Student and Graduate Loans Guide

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Student loans are loans offered to students to assist in payment of the costs of professional education, usually carrying a lower interest rate than other loans. This kind of loan is issued by the government. In many cases, they are supplemented by student grants which do not have to be repaid.

Graduate loans work in the same way as unsecured personal loans, when you borrow the cash you don’t have to offer any security or collateral such as your home or other assets. However, banks often offer better loan rates for graduates, but you will normally have to hold a current account with the same provider to get a graduate loan and are available up to a £25K. These kinds of loans are repayable over a period of time, usually between six months and 10 years.

Just as in the case of unsecured loans, a lump sum is lent in return for you agreeing to make regular repayments, usually by direct debit and lenders charge interest on the amount borrowed. This tends to be fixed at the start of the loan which means that the repayments remain the same throughout the term.

When someone is taking in consideration a graduate loan, there are a few things to think over:

Attention on the Typical APR – You may not always get the advertised typical APR on a graduate loan as the rate you are given can depend on your credit rating.

Early settlement penalties – Many lenders will allow a break between when you receive your loan and when the first payment needs to be made, however, interest is charged over this period. This increases the total interest payable. Lenders also offer break during the loan term, but again interest is charged on the amount not paid, meaning a larger loan amount is left unpaid for longer.

Same Day Funds – Are usually chargeable with around £50.

Direct Debits – Most lenders need a direct debit to pay the monthly instalments so you need to ensure your bank account can accept these and ensure that the money is available for payments. Penalty charges for missed payments can be around £38.

Insurance Providers – Insurance is always provided by the lender, but can also come from a standalone broker with whom you can be assured that the insurance has not been added to your loan and interest charged on the resulting balance.

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