Student loans are popular, and many people struggle to pay them back. However, some people have little money for student loans and need help in the meantime. Bad credit hardship loans are a good solution for these individuals.
The Pros
Hardship loans give a low interest rate, which makes payments easier to afford than paying back student loan debt. The interest rates on hardship loans can range from 181% APR to 853% APR while federal student loan rates range from 5.00% – 7.00%. Depending on the borrower’s credit score, they might be eligible for a very low rate or zero percent payment if they don’t miss any payments before applying or after completing their program of study..
Hardship loans provide financial assistance for those who need it. It’s a great option when a person can’t pay back their student loan debt at the current high interest rates. Graduated repayment plans, IBR and PAYE make it possible for people to pay off the loans without paying more than what the program is set up to go along with.
Administration is easy. Some companies charge a fee when you apply, but other companies don’t charge anything at all in order to get help with your payment or servicing on your student loan. You’re not required to give any personal information or take out insurance before applying; this makes it easier to get help with student loans. You can apply online or through your phone, and you’ll usually receive a response within a few days. In some cases, you will be eligible for an instant decision, which means that you’ll get your decision without applying for other options first.
You can get approved for a higher rate than the one listed on your federal student loans. The interest rates listed on the FRS are normally announced at the beginning of every year, but sometimes they change depending on the conditions of the economy. There are many reasons why interest rates could change and there are also many factors affecting them such as stock market value or unemployment rate in specific states and cities. Your federal student loan rate might be affected by these factors.
Con
Hardship loans don’t have a good reputation. It takes time to build good credit when you owe over $7,500 on student loan debt. If you don’t pay for 120 days on your student loan, your payments will go up by 7% (though sometimes it is lower if the interest rate was already high). Your payments could go up by more than 7% if you miss a payment during the grace period. Hardship loans are not always easy to get, though they are available for students who need help with their credit.
