Student loan can help you study aboard without being too worried about school fees. Paying for your studies can be a big responsibility. How then can you apply for student loan? What requirements must you meet in order to apply for student loan? The answers to those questions and more would be considered in this article.
1 – What is the student loan for?
The student loan is not only intended to finance registration and tuition fees. It can also finance the purchase of equipment (computer, etc.) or pay for everyday expenses (rent, food costs, car, etc.).
2 – What are requirements you must meet to apply for student loan?
A student loan is an “affected” consumer credit, that is to say that it is used to finance studies and what goes around (tuition fees, accommodation …) during the duration of the studies: we knows the purpose of the funding right from the start.
The interest rate of student loans is often more attractive than that of traditional loans, because banks are interested in young customers. Indeed, as new customers, they can open a bank account, subscribe to banking products and services (card, etc.).
The annual percentage rate of charge (APR) includes all costs: interest, insurance, administration fees, etc.
The APR varies depending on the bank, between 1 and 2%. Some banks offer even more attractive rates within the framework of partnerships with certain schools or universities.
Do not hesitate to compare the rates and the offers and to play the competition before subscribing.
3 – What are the conditions to be fulfilled?
To obtain a student loan, you must be of legal age (18) and generally be under 30 years old. Exemptions are sometimes granted to older students.
You must prove your situation by producing a student card , a certificate of schooling or a certificate of enrollment in your school or university.
The bank sometimes requires that you take out death and disability insurance . But you can take out this insurance with the organization of your choice.
The bank often asks that a person (parent, other …) stand surety especially if the amount of the loan is important. In the event of repayment difficulties, the bank may then turn against the deposit so that it repays the loan for you.
4 – How much to borrow?
The amount of a student loan often varies from € 800 to € 50,000 depending on the bank. Sometimes he can go further. The amount of the loan is determined according to your needs, but it can also vary according to the duration of the studies, the chosen school, in particular the possibilities of repayment once entering the working life.
You will therefore have access to different amounts and rates, depending on your studies, your income and your deposit.
You can apply for a new student loan each year or take out a larger one . In the first case, you are not sure whether the bank will grant you a loan in the following years and at what rate. You will also have to pay administration fees each time.
It may be better to apply for a one-time loan. On the other hand, you must plan for the amount you will need to cover several years. If necessary, you can request a complementary loan if this is not enough.
5 – How to use the loan?
Generally, you are not required to justify the use of the borrowed sums: they can be used to pay study fees, everyday expenses.
But be careful with the release of funds!
Indeed, if the bank releases the entire sum at once on your account , the interest is calculated from the payment of funds. So you pay interest on the entire loan, while you are not going to use the entire amount immediately.
So check with the bank if they can release the funds gradually . You can then see with your banker the schedule (every year, every semester, every month) and the amount of the successive payments. Some banks give you the option of requesting payment of amounts according to your needs. The total cost of credit is then lower because interest only accrues from each release of funds.
6 – How to repay the loan?
The duration of a student loan is variable, often between 2 and 10 years.
You can repay your loan early (in part or in full) at any time. A reimbursement indemnity may be requested if the amount reimbursed is greater than € 10,000 over a period of 12 months. This compensation may not exceed:
– 1% of the amount of the loan if the remaining term of the loan is greater than 1 year,
– 0, 5% of the amount of the loan if this duration does not exceed 1 year.
7 – What will you have to pay?
The cost of the student loan depends on the interest rate applied by the bank, the amount of the death and disability insurance contribution that you must take out and the application fees. It also varies according to the amount borrowed and the pace of the availability of funds and the repayment terms chosen.
8 – Our advice
Do not hesitate to play the competition by comparing in particular the interest rates (APR), the application fees, the cost of the insurance, before taking out a student loan.
Negotiate the possibility of extending the repayment period until you find your first job at the end of your studies.