Study/Student Loans

If you’ve found your calling and want to learn more about it by heading off into higher education, a student loan is what you need.

You would, ideally, use savings or be studying a course that is covered by the Student Loans Company or a high street bank. Unfortunately, that’s not always the case, and you may need finance approved quickly.

What is a student loan?

Student loans, or student finance, can be used to cover anything from tuition fees and living costs to post-graduate study and specialist courses.

A student loan can provide you with the financial support to pay for anything you need for your education. They are particularly useful if your course is a specialist or short-term, professional body-approved study.

Through a lender, you can often get fast approval for a loan with flexible options available. This covers the amount you need to borrow and repayment periods based on your current or potential income.

What are my loan options?

If you require a student loan, outside of the Student Loans Company, there are four options available.

Personal loans are the most common high street option. However, for many who have no credit history, they can be difficult to secure. Also, your score could be affected if you’re not eligible if a hard credit search is conducted during the application.

Payday loans provide a fast, short-term finance option, making them popular among borrowers. However, these loans often come with very high APR rates. This could lead to potentially large repayments each month.

Secured loans require an asset, such as home, to be used as collateral to secure an approval. However, failure to meet your monthly repayments will result in losing your asset. This is not an option to be taken lightly, and is probably not relevant for most students.

Guarantor loans are popular among applicants with a poor credit score. They require a guarantor to meet the monthly repayments if you can’t. It is a loan option based on the strength of your relationships with family or friends.

What are the benefits of a student guarantor loan?

If you require financial support for your studies, a student guarantor loan could be what you need.

If you have a poor credit rating, or none at all, this could block you from securing a loan with a high street bank. Through a guarantor loan, you may be able to secure the finance quickly, despite your credit history.

With education costs including tuition, books and placements, this is a flexible, finance solution.

This form of loan is beneficial if you’re younger with little or no credit, especially if you’re studying a short course through a professional body.

How could a student guarantor loan improve my credit score?

The are many ways that a student guarantor loan could help improve your credit rating and financial stability.

Once you complete your studies and are earning, budget your income to meet monthly payments on time and in full. This will show your financial responsibility. That should lead to an improved credit score.

Once you start earning and are able to repay the loan earlier, there will be less interest on the loan. This will leave you in a stronger financial position. At the same time, paying your debt quicker could help improve your credit rating.

Advice for guarantors

If you are interested in becoming a guarantor for a student loan, there are certain matters to consider.

Student guarantor loans cover various subjects and could depend on the borrower securing employment. So, consider if they will be able to make repayments. Otherwise, it will fall to you.

It is also vital that you are in a financial position to cover repayments if the borrower can’t. Also, consider whether doing so may be detrimental to your relationship.

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