As you start to look for ways to supplement your federal student loans, you’re probably wondering which private lender you should choose. Some lenders offer fixed or variable rates. Others offer low starting interest rates but don’t offer fixed rates. Some have gone as far as possible to offer protection in case of unemployment or other financial hardship, just like you’ll get for your federal student loans. So, should you go with one of the big names like Wells Fargo, or should you do some more digging for a better deal?
With more and more people seeking additional student loan money to close the gap between the cost of attendance and the loan money they qualify for from the federal government, private lenders are getting competitive! Not too long ago, most students could cover all of their costs without seeking additional funding, and banks like Wells Fargo found their efforts were better spent on other types of loans.
Today, though, tuition rates have skyrocketed while federal student loan caps have stayed stagnant. As a result, banks like Wells Fargo have refocused their attention on providing attractive private student loans.
Getting a Student Loan from Wells Fargo – The Pros
As you consider which lender to use for your private loans, keep in mind that Wells Fargo student loans come with a few attractive discounts for current Wells Fargo customers. If you already have an account with them, Wells Fargo will give you a 0.25% relationship discount on your interest rate. They also offer a 0.25% discount if you sign up for automatic payments each month, and they often run promotional discounts at the same rate, as well.
If you combine all three of those discounts, you can take 0.75% off your interest rate. That’s a significant savings over a 15-20 year loan. Right now interest rates for variable interest loans range from 4% to 8.75%, which means you could potentially see an interest rate of 3.25% if you took advantage of all of the discounts above.
Getting a Student Loan from Wells Fargo – The Cons
Of course, there are some downsides to working with Wells Fargo on your student loans. If you choose a flat rate loan that’s guaranteed not to spike each year, you’ll have to settle for a rate of 7.49% to 12.29%. Even with a 0.75% discount, the high end of that range is a little bit scary.
Another disadvantage of going with Wells Fargo is their stringent repayment rules. There is no real protection against unemployment or financial hardship when you have Wells Fargo student loans. They do offer a two-month forbearance on your loan if you are having economic difficulties, but if you cannot pay again after two months, you’ll be considered in default. Furthermore, you won’t be able to qualify for another forbearance until you have made on-time, in-full payments for a full year.
If you have a cosigner, and you want to release them from your loan, you will have to make all payments on time and in full for 24 consecutive months. At that point, you’ll have to pass a credit review conducted by Wells Fargo. If you do not pass, your track record won’t help your cosigner; they will be stuck with your loan until you can pass a credit check.
Should You Look Into Wells Fargo Student Loans?
Do you already have a good relationship and an active account with Wells Fargo? Is your credit history excellent? Is your income stable, sufficient, and secure? If you answered yes to all of these questions, you’ll have great luck with Wells Fargo student loans.
However, if you don’t already have an account with Wells Fargo, you’ll only be eligible for a discount of 0.25% on your interest if you sign up for automatic debits on your loan. Also, if your credit isn’t great and you don’t have someone with great credit who’s willing to put their name on your loan for an extended period of time, you might not even be approved for a loan at a reasonable interest rate. If you’re at all concerned about your income and/or you don’t have savings put aside in case you’re laid off from your job, you should also consider a more forgiving lending entity.
Not every lender is right for every student. Choosing the best lender for you involves looking at the benefits they offer and the disadvantages, too. You need to know what you’ll be facing if you lose your job or run out of savings. You also need to know if there are any penalties for paying your loan off early, as well.
If you plan to try to save money on interest by paying down the principal as quickly as possible, you absolutely need to find out about your lender’s policy on early payments. Wells Fargo is a well-known commercial lender, and they’ve helped a lot of people. They could be the right lender for you, but you need to know yourself and your financial situation to determine that.
Compare and Apply for Student Loans TuitionChart.com
TuitionChart.com works hand-in-hand with the best, most trusted names in private student lending to help students and their families find the money they need for college. Through use of comparison tools and loan searches, TuitionChart provides over 20 different loan options for students. TuitionChart.com is designed to help students and their families wend their way through the maze of financial aid information.