Questions for Private Lenders
It can be difficult to compare the various alternative loan programs offered because they differ in repayment features, methods used to assess costs, and eligibility criteria. Answers to the following questions will help you evaluate alternative loans and make the best choice for your borrowing needs:
- What are the minimum and maximum loan amounts?
- Is the amount eligible to borrow tied to school costs and other financial aid?
- What credit considerations exist for this loan? How will my credit affect my loan?
- How long does it take to get an approval or denial on the loan?
- Are co-signers required for this loan?
- If available, what options exist to release the co-signer at a later date?
- Any requirements: enrollment status, graduate or undergraduate, degree program or just taking classes, past due balances or current balances only, citizenship?
- Are specific programs available by discipline/major that may reduce my final payment amount?
Interest Rate and Fees
- What is the interest rate? What is it based on (i.e., Prime, T-bill, Libor)?
- Is the interest rate fixed or variable? How often do variable rates fluctuate?
- Is there a maximum interest rate or "cap"?
- Is an "introductory rate" offered? How long is this rate, and how is the rate affected after the introductory period?
- How is my loan interest capitalized? How frequently?
- What additional fees are charged? When and how are fees paid?
- Do these fees vary based on my credit, academic level, or whether or not I have a co-signer?
- What interest reductions or incentives are offered during the life of the loan?
Repayment Terms and Conditions
- Can these loans be deferred while I'm in school? For how many years?
- When do I begin payment?
- Can interest-only payments be made while I'm still in school?
- What are my repayment plan options?
- What are the minimum/maximum terms and payment amounts?
- Is there a penalty for paying off the loan early?
- Are grace periods, deferments, and/or forbearances offered? What are the terms and conditions for each? How is interest capitalized during these periods?
- When are late charges assessed and how much are these charges?
- Does the lender offer any other borrower benefits? What are the eligibility requirements for these?
- When do you receive the benefits and what are the total dollar savings?
- What is the best way to apply on-line, phone, fax, mail?
- What is the turnaround for credit decisions and disbursement of funds?
- What are the loan fund delivery options, electronic or paper check?
- Who do I contact for questions about my loan and to resolve any issues?
- Will I have on-line access to my loan information?
- Are these loans typically sold to other lenders?
- Will my loan be serviced in house or with a contracted servicer?