Unlike 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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