<p>I use college confidential loans search and found one private loans that only have a 3% interest, while the loans that my college (UTSA) offered has a 8% interest. Which should i choose?</p>
<p>First, we are sort of having this same discussion in this thread: <a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1196386-why-do-people-say-federal-loans-cheaper.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1196386-why-do-people-say-federal-loans-cheaper.html</a></p>
<p>Secondly, if you want an accurate assessment you’d need to include more details about the loan. What is the exact name of the college offered loan? From the name, the folks here know the terms and conditions. To compare it to the private loan, we’d need to know if a) fixed rate? b) fees?, c) points?, d) repayment term, e) are payments deferred while in school or does your 1st payment start now? f) any other terms or conditions? g) what field/job are you studying for?</p>
<p>The terms of a,b, and c, make loan comparisons easy and objective. However the d) e) and f) options may or may not be important come repayment time, so one has to make somewhat subjective valuations on those. The g) option is mentioned b/c there are possible loan forgiveness programs for certain fields if you commit to the employment terms (like for nurses or teachers). This is an example of one (but there are more) benefits for govt. backed student loans that would not be available for private loans.</p>
<p>Finding a loan for 3% is not the same as actually getting a loan for 3%. If you can actually get the loan at that rate, it has no hidden catches, and it will stay that rate, then I would take that over an 8% loan.</p>
<ol>
<li> That 3% loan is almost certainly not a fixed rate, but one that will vary over time, and is likely to go up at some point.</li>
<li> You will usually need a co-signer for a private loan, unless you have an established, good credit history yourself.</li>
<li> Your co-signer will need good credit. That listed 3% is probably the bottom of a CURRENT range (e.g. 3% - 11%). The rate you actually get (assuming you are approved at all) will be based on your credit score, your co-signer’s credit score, the repayment option you choose (the rate for deferred repayment can be higher), and factors they won’t tell you. Based on my experience, that low 3% rate requires more than just excellent credit. You have to apply to find out what rate you will get (and even then, be careful–one lender sent us promissory notes to sign WITHOUT disclosing the rate!).</li>
</ol>
<p>See the thread listed above by jgonz123 for more detail.</p>