Financial stability is one of the key factors to becoming a successful and career-minded individual. There is a multitude of options for personal financing, and it's important to weigh your options before you make any decision regarding taking out a loan or borrowing money. When you are applying for a loan, make sure you ask these questions. (Psst... if you're applying for a Skills Fund loan, we've answered these questions for you!)
What Questions Should I Ask Before Applying for a Loan?
July 17, 2017
Q1: What are the qualifications for the loan?
It's important to know if this is the right loan to be applying for. Some loans are only available to residents in certain areas, or with certain credit scores. Some lenders do not approve people with certain education backgrounds or income levels.
Skills Fund: We’ve worked closely with our bootcamp partners to provide students - of all backgrounds and walks of life - access to competitive financing. Our basic underwriting criteria includes being a US citizen / permanent resident with no bankruptcies and no history of default on a public or private loan.
Q2: What is the loan application process?
Some loans take longer than others to apply for, and some loan applications need to be done in-person at a bank or office. Some lenders require you to send in a W2 or utility bill in order to prove a particular income or a history of making on-time payments. Bear all these factors in mind while considering different financing options!
Skills Fund: Typically, the process of applying for a Skills Fund loan takes less than ten minutes. You can e-sign your loan application without having to fax anything in, in most cases. We've made it as clear-cut and simple as possible because we want you to focus on your immersive program! We've created a blog article which outlines the five steps of what goes into a Skills Fund loan application - check it out here!
Q3: What do I need to provide in my application?
Some lenders request a minimal amount of information, while other ask for more detailed items (such as your GPA, work history, and yearly income.)
Skills Fund: We need information about the school you plan on attending, as well as several pieces of personal information and the type of loan you'd like to receive. We've created a blog article which outlines exactly what you need to apply for a Skills Fund loan - check it out here!
Q5: Do you have cosigner options?
If you have no credit history or a low credit score, often times a cosigner is used to supplement your application. When there is a cosigner on a loan, you and the cosigner are held responsible if there is a loan default.
Skills Fund: Skills Fund encourages students to apply by themselves first because you should be in charge of your financing. Skills Fund encourages students to apply by themselves first. If a student does not meet the loan underwriting criteria, a cosigner could be needed. You can (1) apply individually, and should you not be approved, you may be given the opportunity to reapply with a cosigner, or (2) initiate your loan process with a cosigner. We advise you to apply individually to begin, and should you not be credit approved, you may be given the opportunity to amend your application with a cosigner.
Q6: Do you lend to permanent residents or foreign nationals?
Some loans are available for international applicants, while others are focused on United States residents solely.
Skills Fund: U.S. citizens and Permanent Residents are eligible to apply for a Skills Fund loan.
Q7: Do you lend in all 50 states?
More localized lenders may only be able to lend in certain states, because of a bank charter.
Skills Fund: Our loans are available for students in all 50 states and US territories.
Q8: Are there any prepayment penalties?
Often times, if you want to pay your loan back in full prior to the loan term ending, you may be faced with an associated fee. Some lenders will advertise "no prepayment penalties" - but you'll still be required to pay the rest of the capitalized interest (which is the same amount you would be paying if you took the whole loan term to pay off your loan.)
Skills Fund: We have no prepayment penalties, and we won't make you pay interest for the entire loan if you're not actually taking the whole loan term to pay back what you've borrowed. You may pay off your loan at any time without any fee. Why? Because similar to our underwriting, this is an investment in your future. You shouldn't have barriers to your professional and financial health and future.
Q9: What will my interest rate be?
You should know exactly what your interest rate is before you apply for a loan. If you're given a "range" of interest rates you may fall into (for example, "Fixed rates from 6.00-14.00%") be prepared to have the loan's interest rate be the largest possible amount. Also check for the footnotes: you might read "Pay as low as 5% interest*" but then see at the bottom of the page something along the lines of "average interest amount is 11%." Marketing can be tricky!
Skills Fund: We work with partner schools to ensure as many of their students as possible have access to competitive financing. Please see your specific bootcamp’s Skills Fund site for further details. The specific page can be found by visiting our School details page here. At the time of this writing, the highest interest rate we have is 8.99% for a 36-month loan (11.45% estimated APR), and 10.99% (12.55% estimated APR) for a 60-month loan.
Q10: Is the interest rate fixed or adjustable?
If your loan has an adjustable interest rate, you run the risk of having your interest rate change in the future, causing your monthly payment amount to rise.
If the interest rate is adjustable, ask these two questions:
- What is the maximum interest rate increase for each adjustment period?
- What is the maximum interest rate increase over the lifetime of the loan?
Skills Fund's interest rates are always fixed. They won't change at all through the life of the loan.
Q11: What will my origination fee be?
The origination fee is the cost that is added on top of the interest rate. It's the fee associated with processing the loan. The origination fee is part of what goes into your APR.
Skills Fund: All of our origination fees are disclosed on our specific bootcamp's Skills Fund sites. They can be found by visiting our School details page here. At the time of this writing, Skills Fund origination fees are either 3% or 4%, depending on the partner.
Q12: How much will my monthly payments be?
After you've figured out your bootcamp budget, realistically look at the amount you want to pay each month.
Skills Fund: With our awesome loan calculator, you can see your exact monthly payment amount before you apply. Additionally, we've worked with a number of our bootcamp partners to offer Interest-Only loans, in which students make interest-only payments while in their bootcamp and for two months following their in-program period.
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Skills Fund only works with the best skills training programs, because we believe all students deserve a Return on their Education (ROE). If you put your precious time and money into an education, you deserve an outcome that places you in a career you love.