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If you want the best personal loans for students, you’ll want to find lenders with relatively low-interest rates, modest fees, reasonable credit score requirements, and a good repayment schedule. LendStart has taken the time to look at many different lenders to find the lenders that can help students with unexpected expenses like car repairs or medical expenses. The following will help you with information about student personal loans and tops to find the best student personal loans.
Compare Top Personal Loans for Students
Below is a quick comparison chart of some of your choices when you need a personal loan for students.
The Best Personal Loans for Students According to Lendstart
- Best Overall Personal Loan for Students - Lending Tree
- Best Personal Loan for Students with No Credit History - 5K Funds
- Best Lenders that Focus on Students - Loans Under 36%
- Best Personal Loans for Students Online - Monevo
Lending Tree: Best Overall
Students want low APR loans, and they often need smaller amounts. With its broad network of lenders, Lending Tree can help to find personal loans from $1,000 to $50,000 and rates as low as 3.99% APR. Many of the lenders that Lending Tree works with have low credit score requirements as well, making them an ideal choice for college students who could have limited credit history. These factors led us to choose Lending Tree as the best overall personal loans for students.
5K Funds: Best for Students with No Credit History
Students often have not had time to build a complete credit history. Some might have no credit history at all. While that can make finding a personal loan more challenging, lending portals can help. LendStart has identified 5K Funds as its choice for the best personal loans for students with no credit history. 5K Funds offers smaller loan amounts, has a simple application process, and can secure loans for those with no credit history through its vast network of lenders.
Loans Under 36%: Best for Students with No Income
As a loan aggregator, Loans Under 36% can secure loans for people in all types of circumstances. They can even find lenders willing to work with students who have no current income. In addition, loans Under 36% offer smaller loans and flexible terms, which is also beneficial for students. It’s also very convenient for busy students, as one application is used to get loan offers from many different lenders.
Loans Under 36%: Best Lenders that Focus on Students
We also found Loans Under 36% as the lender with the best focus on personal loans for students. That’s because they can work with low credit scores and offer flexible repayment terms. Often students need small personal loans, and Loans Under 36% offers loans as small as $500. That’s a good amount to help a student through any issues causing them financial distress. Students also benefit from a lack of application fees at Loans Under 36%.
Lending Tree: Best for Living Expenses
Lending Tree is one of the oldest lending marketplaces, which has given them both an extensive network of lenders to pull from, and a solid reputation as a good choice for students looking for a personal loan to help with living expenses. Lending Tree has excellent experience in this niche. Their pre-approval process can help students find the best student personal loan when they need some help with their living expenses.
Monevo: Best for Students Online
Students spend a majority of their time online, either completing work for their classes or simply connecting with their peers. So it makes sense to choose a personal loan platform that makes online personal loans easy and understandable. We’ve found that Monevo is best for this. They have a straightforward website that walks you through each step of the process, and potential borrowers will get a list of results in just 60 seconds.
Personal Loans vs. Student Loans: What’s the difference when one is a student regardless?
It's important to know that personal loans and student loans are similar in some ways, but they can't be used interchangeably by borrowers. Some key differences separate the two that borrowers need to be aware of before taking either type of loan. The most significant difference between the two is the expenses that each can cover.
A personal loan can be used for anything, including living expenses, car purchases, repairs, or even education debts. The terms of the personal loan are not tied to the intended use.
Student loans, which can be either a Federal loan made by the government or a private loan funded by a private lender, have limitations on their use. A student loan, either private or Federal, can legally only be used for higher education costs such as tuition. Student loans can also be used for expenses directly related to education, such as book purchases, a new laptop, child care expenses for dependents, and even your internet and phone bills.
There are also similarities between personal and student loans. For example, both are unsecured loans that aren't guaranteed by any collateral. And both are installment loans with a set term and monthly payments. It's also worth noting that both personal and private student loans have credit checks and credit score requirements, but Federal student loans do not have any credit checks or credit score requirements.
Can one secure a personal loan as a student?
Many students take advantage of federal and private student loans, grants, and scholarships to finance their education. However, they can find themselves short on funds to cover living expenses even after all this. If financial aid isn't enough, personal loans can often fill the gaps. However, students should know what they are getting into before taking a personal loan.
Personal loans can come from several sources, such as banks, credit unions, and online lenders. Because these loans are unsecured and thus a higher risk for the lender, they often have higher interest rates or lower lending limits. They also require minimum credit scores and some way to repay the loans. As a result, students can struggle to meet lenders' requirements, but there are still options for personal loans for students.
Can one secure both at the same time?
Because tuition is the most significant expense for students, they often have student loans from the government or a private lender. Does that mean they are prevented from taking out a personal loan to help cover other expenses? Absolutely not! Personal loans are available to anyone, so long as they meet the lender's requirements in terms of credit score and ability to repay the loan. Students often use personal loans to cover regular expenses like housing or emergency expenses such as car repairs or medical bills. Because personal loans are not tied to their intended use, students can utilize them for any expenses, making them versatile.
Are student loans meant to cover personal expenses?
Whether you're applying for a private student loan or a Federal student loan, the first thing the funds go toward is your tuition and school fees. Typically funds are dispersed to your school's financial aid office to cover these things. Anything leftover is then deposited into the students' account. And yes, these funds can be used for personal expenses. It's understood that students need to pay for housing, food, and many other personal expenses. However, experts recommend keeping these expenses as low as possible to avoid taking on too much student debt.
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Who qualifies for a personal loan while they are a Student?
