Is It Right to Use Personal Loan to Pay off Student Debt? - Loan Trivia

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Friday, 8 February 2019

Is It Right to Use Personal Loan to Pay off Student Debt?

A personal loan is one of the ways that some people prefer to pay off student debts. The personal loan for debt consolidation has a fixed term and payment throughout the loan period. These loans also don’t have any prepayment penalties. So, paying off student debts using a personal loan is something to be considered. 

However, you must be aware of its pros and cons.

Pros:

  • Using a personal loan, you may get access to a lower fixed-rate loan.
  • The personal loans have a shorter payoff period; hence you can pay off the loans faster.
  • Another major advantage is that you can even consolidate multiple student debts into one payment.
  • Unlike many student debts, a personal loan is something that’s dischargeable in bankruptcy.
  • If you have qualified on your own for a personal loan, the person who has co-signed for your student debts will not be obligated for any of your new loans. 

Cons:

  • You could lose your benefits of deferment and forbearance options on your federal loans.
  • Many lenders have a limit on the loan amounts in the case of a personal loan.
  • There are no tax benefits on a personal loan.

Should you apply for a personal loan for paying off student debt?

Depending on your financial situation and after analyzing all the pros and cons, you can figure out your repayment goals. This way you can realize yourself whether it’s a good option for you or not.

Read Also: Personal Loan in Paying Off Your Student Debt

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