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Student debt is something that many of us have to live with. More often than not, payments are still being made long after the mortarboard has been thrown in the air. However, even if you still have student debt, that doesn’t mean you can’t apply for other loans or credit. As many student debt options tend to be low interest and payable in small amounts over a long period of time, other lenders are less likely to be put off. If you’ve still got student debt then you can still apply for other types of credit as you graduate and go through life.
If you’re eligible for a graduate loan then you can often get a better deal on the basics, such as interest and repayment dates. Having existing student debt won’t prevent you from applying for a graduate loan. Most banks will offer a graduate loan of some sort and the institution you currently bank with is a good place to start. Graduate loans involve a fairly standard approval process often with a face to face with a staff member. Terms for graduate loans tend to be for between six months and 10 years. You can borrow up to £25,000 with a graduate loan but the interest and conditions vary from individual to individual. It’s worth noting that some lenders charge penalties on graduate loans that are paid off early.
Payday lenders are different to regular lenders. As payday loans are borrowed in smaller amounts over shorter terms, the credit criteria are less stringent. While you may not be eligible for some payday loans if you have a bad credit rating, there is normally an option to suit most people. Payday loans approval depends most on whether you are able to repay the loan when it becomes due. As long as you can provide evidence that you can make the repayment then existing student debt is unlikely to stop a successful payday loans application.
Personal loans are available to most people with a decent credit score and a proven income to make repayments. If you have existing student debt this may actually help you to get a personal loan, rather than hindering your application. Student debt that you are already repaying, where you haven’t missed payments, can provide a lender with proof that you can manage credit. It may demonstrate you are a good credit risk and a customer they can rely on to make repayments. There are many different types of personal loan, from a short-term loan with an online lender, to a long-term option with a traditional bank.
If you haven’t yet begun repaying student debt, or you’ve only recently started working, guarantor loans might be better for you. Most guarantor lenders won’t be put off by existing student debt and will be happy to lend. These loans offer a way of providing some security to a lender that the loan will be repaid. A guarantor signs a guarantee when you take out the loan that they will cover the repayments if you’re not able to. This gives lenders the confidence to lend where they may not otherwise do so – for example, if you don’t have much in the way of a credit history or your income is low.
For many graduates, having their own transport is a priority. If you don’t have access to your parents’ wheels, and your job doesn’t come with a car, then car loans can be useful. Car loans lenders are generally happy to lend to graduates with student debt, as long as you have an income to make the repayments. You can choose to borrow a car loan as a hire purchase – where you pay to hire the car and own it once the last payment is made. You can also opt for a personal contract purchase, which offers more options after the initial 2-3 year period comes to an end, including a part exchange or just returning the car.
Students often face issues when trying to obtain finance for the next stage in life. However, having student debt isn’t usually a problem. Most lenders will be happy to see debt that has been carefully managed and these days it’s so usual to graduate with debt that lenders expect it. As long as you’re able to provide an income from which you can make affordable repayments then you should be able to access the credit you need to make your next move.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
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