A fixed rate private student loan is a private student loan that comes with an interest rate that remains the same for a set period of time (regardless of the changing underlying interest rate index). An advantage to having a fixed rate private student loan is that your (fixed rate) private student loan monthly payments will remain consistent. However on the other hand, you may be subjected to a higher total monthly payment for your fixed rate private student loan. Unlike a fixed rate private student loan, a private student loan with a variable interest rate has an interest rate that moves (up or down) based on the changes of an underlying index. Some variable interest rate loans come with an interest cap, but the disadvantage to having a variable rate private student loan is that your monthly payments will fluctuate as the determining index fluctuates (variable rates usually go up instead of down).
If you are looking for a fixed rate private student loan you are going to have to do your research to determine which lenders offer fixed rate private student loans, and if you qualify. However, the majority of private student loan lenders are going to offer a variable rate loan, and not a fixed rate private student loan. One important thing to remember when applying for private student loans (fixed rate or variable rate) is that if you apply for too many private student loans over a stretched period of time, you can do damage your credit score. The best thing to do would be to select your top private student loan lenders and then apply to them all within a months period of time.
If you are looking for a fixed rate private student loan, and have yet to apply for federal student loans yet, STOP! You should never be looking into private student loans (fixed rate or variable) until you have exhausted all of your federal financial aid options. Why apply for a fixed rate private student loan, when you may be eligible for a fixed rate federal student loan? As a general “rule of thumb”, federal student loans will always be less expensive then any private student loan out there. To get started applying for federal student loans, file the FAFSA.
If you have variable rate private student loans already and are looking to lock into a fixed rate private student loan, you could always try looking for a fixed rate private student consolidation loan. A consolidation loan would be able to help lock your variable rate private student loans into a fixed rate, however private student consolidation loans are fairly scarce these days. If you do find a private student consolidation loan, remember to NEVER consolidate your federal student loans into a private consolidation loan. Consolidate your federal student loans and your private student loans separately.
Another option for those of you with variable interest rates looking to lock into a fixed rate for your private student loans is a fixed rate home equity loan. As with a private consolidation loan, you have to do your research with this, and weigh the pros and cons for your specific situation. So if you have already exhausted all of your federal student loan options, and are looking for a fixed rate private student loan to supplement the cost of college, make sure to DO YOUR RESEARCH on all lenders and their fixed rate private student loan terms and conditions. if you are unable to find a fixed rate private student loan, make sure you fully understand what you are getting into with a variable rate private student loan. When obtaining a fixed rate private student loan or a variable rate private student loan, NEVER borrow more then you actually need. For fixed rate private student loan consolidation, understand that you will most likely be paying more over the lifetime of the loan since you are extending the repayment period.
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