Student Loans

Student loans can be a necessary evil. College is very important and can help you get established in a career or help further your career but it is also very expensive. Before you take out student loans, find out what other types of financial aid might be available to you.

Scholarships and grants are free money from the government and other organizations that does not need to be paid back. They are the best way to pay for an education however not everyone qualifies for enough scholarships and grants to receive a full ride. There are endless types of scholarships available for school and the first step is to apply to them. When you are accepted to a school, the school may grant you scholarships based on the information you provided on your application. The government provides grants to you when you fill out your FAFSA form. These are financial gifts awarded to students in need. In addition to this there are many types of scholarships available through business and other organizations. The best way to find scholarships is to look online. Take some time to apply to as many as you qualify for. Every little bit helps.

Once you have exhausted all of your opportunities for student aid that does not need to be paid back you can get student loans to cover the rest of your coast. Government loans again come from filling out your FAFSA. There are a few different types of loans, the two most common being direct subsidized loans and direct unsubsidized loans. Take advantage of any direct subsidized loans first as these have a grace period while you are in school where the department of education pays interest on the loan for you. With unsubsidized loans you are responsible for the interest during the entire length of the loan.

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Interest Rates on Loans

At some point or another the average American will need to borrow money for something or another. The general population borrows money every day using their credit cards. According to Your 650 Score reasons for obtaining a loan might be to go to school, buy a car or to purchase a house. All of these loans come with interest rates. An interest rate is a percentage of the loan that you will have to pay the lender in addition to borrowed sum. The majority of loans are paid back on a monthly basis and included an interest fee each month.

A credit card usually has a fairly high interest rate, it could be as low as 6% or as high as nearly 40%. However interest rates on credit cards are only applied to the unpaid balance each month. Therefore if you pay off your credit card balance in full each month you will not have to pay the interest fee.

Car and house loans have lower interest rates because these are larger sums of money. They range anywhere from 2% to 10%. The average interest rate for a 30 year fixed mortgage is just under 4% while the average car loan interest rate is just over 4 percent. The term “fixed interest rate” means the interest rate does not increase over the life of the loan. Student loan interest rates are also typically around 4 percent, however this may double in the coming months and years.

All loans come at a price. While it is inevitable that you will take out a loan at some point, remember to shop around and find the best interest rate available. Don’t forget to make all of your payments on time. Also, the faster you pay off a loan, the less you pay in interest so be sure the throw any extra cash into paying off debt you may have occurred.

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