Are you not sure what a private loan is? Well, here is a private loan guide to help you be successful when you decide to take out your loan. To break it down for you, a private loan is a sum of money that you seek out to apply for. Some consumers take out private loans for college, auto loans, bad credit loans and even debt consolidation loans. Here is a breakdown of those loans and the differences in each.
- Private Student Loan
Private student loans are special because they help parents and students bridge the gap in their education. Since education is so expensive these days, it’s important for students to have access to these private student loans. The catch behind a private student loan is that the interest rates can vary tremendously. You must be extremely careful when you decide to take out a private student loan to cover your expenses for a college education. You can obtain a private student loan through places like Chase, Sallie Mae, and Wells Fargo.
- Private Auto Loans
Pretty much any auto loan is considered a private auto loan. A private auto loan is fairly easy to get, but you are not guaranteed a great interest rate unless you have good credit. The best car loan rates really depend on the auto place you are buying from and the options they give you for a car loan. Big places like Bank of America, Wells Fargo, and Chase offer private auto loans. If you do not want to work with bigger banks, then check out local banks and credit unions in your area.
- Debt Consolidation Loans
Many people find themselves in a debt predicament every once in a while. To solve that debt issue, a person might take out a private debt consolidation loan. Debt consolidations are a little trickier to obtain because you genuinely must have some sort of collateral. Debt consolidation loans are typically available through banks and credit unions. To apply, you will need to have proof of a steady job and a good credit score. When you are taking out a debt consolidation loan, debt to income ratios is also incredibly important.
- Other Information for Private Loans
Private loans are something a person should be really careful about. There are some negatives to taking out a loan such as this:
* Higher interest rates
* Not always forgivable during bankruptcy
* Interest rates can fluctuate
* Cosigner might be needed
If there is one thing you take away about private student loans is that they are not as easy to get as they once were. The year of 2008 really changed the way private loans are dispersed. In fact, 2008 changed the way banks lend out money in general.
If you want to take out a private loan for school, an auto loan, or for debt consolidation, then you should ensure you can prove you have a steady job. Also, you should call and ask about the minimum credit score one must have to even take out a private loan with that specific bank or credit union. Some local financial institutions are a little more flexible when lending to someone local.