Tag Archives: what is a loan

How Do Loans Work?

11 Oct

If you are thinking of applying for a loan so you can get a higher education and simply don’t have the funds readily available for you – good job! I mean, you might as well get a loan so you can get into that program so you can start making decent money doing something you love, then working pay check to pay check for the rest of your life, right? It is very rare that someone can just go to school without some financial help. Unless you are Michael Jackson’s kid, the chances are that you fall into this category and don’t feel bad, or embarrassed! At least you are getting a higher education! Almost all wealthy people had to get a loan to get their degree…. to get wealthy – again, unless you are famous like Michael Jackson. You have to start somewhere, right? But the big question is… how do loans work?

The best advice that I can give you is to go into your local bank. They will give you all the information pertaining to their company, as well as in general about loans. If you don’t want to feel pressured or simply don’t have the time to physically go see a financial analyst, you can always call their customer support line. Although, doing so – they will not be able to give you specifics in regards to your situation as they would if you went in for a meeting, but at least you could get all the general stuff and book a meeting to go in and discuss further if you wanted to do so.

Now, you may be asking me why I am telling you to go speak with your bank as you clearly just googled this for an immediate answer.  The reason being is that, again, you can get specifics. If you have a co-signer that makes $100,000 a year, you will get this deal, or this discount, or this interest rate etc. I can definitely tell you that a loan is money being lent to you, that you have to pay back over a certain period of time – but I am going to assume that you already know this. If not, now you do!

Once you have chosen a company to get a student loan from, you have to fill out an application. Of course, the bank needs to know that you will be able to make payments, and if not – someone else can co-sign for the loan and help you out… which usually falls onto your parents.  Once you are approved, they will let you know how much money you are able to “borrow” from them. They will also give you specifics in regards to how long you have to pay it back, interest rates, when the payments have to start etc.

Again, I highly suggest calling your local bank(s) and inquiring about what type of student loans they have and then once you have an idea of who you’d like to get a loan from, book an appointment and get more specifics.

It’s as simple as that! It’s paying the loan off and not buying video games or concert tickets that is the hard part. Remember, credit is important…. don’t miss payments and mess that up for you. Horrible credit means no house, no car, no more loans… it’s just bad – avoid like the plague.