What you need to know about Loans

Before I get into Loans, I would like to make a quick note about my previous two posts. I would like to apologize for the horrible grammar and all the errors in the past two posts. I fully expect errors to appear and all my posts. I don't see myself as a writer and have always believed that I was horrible with grammar. I just wanted to add that as a result of the pain medication and the intense pain the previous two posts were especially atrocious and I fully expect that level of error to not persist... I just wanted to leave it the way it was and not correct it because it adds to the imagination the amount of physical pain I was in and the dangerous power of prescription medication.


Alright, about Loans... Don't get them! Well, if you can avoid them I highly suggest you find an alternative means, but I'm certain that just isn't an option for everyone including myself. To be a little more fair for everyone, let me provide you with a few tips regarding Loans.

Before I go any further I'd like to add one thing. Though I am a Finance major, I am not an expert on Loans nor do I have the intention of becoming an expert on Loans.

1- If your credit can not qualify you for a loan, try a co-borrower with a good credit score. (obvious tip)

2- READ THE TERMS!!! Many Loans will not give you all the terms until you've applied for the loan. It is at this point that you're given the Promissory Note. READ IT. I can not stress this enough. In order to fund my living expenses I needed to apply for a Loan. I was approved and for the lowest interest rate of the Loan, I also requested a deferment period. (I wouldn't begin payments until a specific amount of time after I graduate) Sounds good right? This was an online Study Abroad Loan. After I received notification that I was approved, not even twenty four hours later I receive a phone call from the company wondering if I've printed out the Promissory Note, signed the paper work, and when would I have the entire packet submitted. This obviously unnerved me. I began reading more deeply into the Loan.

The Terms for this particular loan was a 7.8% APR (adjustable) and on top of that you add LIBOR, which is the "London Interbank Offered Rate." It's like a Federal interest rate. I think currently LIBOR is at about 3.25%. This would make the total interest rate above 10%. Since the interest rate was adjustable it very well could have gone well beyond 10% depending on LIBOR and other factors.

Well, I hope this saves someone in the future. Though it sounded wonderful at first, the more I read the terms the more I realized I was signing up for something I truly did not want. I plan to have more interesting posts soon.