What Every Young Adult Should Know about Loans and Financing

Starting off on your own can be an exciting adventure. You’ve been living with your parents all of these years and now it’s time to finally break the chains of attachment and claim your adulthood. With that comes a lot of responsibility that you may or may not be prepared for. One of the main things you’ll have to take into consideration is how you will begin to finance your lifestyle. This starts with establishing your credit and avoiding the pitfalls that many young adults make with mismanaging funds. Here are a few loans you may soon need and how you can go about preparing and qualifying for them.  

Personal or Installment Loan
If your credit is a little rocky at the moment and you can’t get approved through your local bank or credit union, consider a personal or installment loan. You can apply online and only have to meet simple requirements to get money in your account right away. Steady employment, no past bankruptcies and a checking account in good standing are the main criteria for qualifying. An installment loan, like those through Maxlend online installment loans, is an easy way to get cash fast, put a down payment on an apartment or pay for emergency expenses.

Obtaining Student Loans
One thing that you may have been thinking about for a while is where you’ll be going to college and grad school once you graduate. Not all kids are lucky enough to go to a local college and still live with their parents while they make their way to a degree. In addition, not all parents are able to dump money into a trust fund or college savings for their children, therefore you may have to finance college on your own. While working and saving your money now can help, it likely won’t cover the entire cost of living as well as all college expenses for all semesters. This means you’ll have to find alternative ways to pay for tuition, books and living expenses. Getting a student loan is a great option for paying for college. Sallie Mae is the largest student loan lender and has flexible loan criteria for younger students. This means there is no credit check to obtain a loan, but that’s only if your parents are not eligible for a private lending loan. In addition, they only cover a certain percentage of tuition, the rest will have to be borrowed privately or obtained through grants. Make sure that you don’t have a lot of new credit cards or lines of credit taken out, as this could negatively affect your credit score and make it more difficult to obtain a personal loan.  

Auto Loan
Heading off to college can be an exciting time. You likely don’t want to be the freshman being dropped off by your parents and left without your own transportation. This is why you should try to get a reliable vehicle to meet your needs. Obtaining an auto loan isn’t easy for a young college student, especially if you have a limited income and more limited credit. In order to qualify for financing for a new or used car, you’ll need to meet the following criteria:

  • Steady employment or a consistent monthly income
  • A minimum of $1000 income each month
  • Good credit score of at least 550 or more
  • At least a three percent down payment

These are minimum requirements as each lender or dealership is different on what their loan regulations are. If you don’t meet these regulations, you may have to request a co-signer to get the loan. Asking a parent may be beneficial because your payment will be lower and the loan APR may less than what you could obtain as a high-risk borrower.

Mortgage or Rent
After graduation, you may be considering purchasing your very first home. This is a great investment, no matter what age you are. Most homes increase in value as the years go by, making any future sale a profit so you won’t lose money down the road. Qualifying for a mortgage is similar to qualifying for a vehicle loan, except the lender digs deeper into your credit history to determine your creditworthiness. If you’re a first time home buyer or considered high risk, you may have to obtain PMI or private mortgage insurance. This can make your house payment higher for the first 24 months of your loan. Renting an apartment also requires good credit, but you don’t need as much money down as if you were buying a home. Now is the time to run your credit report and pay off any old outstanding credit card debt and make sure that you make all credit payments on time from now forward.

Talk to your lender today about getting set up for a loan ahead of time. Being prepared will quickly get money in your hands or make the entire purchase process that much smoother.

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