Should Students Take Consumer Loans? Weighing the Pros and Cons
If you’re a university student, unless you’ve got rich parents who can afford to finance your studies and living costs at your chosen uni, you’ll appreciate just how hard it can be to survive financially.
Student loans are available in most countries, including Finland and the UK. They can be taken out to cover tuition fees, living costs, and, in some instances, some extra costs too. But it’s consumer loans covering a whole range of costs that we are concerned with in this article.
The Difference Between Student Loans and Loans for Students in the UK
In the UK, student loans, specifically, are administered by the SLC (Student Loans Company). In order to get one, you have to confirm you’re enrolled in an eligible further or higher education program. These loans cover tuition and maintenance costs. How much you have to repay and when repayments start depends on the type of plan you’re in. However, the take-off point is usually when you’re earning a minimum of £25,000 per annum. But there’s a difference between student loans and loans for students.
Whereas the terms of student loans are standard and are laid down by the government and the SLC, the terms of private consumer loans for students are dictated by the lender, including how much you can borrow, over what duration, and how much interest you’ll be charged. A key difference between student loans and loans for students is when you have to start making repayments, with the latter requiring an immediate start.
Student Loans and Loans for Students in Finland
Prior to asking for a student loan in Finland, you require a government-backed guarantee from Kela. It is the only collateral you’ll need, and it won’t cost you anything. But as you progress through your student years, you may well find that your loan isn’t enough to cover your cost of living. It’s something that many students encounter, and to get by, you might decide to take out a consumer or resort to using your credit card. It’s a case of ‘needs must when the devil drives’.
The Pros and Cons of Consumer Loans for Students
Before you decide to apply for a private consumer loan as a student, you need to be aware of the pros and cons. They include:
| The Pros of Consumer Loans for Students | The Cons of Consumer Loans for Students |
| High Limits on the amount you can borrow | No government protection |
| Low interest rates for good credit ratings | Require high credit ratings |
| Freedom with what you spend the money on | Bad credit ratings mean higher interest rates |
| A choice of fixed or variable interest rates |
One of the most common traps that students get caught out by is applying for too many short-term consumer loans and then finding they’re struggling to be able to afford all of the repayments. If you’re a student in Finland and you find yourself in this position, all is not lost. You can seek help from a digital loan tendering site that can get you a number of loan offers for what are known as consolidation loans.
Consolidation Loans Explained
If you find yourself struggling to keep up with the repayment of several debts – loans, credit cards, etc., you should review how much interest you’re being charged on each one and what the total monthly repayment amount is. The chances are that some are charging higher interest than others. You’ll also probably find that the payment dates fall on different days, making it more difficult to manage your financial situation.
Consolidation loans are all about taking multiple debts and turning them into one more easily manageable and less costly debt.
Because the amount of the consolidation debt is higher than each of the individual debts, loan companies will charge you less interest than you are currently paying. However, in order to find the best loan terms, you need to collect a number of different offers for comparison. Not an easy thing to do if you’re a busy student whose time is taken up with studies. Thankfully, help is at hand. You can turn to a Finnish consolidation loan tendering platform that specialises in comparing consolidation loan offers.
Eligibility for Consolidation Loans
The criteria for securing a consolidation loan are:
- Being at least 18 years of age.
- Having a Finnish bank account.
- Your creditworthiness.
- Having a regular income.
You can still get a consolidation loan even if your credit rating is not particularly good. However, this will mean that you’ll probably have to pay a higher rate of interest, but even so, it could still be less than the interest you’re currently paying.
If you don’t have a regular income or your income amount is lower than the loan companies require, one of two things can happen. The first is that you might be offered a lower amount, and the second is that you might be asked to offer some form of collateral.
A good loan tendering site will be able to provide you with up to 30 loan offers from various trusted lenders within 24 hours. If collateral is required, it could take a little longer.