You can only take out a loan when you are of legal age. This applies to most students, but a few university students start their studies at the age of seventeen. In this case, borrowing with the consent of your parents and the juvenile court would be conceivable. In practice, the judges hardly ever issue one. As an exception, the co-signature of a parent is sufficient for the Credit Aid application, as this is not considered a classic loan, but rather a partial repayment.
State student loans
When asked to what extent students can obtain a loan, it is often overlooked that half of the Credit Aid services are provided as loans. As a student, you will receive this interest-free loan, which will only be repaid after the end of your studies, if your additional income and assets, as well as the income of your parents, do not exceed specified limits.
The evaluation of half of the federal education funding paid out as a loan is inaccurate because the debt burden from Credit Aid payments amounts to a maximum of 10,000 USD at the end of your studies. Further amounts will be waived without application.
You do not have to provide proof of your financial circumstances for the student loan from the state-owned Lite Lender, as this is paid regardless of income and assets. Even a negative Credit bureau information is not an obstacle to credit. From the fifth semester, proof of achievement must be provided, with the Credit Aid office crediting the university semesters and KfW the funded semesters.
With a few exceptions, you are not entitled to Credit Aid for a second degree, but you can in principle apply for a student loan. The maximum funding period is fourteen semesters, whereby only the periods for which you actually received the Lite Lender promotional loan are taken into account. You can receive the Lite Lender student loan for six semesters for postgraduate studies and for a doctorate. This period is irrespective of whether you applied for the development loan during your original studies.
The Lite Lender promotional loan is paid out to your account each month, and you choose an amount of between $ 100 and $ 650. You can change this amount on two dates per year without having to give reasons. You can also apply for an educational loan while preparing for the final exam and during the semester. You are, of course, also entitled to this if you have foregone the student loan and have financed your living through employment.
The bank loan for students
Most banks give you your first student loan by giving you an overdraft facility. As a rule, regular incoming transfers are sufficient. Since the amount of the disposition limit is also determined by the amount of the input amounts, you should ask your parents to transfer the support they have paid to your account and not to hand them over to you in cash.
As a student, you can also easily obtain a credit card, especially since some issuers offer special card variants for students. These are mostly equipped with a credit limit of $ 1000.00, which you can use like a real loan by activating the installment facility. In view of the high debit interest rates, it is advisable, however, if you only use the payment target until the credit card bill is due and if you need a loan over a longer period of time, contact a bank.
In addition to a good Credit bureau, your regular income is the main criterion for lending. For students, this often consists of several components. The most common payments received by students come from the following sources:
- Professional employment
- Secondary activity on a freelance basis
- Credit Aid
- Student loan from Lite Lender
- Parental support
If you want to take out a loan from a bank as a student, it depends on the income components that the financial institution takes into account in its budget calculation. There are clear differences here, especially freelance part-time jobs and the payments of the parents are not always recognized when applying for a loan.
You may be surprised that the Credit Aid payments and student loan are counted as income. In fact, a loan is considered income for further lending, but the procedure is logical. Finally, the corresponding payments for loan repayment are available to you, since neither the Credit Aid office nor Lite Lender require repayments during your studies.
You increase the likelihood of receiving parental support if you provide the bank with confirmation from your parents that they are willing to make payments for the duration of your studies. As a student, when making a loan comparison, make sure that the bank you select as the contract partner evaluates all of the income components as relevant for the household bill.
If you are borrowing as a student, you can ask your parents or another confidant to act as a co-applicant or to provide a loan guarantee. The fact that many banks prefer to apply jointly to the guarantee declaration is due to the usual case law. When accepting private individuals as guarantors, this obliges lenders to check not only the income situation but also the knowledge of the possible consequences of a loan guarantee. In contrast to a surety, there is no risk that a court will declare the corresponding contract to be ineffective when taking out a loan.
If you want to take out a loan as a student, hiring a credit broker can make sense. Thanks to the bundled demand, in many cases the bank approves a student loan, even if it would have rejected it if it had been applied for directly. However, make sure that the credit service provider works without any upfront costs and does not request remuneration until it has actually helped you to obtain the desired loan.
