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Use Loans for Bad Credit for Your Personal Items for College
26 Dec 2018

Student Debt Simplified: Using Loans for Bad Credit

70% of students graduate with student debt. In fact, it’s such an issue, that combined, all student debt totals to over $1.5 trillion, and politicians are labeling it as a crisis.

Many people are paying a good chunk of their salary every month to lessen the mounting piles of student debt.

And if you’re one of the millions of students about to enter into debt, or are trying to claw your way out of it, we’ll discuss some of your options.

Student debt doesn’t necessarily mean you’ll have bad credit, but it can exclude you from big-ticket purchases like cars or homes. As a result, you may need a to consider loans for bad credit to help keep your monthly costs down and bring you closer to repaying your debt.

Get a Loan to Build Your Credit

If you’re just starting out on your college journey, you’ll soon realize that there is an entire world of credit cards and new debts you’ll be taking on as an adult.

You’ll start out as a small fish in the credit pond, meaning that if you want to take out a credit card or get a loan for a car or other item, you’ll find yourself in quite a conundrum.

For example, you won’t be able to take out a bank loan or get a credit card unless you have credit. But you can’t get credit without taking out loans or a credit card.

One way to solve this issue is to take out personal loans, especially those that you know you can pay back. So, even if you know you’ll be able to pay for a car or some of your school supplies with money from your parents or your part-time job, taking out a loan is still a smart thing to do.

Most of the time, you’ll need to take out a loan for people with bad credit to get on the ladder. This, of course, doesn’t actually mean you have bad credit. It just means you don’t have any.

If you take out a loan for college expenses and pay it back immediately, it builds your credit history.

Your future self will thank your past self for using credit wisely.

Use Loans for Bad Credit for Your Personal Items for College

If you’re just starting college, you may be totally overwhelmed with all of the loan options out there. And that’s understandable.

Many lenders recommend personal loans for smaller items, like paying for your laptop, books or other items you’ll need for school. This is because many loans for bad credit come with high-interest rates, which may be even higher than the student loans you took out originally.

A personal loan, when kept separate, can be paid off almost immediately. You can get a part-time job or open up a small business on the side to help you pay off the monthly fees from the loan.

You’ll get all the items you need for school immediately while building a serious credit history.

Perks of a Personal Loan: They’re Dischargeable

One huge perk of personal loans is that they’re dischargeable. That means that if you fall on hard times in the future, you can actually get the debt written off.

Student debt, on the other hand, follows you for a lifetime. Bankruptcy will not absolve you from your responsibilities in regards to student debt.

If you have to file bankruptcy in the future, your personal loans will become null and void.

Of course, this isn’t something you should hope for, as bankruptcy should be considered a last resort. But it is something to consider if you’re using loans to pay for your tuition.

While you can’t take out huge personal loans to pay for private school tuition, you may be able to pay for a state school or community college through personal loans.

For individuals that never pay off the sum of their student loans, the debt technically gets forgiven after a certain number of years. While that seems like a good deal, it doesn’t always work out that way.

If you own any kind of assets, the government or the bank can take out a lien on it at the 25th year mark. That means that even if you’re dirt poor and living on public assistance, they can still take away your home, car or other assets in order to help pay for your student loans.

This is a situation many students don’t see themselves in the future when they start out at college. That’s understandable, especially since no one goes to college anticipating an outcome like that. But, life isn’t always predictable. Therefore, even with the best-laid plans, you could wind up in that situation.

It can be avoided with personal loans in lieu of federal loans.

Consolidate Debt with a Bad Credit Loan

After college, a lot of people find that they’re paying debt here, there and everywhere. They may be paying off two or three credit cards from nights of partying while also trying to pay off student loans.

If you’ve ever been in this situation, you’ll know that it can be a struggle to keep up with all of the due dates and where to send your payments.

You can take out a loan and then pay off all of your debts at once, putting them in one place. That way, you’ll only pay them off at one source, instead of trying to pay 13 different creditors at once.

While bad credit loans often have higher APRs and interest rates, it’ll give you one flat interest rate to keep track of. That way one credit card isn’t piling on the interest while you’re attempting to put out several small fires at once.

