Fees & Penalties
Fees are typically one-time charges that are tied to specific services. For example, you may be charged an application fee or origination fee. Penalties come in different forms as well. A common penalty with loans are pre-payment penalties. In this scenario, you have to pay a pre-negotiated amount for paying off your loan early. In today’s competitive environment, you rarely see this penalty from private student loan lenders. Almost all lenders will have penalties if you miss a payment, so you should know the lenders procedures and penalties in this case.
The majority of private student loan lenders offer flexible repayment terms. It’s important to make sure the lender you work with offers the flexibility you need for your situation. It’s also a good idea to look at the terms regardless of your current situation as your needs may change in the future.
You may be looking for interest only payments while in school, or you may need a longer grace period than the typical six months before you start repaying your loan.
Many of the lenders will also offer the ability to release your cosigner from the loan after a period of timely payments. This is beneficial for those borrowers who need a cosigner as many potential candidates may be leery of a long term loan commitment.