In addition to classic bank loans, individual commercial banks also offer you as a student a student loan on similar terms to Lite Lender. Of course, you do not have to provide proof of income for such a loan, because after your final examination you repay the loan with the income earned. It must be checked in each individual case whether an independent commercial bank or the credit institution for reconstruction pays the cheaper student loan. If you cannot find a job with reasonable remuneration immediately after completing your university degree, Lite Lender usually behaves more flexibly than most traditional financial institutions.
Take out a loan from a dealer as a student
Many mail order companies and some brick-and-mortar stores offer you a loan while studying by accepting installment payments. In most cases, you do not have to submit proof of earnings with this form of credit financing, and in some cases there is even no demand for your monthly income.
Some retailers even offer installment payments without interest. Nevertheless, a price comparison is indispensable, because sometimes a lower commodity price leads to lower overall costs than interest-free payment in spite of interest for installment payments.
When arranging installment payments, make sure that you can meet all payment obligations from your income as a student. The Credit bureau information provided to a dealer does not contain any data on current obligations, but only information about possible negative entries, so that it does not protect against possible over-indebtedness due to too many loan liabilities.
The benefits for both sides – is the student loan worth it?
For the claiming student, the advantages of the loan are, of course, that they can complete the course or a limited period of it without any financial pressure. The annoying questions about how to secure maintenance and also buy the important textbook are no longer necessary. The entire concentration of the person concerned is on his university education.
The bank in turn benefits from this approach by only starting the repayment phase when the borrower already has a regular income. It therefore only takes a small risk. This can be reduced further by charging a certain interest rate during the payout period. This approach is also customary in the market and will not reduce the beneficiary’s financial livelihood.
Overall, both students and banks should benefit from such a loan. Ideally, a strong partnership is created between the two sides, based on the principle of mutual support. The student receives a monthly income with which he can devote himself entirely to his specialty – and the bank can hope for a repayment if the borrower reaps the financial fruits of his troubles and pursues a career.
All advantages at a glance:
- Parental support option
- Particularities regarding the repayment
- Limiting monthly payments to reduce the risk of debt
- economic security even in the stressful times of studying
Special features in the repayment phase – how is the repayment structured?
Of course, there will come a time when the amounts once granted have to be paid again. Depending on the bank, the maturity usually begins about one to two years after the last monthly installment of the loan has been transferred to the student. This means that there is scope in terms of time to find regular work and generate savings, but also to compensate for any delays in your studies.
In addition, in case of hardship, a further postponement of the repayment can be requested. This is usually the case if, contrary to expectations, the borrower has not found a job or there have been personal restrictions that temporarily prevent the repayment from starting. Contact with the bank is important here in order to discuss how to proceed between the two sides and to strive for a satisfactory solution.
Nevertheless, it should not go unmentioned that the former student faces a period of 20 to 25 years in paying the first installment in which he has to pay his arrears monthly. The level of the regular payments is the responsibility of both parties. Amounts between 25 and 500 USD are common here.
How the repayment works:
- The repayment is limited to 20 to 25 years.
- In addition to the loan amount, a certain interest rate must be paid.
- The amount of interest varies and should average 6 to 7 percentage points.
- Before the repayment phase, the modalities between the bank and the borrower are discussed and contractually confirmed.
- Changes can also be made to this agreement during repayment.
The private loan for students
It is easier for you as a student to get a loan on an online platform for the organized procurement of private loans than at a traditional bank. The private lenders mainly base their decisions on the purpose for which you want to use the requested loan. If you describe it as precisely as possible and at the same time explain from which sources you want to repay the loan as a student, your request will be drawn up within a short time.
The loan amounts requested by students are mostly so low that one single private lender suffices to subscribe. If you need an above-average student loan, the loan is granted by two or more lenders. The loan amount will be paid to you as soon as it has been fully subscribed.