Questions to Ask Private Lenders
- What are the minimum and maximum loan amounts available?
- Will this loan meet my long-term educational borrowing needs as well as my immediate short-term needs?
- How will my credit rating affect my loan?
- Is a co-signer required? If so, under what conditions?
- Is there an option to release the co-signer at a later date?
Interest rate and fees
- Does the spread/margin over the interest rate fluctuate?
- Is there an interest rate cap?
- What is the current interest rate?
- What additional fees, interest reductions, or other incentives are offered during the life of the loan? If any, do these conditions vary based on credit rating, academic level, or availability of a co-signer?
- When are late charges assessed, and how much are these charges?
- How is my loan capitalized — annually or only at repayment?
Repayment terms and conditions
- What are the minimum and maximum terms and payment amounts?
- When do payments begin?
- Can interest-only payments be made while still in school?
- Is there a penalty for paying off the loan early?
- Does the lender offer combined billing of alternative and federal loans?
- Are grace periods, deferments, or forbearance offered? If so, what are the conditions and how is interest capitalized during these periods?
- Does the lender offer any other borrower benefits? If so, what are the eligibility requirements?
- If a borrower does not qualify for a benefit, what is the appeal process?
- What is the turnaround time for credit decisions and disbursement of funds?
- How are problems resolved? Does problem resolution occur in person, by phone, online, or another method?
- Is there access to loan information through the Web?
- What is the lender's policy on selling loans to other lenders after the loan has been disbursed?