The cost of college is undoubtedly expensive, from tuition and room & board to the price of textbooks. And while there are scholarships and financial aid available to help, those don't always cover everything or come through in time. So what's a student supposed to do?
Wait tables, mow lawns, or tutor elementary school students? Those are great options to help earn some cash while in college. However, they can take up a lot of time that could be spent studying or enjoying some free time.
So what's the solution? For many college students, the answer is taking out a personal loan. But is that the best idea? Let's explore five ways when it makes sense to take out a personal loan as a college student:
To Cover Unexpected Costs
Again, even with scholarships, financial aid, and a part-time job, college students often find themselves short on cash. And when an unexpected cost comes up, like a car repair or emergency dental work, it can be challenging to come up with the money. In these cases, a personal loan can help fill in the gaps.
Since traditional lenders like banks can be strict about who they lend to, online personal lenders have become a popular option for college students. They can apply for loan online and often get approval in minutes.
Online lenders require few documents and don't require a credit check. They also have flexible repayment options. For example, some online lenders offer the option to defer payments until graduation.
So, if you're a college student who needs some extra cash, an online personal loan could be a good option for you. Just make sure to do your research and compare offers before you apply.
To Cover A Large Purchase
Personal loans also make sense for college students when they want to make a large purchase. Common purchases that college students make include:
- textbooks
- furniture for their dorm or apartment
- a new computer
- travel expenses to and from home
These expenses can cost a lot of money, and a personal loan can help college students pay for them. You can also use a personal loan to buy things unrelated to your education, such as:
- new clothes
- entertainment
- a new car
Personal loans can be used for anything you want, but it's important to remember that you'll have to pay the money back. So make sure you only borrow what you need and can afford to repay.
To Build Your Credit
Taking out a personal loan as a college student also makes sense for building credit. Credit history is essential for qualifying for things like an apartment, a phone plan, or a car loan down the road.
These things are necessary once you graduate and enter the "real world." By taking out a personal loan and making timely payments, you show future lenders that you're responsible with money.
Also, this can help you get better terms on loans and lines of credit in the future. And the sooner or earlier you start to establish credit, the better. A personal loan is just one way to start building credit while in college. You can also consider getting a credit card or becoming an authorized user on your parents' credit card.
But remember, with excellent borrowing power comes great responsibility. Be sure to make all your payments on time and in full to avoid damaging your credit score.
Advantages of Personal Loans for College Students
The most significant selling point of personal loans for college students is that they usually have lower rates. So, it means that you'll be paying less in interest over the life of your loan.
And that's especially important for students who need to borrow money to cover for whatever reason. Another advantage of getting a personal loan as a college student is getting the money quickly.
This fast turnaround time is helpful if you have an unexpected expense or need to cover a gap in funding. Personal loans also tend to have more flexible repayment terms than other loans.
Since college students have poor or no credit history, personal loans are one of the few options available. Online lenders, in particular, are willing to work with borrowers who have little to no credit history.
That's something to keep in mind if you're a college student who needs to borrow money. You may not have many options, but personal loans are undoubtedly worth considering.
Conclusion
It's essential to take your time, shop around, and compare prices before taking out a personal loan, especially for college students. Since they may have little experience with borrowing money, college students are especially vulnerable to scams. So, ensure you do your research and only work with reputable lenders.
