Wondering whether to use personal loans for school and college? With some interest rates on student loans and the hoops you have to go through to get them taken care of, it’s tempting to understand your options.
Today, college is not cheap. If you’re planning to get a degree, you will probably need to borrow some money (thank your parents if not).
Canadian students on average pay over $4,000 per school year out of pocket in college. This number is a lot lower than other countries (looking at you, America), but that’s still a serious chunk of change.
In this article we’ll break down what getting a personal loan for school looks like, and the pros and cons.
Can I Get Personal Loans For School?
The short answer is yes.
The longer answer is there are a lot of things to consider before taking out a personal loan for college. Below we look at some situations where it might make sense.
Not everyone needs to borrow the same amount to pay for college, and if you don’t need a ton, then a personal loan might make sense. For example, you might take out a personal loan when:
- You don’t need to borrow a ton of money for college.
- The student loan that you already took out isn’t enough to cover the cost for the full semester or school year.
- You find a lower interest rate through personal loans than with your student loan vendor.
This list isn’t comprehensive but paints the picture for a few scenarios where a personal loan becomes the better option.
Now, let’s look at some pros and cons.
It Might Be Easier To Get A Personal Loan
If you have good credit, you can likely get a personal loan just as easily as you can be approved for student loans. And even if your credit isn’t perfect, a cosigner (one or both your parents) can help make it happen.
It Might Be Cheaper, Too
Many students don’t consider that they don’t have to use student loans and can seek alternative options. A lot of times they are the best option, but it doesn’t hurt to shop around.
You Can Use Them To Cover Additional Expenses
Personal loans can be useful if your student loans don’t cover all your expenses. For example, perhaps your student loan covers the money you need for tuition expenses but doesn’t cover the cost of books, a new laptop, or living off campus. Here a personal loan can be useful.
The fact is, personal loans can be used for anything. You have more flexibility with them, which is a major advantage.
They’re Easy To Apply For
One downside of student loans is the rather lengthy process it takes to get approved and get the money distributed to your university. If you’re in a crunch or something happens where you need money, a personal loan for college might make a lot more sense.
Learning how personal loans work is simple, and you can apply within the hour if you’re ready.
Higher Interest Rates
Student and personal loans aren’t like auto loans, where if you do not make the payment the vendor can repossess the car. It’d be hard for them to “take back” what you’ve learned in school if you miss payments, no matter how smart you are.
The benefit of this for, say, an auto loan, is the vendor can take more risk. With a personal loan, there’s a lot more risk involved, which usually means higher interest rates.
You may lower the interest rate, but this might mean putting up collateral like your car or other property if you can’t pay back the loan.
A Long-Term Loan Might Be Better For Your Situation
Wherever you are in your education plays a role in personal loans being a good fit for you, too. If you are in your first or second semester and already applying for personal loans, for example, this doesn’t make as much sense. Taking out a personal loan each semester until graduation will leave you in a ton of debt and with multiple loans opened—in this case, it’s probably better to go through the Federal government.
But if it’s your last semester or you just need to make ends meet for something like a new laptop, your situation might be ideal for a personal loan.
So, Is It A Good Idea?
This question is hard to answer, because a personal loan for students is based on a lot of things. Your situation might warrant a personal loan, but plenty of variables could make a student or federal loan a better option.
To make the right choice, look at interest rates, terms of repayment, and how much money you need to borrow (and how long you have until you need to repay it). Make a pros and cons list so you can determine what the right move is for your situation.
Personal Loans For School: Wrapping Up
Contrary to popular belief, student loans aren’t your only option for funding college in Canada. Personal loans for school are an option for many students and might make sense depending on how much you need and how close you are to graduating.
Do your homework and decide what’s best for you.
And if you decide a personal loan is a right move for you, you can claim your cash online. After all, the process is much, much faster than any student loan vendor.