not hesitate to compare the offers:
- First point to check: the APR or annual effective annual rate. Expressed as a percentage, it allows you to assess the total cost of a personal loan (the higher the better). The APR is freely set by the bank. For a student loan, it generally hovers around 1%.
- Another point to study, the repayment terms. Duration of repayment, adjustable monthly payments, penalties (PRA) applied or not in the event of early repayment, you must ensure that the offer is the most compatible with its repayment capacities.
One last tip: some schools or universities have agreements with banks. They allow you to benefit from a student loan at preferential rate. Students can also take advantage of lower rates at a financial institution whose parents are clients. Ask your bank, you never know!
Tip: don’t delay!
You should also be aware that, conversely, a student loan file could potentially be refused by a bank if the applicant is outside of it. It all depends on his goodwill. The bank can also limit the annual quota of government guaranteed student loans. It is therefore best to approach banks and financial institutions as soon as possible.
Is the full amount of a student loan paid right away?
In fact, students have a choice. By opting for a progressive payment of his student loan (a certain annual amount), the borrower reduces the cost of interest, but also the cost of insurance.
As with any consumer loan, borrower insurance is optional here. But in reality, the granting of a student loan is very often conditioned by the purchase of insurance. If the financial institution granting the loan can offer an insurance offer, students remain free to insure their loan elsewhere. So don’t hesitate to compare insurance!