Can You Obtain a Personal Loan When You are a Student

Can You Obtain a Personal Loan When You are a Student

You can get a personal loan while studying in a college. However, the process can be challenging as you already have student debt. The lender will be reviewing your credit report and financial documents to find out whether you have enough disposable income to cover the cost of a second loan. Understanding the requirements of the lender can make the process of qualifying for the loan easier.

When applying with typical lender, the lender will attempt to calculate your debt to income (DTI) ratio. Debt to income ratio is calculated by dividing the existing student debt by your monthly income. Having higher income enables you to have a lower debt to income ratio. Owing only a small amount of student debt and low monthly repayment are the keys to have a low DTI. You can use the debt to income calculator to calculate your DTI.

Having a decent credit rating is necessary to qualify for a personal loan. If you always pay your student loan on time, you should have a good credit score. High credit score is an indication that you are a responsible person who is disciplined in managing your finance. To qualify for a loan, you must have a credit score in the upper range of 600s.

If you have a credit score that is in the 700s, you will not face any problem in getting a low interest personal loan. Some lenders will require you to have a credit history for a minimum period, for example, 3 years. It is important that you don’t miss a payment on your student loan. If your credit report shows recent missed payment, the lender may decline your loan application. Some lenders will look at factors such as education level and job internship when determining whether you qualify for the loan.

Prior to applying a loan, you can get pre-approved online first. Getting pre-approved does not guarantee that you will be approved when you submit the actual loan request form. However, getting preapproved does mean that your loan application may very likely get approved. Getting pre-approved also givse you a clue on how much interest rate you will be charged so that you know whether you can afford the loan. If your application is rejected, you should try to improve the areas where you fall short on.

The lender will usually send you a letter that explains why you are being rejected for the loan. You can rectify the problem and increase your chance of getting approved. For example, if the reason you get turned down for the loan is because of a poor credit score, you can take actions to repair your credit score and reapply within a few months. If you have unfavorable DTI, you should find a job that can bring in more income or reduce the monthly payment of your student debt.

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