Repaying Personal Loans

Many students use personal loans to supplement their financial aid. If you've taken out a personal loan, you need to keep some things in mind in order to better manage the costs of your online educational program.

Attending a Loan Counseling Program
It's important to make sure your loan repayment information doesn't get lost in the excitement and stress as you complete your online degree. Meet with your lender and take advantage of the free counseling they're required to offer. Your financial counselor can help you understand your loan repayment options. During counseling, find out whether it's possible to repay your loan early without a penalty. Also, check for repayment discount options. For example, some lenders offer incentives for electronic payments and payments consistently paid on time.

Personal Loan Repayment Plans
Your lender may offer you a grace period of up to six months after you graduate or otherwise leave your educational program before you must start making payments on your loan. After that time, you may be eligible for a variety of repayment plans. Your lender may allow you to make graduated or income-sensitive payments. If you've borrowed over $30,000, your lender may offer you an extended repayment plan, which can stretch your repayment plan to a more reasonable timeframe.

Personal Loans and Your Credit
Failing to make monthly payments on time might put your loan in default, which could affect your credit and purchasing power for up to seven years. A default will also affect the credit rating of anyone who may have co-signed for your loan, and those co-signers may also be pursued for repayment. If you're concerned that you may not be able to make timely loan payments, contact your lender immediately to discuss forbearance or deferment options, which may allow you to temporarily postpone or reduce your monthly payments without adversely affecting your credit.

Prioritizing Your Loan Payments
If you have Federal student loans in addition to your personal loans, you might find the personal loan carries a higher interest rate. A fluctuating market could be the reason for this difference. For high interest rate loans, you may want to discuss accelerated payments with your lender. Loan consolidation programs may another option if you have more than one loan. By exploring all of your repayment options, you can protect your credit and your financial future.