Types of private student loans
Students are considered for a secured loan based on their credit worthiness and the value of any collateral they are willing to pledge. Collateral is nothing more than any hard asset (gold coins, stocks, real property) the student has ownership of. If the student defaults on the loan, the financial institution takes ownership of the collateral.
Since most traditional students don’t have any collateral yet, it isn’t uncommon for the student to bring in a co-signer that does have collateral to pledge. In this case the co-signer takes full responsibility for repayment of the loan, at risk of losing whatever asset they personally pledge.
Unsecured loans are based solely on creditworthiness. You as the student do not have to pledge any collateral. Since this puts the risk fully on the lender, these kinds of loans are very hard to get. Loan terms such as interest rate are often less than ideal compensate for the added lender risk.
Payday Loan/ Hard Money Loan
These kinds of loans are the riskiest for the lender, and the loan terms reflect that. Expect to see egregious interest rates and origination fees that border on predatory lending. At face value, they are basically a form of unsecured loan with lower credit worthiness requirements.
Personal student loans will come from friends and family. They are the most common, but seldom will cover the entire amount of your education. Loan terms are usually much better than market, and qualifying for one is usually little more than a conversation with a loved one.
Qualifying for a private student loan
The best kind loans take your credit into consideration, so determining where you stand credit-wise is the place to start. The three major credit bureaus (Experian, Equifax, TransUnion) offer a free credit report annually.
Once you know your rating, you’ll know the best type of loan to pursue in your situation. With that information you can start contacting local banks and doing research online to find viable options.