Fast private student loans are also known as “alternative” student loans. They are issued by private institutions to students enrolled in any college or higher learning program. Typically available in 24-48 hours, these loans are usually up to $20,000.
While this may seem like a quick and easy method of getting money for college, every student should be aware of both the pros and cons of fast private student loans.
The pros are, of course, getting money that is needed fast. Fast student loans are given to students for anything that is needed for college. It’s not necessarily just for tuition costs. When a student is given a fast loan, it’s up to the student to decide how to use the money. Students can use it for rent payments, insurance, clothes, books, or anything else they need money for. The loaning bank is not going to ask for receipts or proof that the student spent the money on education-related items.
Another benefit of getting a fast loan is that it can be issued in addition to any other private or government loans the students may have already received.
There is a huge risk in taking out a fast student loan, however. Typically, fast student loans have an extremely high interest rate. The interest rate may be higher than 20 percent, more than a regular credit card. Additionally, when a student takes out a fast private loan, the loaner will likely have the student sign a contract promising to begin repaying the loan as soon as the student graduates.
Another reason why a student may not want to take out a fast private loan, besides the added expense, is that unlike a government loan, the fast private loan cannot be deferred. These loans usually give the student an option of how many years the student wants to take in order to pay it off. But they will likely not agree to indefinite periods of deferment (during which time the student doesn’t have to repay the loan, and doesn’t incur any bad credit) for the student.
In short, fast private loans should only be used as a very last resort for students. They’re expensive and if a student misses just one payment, it could be catastropic to their credit score. If a student does decide to take out a fast loan, it should only be for the very minimum amount of money the student needs in order to continue their education.