This allows you to put out the one “big fire” of debt, even though the interest rate may be a little bit more than some of your credit cards or student debt.

Open Up New Possibilities: Use Bad Credit Loans to Expand Your Horizons

Student Debt Simplified: Using Loans for Bad CreditHave you thought about studying for a summer in Italy or spending the spring semester in Australia? Plenty of students decide to learn about a new culture by immersing themselves in it, and most find it to be a wholly worthwhile experience.

Your regular student loans will typically cover your tuition to a foreign school, even if you decide to enroll in it independent of your university.

However, you’ll have the same exclusions and limits that you would with a student loan in the United States. This is because you can take out federal loans in for studying abroad, but they’re subject to the same exclusions.

With a personal loan, you can make your experience all the more worthwhile. You can get your plane ticket, extra luggage or splurge on weekend trips around Europe or Asia to get the full experience while you’re there.

If you do study abroad, it will be an experience you’ll never forget.

Nearly 290,000 American students study abroad each year, and the number continues to rise as people begin to see the importance of travel and it becomes more accessible.

In today’s world, you can get flights abroad without spending a pretty penny, which is a huge contrast to how things were even just 10 years ago.

There are also many trains and low-cost airlines you can travel on once you get to your destination to ensure you get to see everything you wanted to while you’re abroad.

With a personal loan, you’ll have access to more funds than you might have had with student loans alone.

Personal Loan Payments are Due Immediately: Trust Us, This is a Good Thing

While you may be excited about the fact that you don’t have to start paying back your student loans until several months after you graduate, you shouldn’t necessarily look at this as a good thing.

40% of students are expected to default on their student loans by 2023. That’s almost half of college graduates.

Defaulting on your student loans can lead to grave consequences, including your debt being sent to a third-party collections agency. If this happens, the student loan provider will sell your debt to another institution.

Once that happens, they can choose to sue you to force you to pay your debt. In some cases, you can negotiate with them or set up payment plans, but this also means you have a lawsuit on your record.

As mentioned above, it can also mean that they can take your assets away from you, like taking out liens on your home or car.

With a personal loan, your loan repayment will likely begin immediately. While that may seem a little bit overwhelming, it does mean that you won’t need to worry about defaulting on your loan.

It also means that you won’t have the interest compounding.

Many students see student loans as something they don’t have to worry about until later. But the truth is that if you wait to pay off your student loans, you’ll continue to accrue interest. This means you’ll have more to pay off in the long run.

While personal loans might have higher APRs, their terms may be shorter. This means that the amount of time you have to pay back the loan is not as long, thus the interest won’t continue to compound until it becomes a totally overwhelming bill you’re looking at when you graduate.

A personal loan helps you stay on top of repayments because they’re required as you go. Letting loans roll off your back is never a good idea.

With interest staying the same throughout the entire period, and repayment terms starting immediately, you won’t be graduating facing a huge loan sum.

A Personal Loan is Better Than a Credit Card

Often, you have two choices when it comes to access to lending as someone with no or bad credit. These two choices are often credit cards or taking out a personal loan.

Some people erroneously believe that taking out high-interest credit cards is the best way to start rebuilding, or building, credit. This isn’t true for a number of reasons.

The first issue with credit cards is that they have no time limit for repayment. They may have limits, but you can pay off small amounts and then start to charge items again.

One of the biggest problems with credit cards as well is if you are doing well with your payments, companies will often extend your line of credit. That’s a huge problem, especially for college students who are just learning to balance a budget.

For some, it can mean carte blanche to go out and buy everything they’ve ever dreamed of. And as long as they make the minimum payments, they think everything is peachy.

But that isn’t the case and can trap them in endless cycles of debt.

personal loan is short-term and is limited by the amount of money you take out.

Once you take out the loan, that’s it. You don’t get more credit because you’ve been repaying the loan successfully. This way, you can manage debt a little bit better and ensure that you’re not slowly crushing yourself with it without even realizing.

Using Personal Loans as a Solution for Student Debt

Loans for bad credit aren’t just for individuals trying to rebuild credit after a bankruptcy or other life event. Instead, they can be used for a wide variety of circumstances, including mitigating student debt and helping college become more accessible.

If you’re interested in getting a quick personal loan, click here for some of our top tips and tricks.