In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed. The document evidencing the debt (e.g., a promissory note) will normally specify, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and the date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.
The interest provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice, any material object might be lent. Acting as a provider of loans is one of the main activities of financial institutions such as banks and credit card companies. For other institutions, issuing debt contracts such as bonds is a typical source of funding.
Similarly, a loan taken out to buy a car may be secured by the car. The duration of the loan is much shorter – often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. In a direct auto loan, a bank lends the money directly to a consumer. In an indirect auto loan, a car dealership (or a connected company) acts as an intermediary between the bank or financial institution and the consumer.
Loan for international students
To pursue your favorite subject in an international college can be expensive. The tuition fees and the living costs are not the only things you need to deal with. There can be other costs like transportation, study materials, accommodation and many more. That is why you may need to take out a student loan to finance your study abroad.
But getting an international student loan is not easy without a cosigner. This is a problem in most cases because it can be hard to find someone willing to act as a cosigner. But there are some international student loans that you can take out without a cosigner. This article will tell you which international student loans are available for students who don’t have a cosigner.
Who is a cosigner anyway?
A cosigner is someone who has a good credit score, and with that, they agree to take responsibility for your loan if you as a borrower are not able to pay back the debt. The cosigner needs to have an income to repay your loan in most cases. They also need to be at least 18 years old. In simple words, a cosigner is a person who guarantees that you will repay the loan.
Why are cosigners necessary?
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International students need someone to cosign their loans because they might not meet the requirements for taking out a student loan. A cosigner gives lenders the security that you will repay the loan, which is essential because lenders don’t want to lend money to international students who cannot repay the loan.
Types of student loans:
Whether you need a cosigner or not depends on a few factors, and your student loan type is one of them. There are basically two types of student loans:
1. Federal student loans: These are the best possible student loans because they have a low-interest rate and specific benefits. You can apply for a federal loan without a cosigner if you meet particular criteria, generally based on your academics and your family income. So your priority should be to apply for a federal student loan, and if you don’t qualify, you should apply for a private student loan.
2. Private student loans: These are much harder to get because there are no specific criteria that make them available to only those students who qualify for it. It depends from lender to lender and how they set their own criteria. You can apply for a private loan without a cosigner, but your chances are much lower, and the interest rates will be much higher than those of federal loans.
Federal student loans that don’t require a cosigner
The good news for international students is that there are three types of federal loans available that don’t require cosigners as well as credit checks:
1. Direct subsidized loans: These are available to students who have not completed their first bachelor’s degree yet. You can apply for these loans until you reach your maximum study time. The benefit of direct subsidized loans is that the government covers the interest while studying.
2. Direct unsubsidized loans: This type of student loan doesn’t require a cosigner because the government covers the interest while you are studying. It is for both graduate and undergraduate students. This loan is also called Unsubsidized Stafford Loan.
3. Direct PLUS loans: This type of loan is available only for graduate and professional students. Parents can also borrow this amount for their kids who are studying abroad. This is the most common international student loan because it requires a cosigner.
How to get international student loans without a cosigner?
Getting an international student loan without a cosigner is a lot harder than getting one with a cosigner. As we have explained before, you need to meet specific requirements to get a student loan without a cosigner, and the requirements may vary from lender to lender.
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Here are a few things that you can do to increase your chances of getting a student loan without a cosigner:
1. Opt for federal student loans: Federal student loans are the best option when trying to get an international student loan as a U.S. student abroad. If you meet certain criteria, you will get the loan without a cosigner. These criteria are not that high, and almost anyone can meet them if they try hard enough. It is mostly about your academic scores and your income in your home country.
2. Go for scholarships before you take out a loan: Scholarships or other financial aids are the best options for financing your education. However, try to get all the available scholarship money before taking out a loan. If there is no other option but to get a loan to finance your education, you should go for federal loans with low-interest rates and benefits before taking up any private loan.
3. Credit score: If you have a good credit history, then the chances of getting an international student loan without a cosigner are much higher. The lenders will trust you because of your credit score, and they will not demand any additional help from someone else for them to approve your application.
4. Find the right lender: To get a good student loan without a cosigner, you need to find the right lender. Most lenders have a reasonable credit score requirement, and they also look for other criteria before approving your application. You have to do your research and shortlist a few lenders before applying for a loan.
Top lenders who approve international student loans without cosigners
Here are the top five lenders who typically approve international student loans without cosigners:
1. MPOWER Financing: If you plan to study in the U.S or Canada, you can apply for a loan from MPOWER. They offer student loans without a cosigner, collateral, or U.S. credit history for students studying at 350+ schools in the U.S. and Canada. They only provide loans to bright and have the potential to succeed.
2. A.M. Money Private Student Loan: If you are an international student with a good GPA, you can get a private student loan from this lender. This is one of the best lenders that offer loans without cosigners.
3. Ascent Independent Student Loan: Ascent offers international student loans without cosigners. They provide loans to both undergrad and grad students who need them for tuition, books, and living expenses. It is ideal for Upperclassmen with no credit, income, or cosigner.
4. Prodigy Finance: If you are a graduate student and looking for an international student loan without a cosigner, you should try Prodigy Finance. Prodigy finance only provides its services in certain states and certain colleges.
5. SoFi: If you have been paying the loans on time and your credit score is good, then SoFi will approve your loan without a cosigner. They offer loans to graduate students and international students. If you have good academic scores, you can also get extra benefits.
The process of applying for an international student loan without a cosigner can be a bit difficult. You have to prove that you are responsible enough to be worthy of the loan. You have to do your research and find lenders who offer student loans without cosigners and match your requirements. Good luck!
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