Many students find themselves on tight budgets while they make their way through university. Course fees and living expenses often start piling up quicker than expected when it's your first time out of home or if you're only able to work part-time or casually and earn minimum wage (or close to it). So, it’s good to know that if you find yourself in need of a loan, there are options available to you.
What's in this guide?
- How does a student loan work?
- What types of personal loans can students consider?
- How will I know if I am eligible for a student personal loan?
- What discounts and eligibility criteria apply to student personal loans?
- How to compare student loans
- Compare personal loans available to students side by side
- What to avoid when applying for a student loan?
How does a student loan work?
Student loans work the same way as personal loans available to others working full-time and who have left their studies. The main differences are the eligibility criteria, which is usually more flexible to allow those with lower incomes, with fewer assets or those with part-time jobs to apply and be approved. Because of these, student loans are usually for smaller amounts and the terms and repayments may be stricter. These personal loans may also come with benefits, such as discounted interest rates or waived fees.
Keep in mind that while many student loans can be used to finance a range of purposes, you may want to avoid taking out a student loan to cover small, everyday expenses. You need to factor the loan repayments into your budget before you apply, and if you are already struggling to manage your everyday expenses, adding loan repayments into your budgets may not be your best option.
What types of personal loans can students consider?
When it comes to selecting a student loan, there are a few options available:
- Secured personal loan. This type of loan requires you to attach an asset, such as a car or equity in a home, as a guarantee in order to be approved for the loan. These loans can be fixed or variable and usually come with lower rates due to the guarantee, which can be repossessed by the lender in case you default on the loan.
- Unsecured personal loan. This loan does not require a guarantee, although as such, usually comes with higher rates. This type of loan is generally more flexible and can be used for a range of purposes, and also comes with fixed or variable terms.
- Medical student loan. This is an innovative type of loan offered by a few lenders to medical and dental students. Qualifying students in their final year of study can secure a loan that they can put towards their course, living expenses, debt consolidation, or other purposes.
- Graduate loan. If you’re a university student in your final year of study, you may be eligible to take out a loan and enjoy no repayments for the first year. This graduate loan can be used to finance anything of your choice and can help cover expenses while you find a job in your first year out of uni.
- Car loan. If you’re looking at purchasing a car, students may also be eligible to take out a car loan with a wide range of lenders. These loans require that you attach the car as a guarantee on the loan, but in return you can usually enjoy quite competitive rates and fees.
- Payday loan. If you really find yourself strapped for cash and in an emergency situation, you also have the option of taking out a short-term loan. These are small, short-term financing solutions and can be accessed by those receiving benefits, working part-time, or even those with bad credit.
Student loans comparison
- SocietyOne Unsecured Personal Loan: 9.51% p.a. comparison rate. A SocietyOne personal loan offers lower rates for good credit borrowers.
- IMB Secured Personal Loan: 6.8% p.a. comparison rate. A competitive secured loan that can help you finance that unsecured purchase.
- HSBC Unsecured Personal Loan: 9.06% p.a. comparison rate. A competitive fixed interest rate and flexible repayments. Students can apply.
- NAB Personal Loan Unsecured Fixed: 11.58% p.a. comparison rate. Get access to the funds you need with the NAB Unsecured Personal Loan.
How will I know if I am eligible for a student personal loan?
Checking if you're eligible for a personal loan is relatively simple. Just make sure you do the following:
- Check the minimum eligibility criteria. Lenders will have minimum eligibility criteria that need to be met before you apply for a personal loan. This is usually to do with your age, employment and income. Some lenders have very tight minimum eligibility criteria and others are more flexible. Before you submit any application to a lender, make sure you meet every minimum eligiblity criteria. Finder also lists the minimum eligibility criteria for loans on every review page and in the table below.
- Confirm with the lender if you are unsure. Not sure if you meet one of the criteria? Call the lender or jump on live chat and confirm with them directly before applying. This is an easy way to avoid a rejection being listed on your credit report later on. This can inhibit your ability to be approved for subsequent loans.
- Consider ways to improve your application. There are many ways for you to improve your application before you apply. For example, a couple of lenders (such as NAB) note on their site that if you open a transaction account with them for a few months before you apply for a personal loan and establish a good history with them, you may have more of a chance of being approved. If the lender you're applying with doesn't offer transaction account products, you could consider building up your savings a bit more before applying or repaying your credit card debt a bit. Anything to prove you are a reliable borrower.
What discounts and eligibility criteria apply to student personal loans?
|Lender||Eligibility criteria||Benefits for students||Review the loan|
|Bank of Melbourne||-||Review|
|People's Choice CU||-||Review|
How to compare student loans
Before you apply for any student loan, it’s important to compare your options to ensure you choose the most competitive one for you:
- How much can I afford? While you may be approved for the loan, keep in mind that ultimately it’s up to you to decide whether you can afford the loan or not. Take a look at the rate, the fees, and see how much your repayments will be. If you don’t think you’ll comfortably make the repayments, you may need to reconsider the loan. Use our personal loan calculator to help.
- Who is the lender? Are they reputable? Can they be easily contacted? Have other customers left positive reviews of their services/products online? The reputation of the lender should inform your decision.
- How much can I borrow? You should also check the loan amount being offered to ensure it will be sufficient for your needs. Keep in mind that the amount you’re actually approved for will depend on the criteria set by the lender and your ability to repay the loan.
- How competitive are the rates and fees? Compare the rates and fees you will be charged to other similar loan products and see how they fare. Are they competitive? You want to select the product that will cost you the least, so make sure you’re getting the product that’s giving you the best deal.
- What are the restrictions? You should familiarise yourself with the terms of the loan to see if there are any restrictions that will affect you. The last thing you need is to take out the loan only to find out you can’t use the loan amount the way you wanted, or you can’t make extra repayments like you’d planned. Find out what you can and can’t do with a personal loan.
Compare personal loans available to students side by side
Just because you are a student, doesn't mean you don't have options available for finance. Compare your options below.
What to avoid when applying for a student loan?
While student loans can offer you a way to access finance that may be needed by you, you should consider your ability to afford the loan before applying. Students are generally on tight budgets, and a loan is a serious and long-term expense to take on. Consider your financial circumstances, compare the options available and decide whether this loan is right for you.
Personal Loan OffersImportant Information*
You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.
You'll receive a fixed rate between 10.69% p.a. and 18.69% p.a. ( 11.58% p.a. to 19.53% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
You'll receive a fixed rate between 7.5% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
You'll receive a fixed rate between 7.95% p.a. and 16.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.
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