Jan
10

Is it better to take a private student loan & pay it off with a bank loan?

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student loan deal

Current interest is about 6.7% but these private loan people are jerks. Would I get a crappier deal from a bank?

(it’s a general question, I know, just tell me anything you know off the bat that I could be missing)

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Categories : student loan

4 Comments

1

Never ever take out a loan and pay it off with another loan. DUMB idea. It’ll kill your credit score. Best to do it take a loan from a well regarded bank, like the one you are allready related with.

2
personalfinancedaily
September 22nd, 2009 at 2:23 pm

If you are referring to Sallie Mae loans, you are correct- they are “jerks”. This is the largest private student loan lender in the country so they have somewhat of a monopoly and choices are limited.

You are also correct in that finding a lower interest rate will both reduce your monthly payment and save you money in the end. The last time I checked, my bank was offering personal unsecured loans (no collateral) for around 12% so I’d recommend shopping rates at a site I use called bankrate.com. Depending on your state, you might find a hidden deal.

3

I’ve never taken a student loan, so I’d love to know what you mean by the private people being “jerks”.

There’s a new “web 2.0″ concept similar to microloans that called “peer to peer lending”. It allows people to borrow directly from each other, with the websites reducing risks etc.

One of the major ones is prosper, and they provide loans for anywhere from 9-19% based on your credit score and other things. (Mine was around 12%, paid back in three years.)

The signup link is below

4

If the interest rate is lower

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