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How are private student loan interest rates determined? | 03.02.10

Posted in Private Student Loans by Kristin Morris

student readingUnlike federal student loans, private student loans do not have a universal fixed interest rate.Private student loan interest rated are calculated based on a published index, such as the Prime Rate or LIBOR, and a margin based on your credit score and credit history. Private student loan interest rates fluctuate over time and interest begins accruing as soon as the loan is disbursed.

Prospective borrowers usually want to know what their interest rate will be before they apply for a loan, however an exact interest rate cannot be determined until you apply for a private student loan. If you are thinking about applying for a private student loan you should check your credit report first. If you have a lot of late payments, overdrawn accounts, and other credit issues your interest rate will be higher or you might not be approved for a loan at all.

If you have not built up a credit history, or if you have poor credit, you can apply for a private student loan with a cosigner. Applying for a private student loan with a cosigner not only improves you chanced of being approved, but it can also get you a lower interest rate.

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17 Responses to “How are private student loan interest rates determined?”

  1. URIEL says on March 30, 2010 at 4:03 am:

    POSSIBLE PAYMENTS MAY HAVE TO BE TAKEN INTO CONSIDERATION

    Reply To This Comment
  2. Harrison says on March 24, 2010 at 10:44 pm:

    Can I recieve a loan even if I have no credit history, or does that mean I need a co-signer for the loan?

    Reply To This Comment
  3. Kelcie says on March 23, 2010 at 8:51 pm:

    Thanks for the information. It answered alot of my questions.

    Reply To This Comment
  4. max says on March 16, 2010 at 1:04 pm:

    my parents are interested in a loan that they can co-sign NOW, but are able to transfer the loan back for me to be responsible LATER… any info on that??

    Reply To This Comment
  5. Oscar says on March 12, 2010 at 1:41 am:

    So the best kind of loan is to get a private loan?

    Reply To This Comment
  6. mary says on March 11, 2010 at 3:04 pm:

    My parents plan to pay for my school, but I plan to apply for a loan so they will not stress out. :)

    Reply To This Comment
  7. Angelica says on March 9, 2010 at 9:41 pm:

    Really good information!

    Reply To This Comment
  8. britt says on March 5, 2010 at 2:38 pm:

    i'm going to need to get a loan even though i don't want to, this is all good information to know.

    Reply To This Comment
  9. Laurie says on March 5, 2010 at 4:37 am:

    This is great basic information for the novice borrrower.

    Reply To This Comment
  10. Alyssa Koulentis says on March 4, 2010 at 1:53 am:

    My parents will help out, however, I will have to apply for a loan.

    Reply To This Comment
  11. chethnaks says on March 4, 2010 at 12:21 am:

    I am an International student studying In florida. What is the process for me?

    Reply To This Comment
  12. shannon says on March 3, 2010 at 9:31 pm:

    thanks for the information.

    Reply To This Comment
  13. Vanessa says on March 3, 2010 at 7:18 pm:

    I need to get a HUGE loan:/

    Reply To This Comment
  14. Elise says on March 3, 2010 at 7:18 pm:

    Thank you for all the information, however I am trying my best to avoid loans so when I am finished with school and have a career, I will beable to enjoy that money an not owe it back over time.

    Reply To This Comment
  15. amanda says on March 3, 2010 at 12:11 am:

    I hope I don't need I loan, but it looks like I might have to. Thanks for the great information.

    Reply To This Comment
  16. maira says on March 2, 2010 at 7:14 pm:

    i plan to get a loan but i am still a little undesided thanks for the info

    Reply To This Comment

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