Anyone can qualify for a personal loan as a student, so long as they meet the lender requirements, typically including the borrower's credit score and proof of ability to repay the loan.
Credit Score
Your credit score is one of the first things any lender will look at when you apply for a personal loan. Unfortunately, this can sometimes create difficulties for students with a limited credit history or even no credit history. However, some lenders are still willing to consider smaller loans with no credit history, although the APR is often quite high.
Proof of Income
Proof of income is important to lenders because it demonstrates the ability of the borrower to repay the loan. Lenders often use the debt-to-income ratio to determine eligibility or set the loan's interest rate.
Co-Signers
When a student has no credit history and no income, it might be time to find a co-signer for the loan. These are usually family members or close friends who are willing to add themselves to the loan and pledge to repay it if the student cannot do so.
How do personal loans work when you are a student?
Being a student doesn’t prevent you from taking a personal loan. While a lack of credit history and stable income might make obtaining a personal loan as a student more difficult, it is certainly possible, thanks to the growth of the online lending industry. While there are many different lenders and loan needs, there are two types of personal loans: secured and unsecured.
A secured loan is collateralized by something of value. The most common secured loans are car loans and mortgages. If you default on this type of loan, the lender gets the asset. As a result, secured loans often have lower interest rates. As long as the borrower is confident that they won’t default, this can be a good route if you need a large amount of money.
Unsecured loans are considered the best personal loan for students since there is no collateral requirement. If you default, the lender can’t take any of your assets. However, a loan default will seriously impact your credit score and ability to borrow. At best, it will increase your interest rates in the future, and at worst, it could keep you from qualifying for a personal loan for years to come.
Once approved for a personal loan, you will typically receive the funds within seven business days. The interest rate will be based on the lender’s assessment of your creditworthiness and ability to repay the loan. It can vary from as little as 5-6% up to 36% or more. Loan amounts can be as little as $500 or as much as $50,000.
An alternative to a personal loan for students is a personal line of credit. This is an unsecured line of credit similar to a credit card. You get a predetermined credit limit but are only charged interest and required to pay on what you draw from the line of credit. This makes these types of loans quite flexible.
What are some common reasons for students to take out personal loans, in addition to their student loans?
Student personal loans are attractive since they offer flexibility. A student can use a personal loan for any number of expenses since they are typically not tied to any intended use (although some lenders may have some restrictions on their use). Here’s a shortlist of potential uses for a personal loan as a student:
- Emergency expenses, such as car repairs and medical bills
- Living expenses like groceries and rent
- Personal expenses such as phone and internet bills
- Moving expenses for graduating students
Using a personal loan for these expenses can be a smart move since a personal loan will usually have a lower interest rate when compared with credit cards or payday loans.
Important considerations before taking the loan & tips for paying it off
If you consider taking a student personal loan, don’t just jump right into it. There are some important considerations before you commit to such a financial step. First, be sure you don’t have a good alternative to taking a loan. Maybe a family member or friend can help you with a small loan to keep you going. If you find you do need a personal loan, start by getting pre-approved from one of the online lending marketplaces. This will help you compare your fees, interest rates, and monthly payments options.
If you can afford to go ahead with the loan, here are some tips for paying it off on time (or even early):
- Make all your payments on time.
- Find out if there are any prepayment penalties. If not, pay the loan bi-monthly to reduce interest payments.
- Prioritize the loan payment as one of your monthly expenses.
- If you work full-time over the summer, make extra payments towards the loan.
How to get a Personal loan as a Student
Securing the best personal loans for students doesn’t need to be a chore. By using an online lending marketplace, you can significantly streamline the process of pre-qualifying for a loan. Then, once you’re pre-approved, it’s a matter of comparing your loan offers and choosing the one that best fits your needs. Here’s easy to following the list of steps for securing a personal loan as a student:
- Estimate how much you need and how much you can afford for monthly payments.
- Get online and navigate to one of the online lending marketplaces. LendStart recommends Lending Tree as the best overall lending marketplace for students.
- Fill out their online lending form. This shouldn’t take more than a few minutes.
- If you have a willing co-signer, add them to the pre-authorization form.
- Submit the form and wait while Lending Tree pulls together all your loan offers.
- Once the loan offers are viewable, you can sort them to find the best offer. Maybe you only want loans with no fees, or perhaps you want the lowest APR.
- Select the right loan for your needs and formally apply for the loan. You’ll typically receive an approval or denial within 24 hours.
Other Financial Assistance for students
A personal loan can be a good option for students, but there may be alternatives that will work better. If it’s a small loan that can be paid back within a year, there are credit cards that offer 0% interest for up to 18 months, which could be a suitable option. Even better options would be federal student loans or emergency student grants. The federal student loans benefit from lower interest rates and deferment until graduation. Plus, the interest paid is a tax write-off. Emergency grants are even better as they don’t have to be paid back; however, they do come with need-based requirements that must be met.
Conclusion
As you might have already determined, the best personal loans for students aren’t difficult to locate. Most students should be able to qualify, although interest rates could be high. Still, in the event of emergencies, or when the money is needed for living expenses, they do offer students a way to secure the necessary funds. They can also help build credit history, which is an excellent benefit. We recommend you continue exploring LendStart, using our personal loans guide as a starting point in your education.
Article Topics
Personal Loans
Steve has been writing in the financial products space for over a decade, with interests ranging from personal loans to investing. He is also deeply into the blockchain space. In his free time, you can find him in the kitchen preparing delicious meals, or outside hiking and biking.
