Oct 08, 2015
College Loans
4 Smart Tips for Comparing Student Loan Interest Rates
The advertised interest rate for student loans can be confusing. Here are four tips that can help you compare interest rates.
Consider these features when researching private student loans.
Interest Rates and Loan Fees
Private student loan interest rates are fixed or variable and may be based on your credit history and other factors. Variable interest rates can change over time, so it is important to find a loan with a low interest rate, as well as an interest rate cap to control the cost over the life of the loan.
Repayment Options
Some private student loans require you to make monthly payments while in school and some allow you to defer payments until after graduation. Longer repayment periods require lower monthly payments, but you end up paying more in total over time. Be sure to choose a loan that provides flexibility so your monthly payments are manageable and the total cost of your loan is reasonable.
Borrower Benefits and Loan Discounts
Most loans come with money-saving benefits such as interest rate reductions for automatic debit payments. Simple and straightforward reward programs can end up saving you money. Carefully read the terms and conditions to ensure that you will qualify for the advertised benefits and retain them throughout the life of the loan.
Customer Service
Choose a lender with experienced and well-trained customer service representatives that will have answers to your questions no matter where you are in the student loan process. Lenders offer a variety of ways to contact them and different hours of operation during which you can talk to a live person, so look for a lender you can reach conveniently.
Did You Know?
When comparing student loans, use the Annual Percentage Rate (APR) since it takes into account the interest rate, fees (if any), length of your deferment and repayment periods and how interest capitalizes. APR does not usually consider borrower benefits and loan discounts, so compare these features separately.
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