Can a student get a loan?
29 February 2008
A personal loan can be useful for a student just starting out away from home. Some students wonder if they can get a personal loan if they only have a part-time job and not many assets, if any. The truth is, getting a loan depends more on having a steady income that leaves a reasonable amount of money after paying rent than on the sheer amount of money you earn. You probably won't be able to take out a particularly large loan, but if you don't need more than a few thousand dollars, there's a good chance you could be approved. Try these tips for maximising your ability to take out a personal loan.
1. Get a job with a steady amount of hours
If the amount of hours you do at your current workplace is extremely flexible, you'll appear to be a bigger risk to a lender. Negotiate with your employer and make clear that your financial circumstances mean you'll need a certain number of hours per week. This may be out of their hands, but many employers find themselves understaffed these days and may likely need someone willing to work a consistently greater amount of hours than other part-time workers. If you don't yet have a job you'll find that the current job market is highly in your favour, with a high ratio of positions to the number of potential workers.
2. Analyse your living arrangements
If it's possible to live with less expense than you currently do, it will be in your best interests when applying for a loan to cut out all the stops. If you're living with your parents, you're probably saving as much as you can. As a student, about the largest drain on your finances will be rent if you live away from home, so choose to live in an area with low rent housing. Share accommodation or dormitories will provide the cheapest options for living. Also, remember to take into account bills you have to pay, like for groceries, mobile phones, Internet access, and electricity so that you don't overestimate the amount you will have free to make repayments on your loan.
3. Keep your job!
The longer you have been employed at a steady income, the less risk you pose to a lender. Don't just quit a job because you can't stand a co-worker, as you'll find that almost anywhere. The job market may be in your favour to get a new job, but while you're looking for yet another part-time position, you'll be unlikely to be able to pay off your personal loan. If the job pays you enough and provides the hours you need, failing harassment or exploitative behaviour by your employer, keep with it.
4. If you have a car, try taking out a secured loan
A secured loan uses an asset of yours, such as a car or house, to guarantee a lender some measure of safety in giving you a personal loan. The pay-off for this is that you will be charged a slightly lower interest rate, so you'll end up paying less back than if the loan were unsecured. The downside is that your asset could be repossessed if you default on your repayments, but that is very unlikely as long as you take out a loan that is realistically within your means to pay off.
If you think you're ready to get a personal loan to help pay for a car, overseas trip or something else, please feel free to visit our personal loans page to choose a lender.
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