Countless purchases often have to be made, especially at a young age. This ranges from the financing of the driver’s license to the first apartment of your own to the financing of your studies. However, reserves can only be used in the rarest of cases. That is why numerous banks and credit institutions offer special loans for young people in order to realize their wishes.
What are the characteristics of such a loan?
A loan for young people is usually characterized by longer terms. This also makes sense, as young borrowers generally do not have a very high income during their training or studies. Due to these long terms, the monthly charges can be kept within limits. A general distinction is made between installment loans and so-called education loans.
The former are repaid in monthly installments, which is particularly recommended for young trainees who already have a certain monthly income. Furthermore, a number of institutes also offer special student or educational loans, in which the agreed loan contract is not paid out all at once, but in monthly installments. This enables the student to concentrate on his studies in peace and quiet and only start repaying the loan after successful completion.
In principle, the young borrowers do not have to provide any proof of income when applying for the loan. However, higher interest must be paid for this luxury. Banks grant loans of up to USD 80,000, the terms are usually 12 to 120 months. The general rule is: the longer the term, the higher the annual percentage rate for a loan for young people: the range is from 2.90% annual percentage rate up to 15.90% pa In addition, the interest rate is also directly dependent on the creditworthiness of the prospective customer.
What should be considered with this type of loan?
Before signing a loan contract, the young borrower should be careful not to overburden himself. So it is advisable to calculate the personal financial needs in advance and set the credit line accordingly. A certain financial buffer should always be built in to be able to finance any special expenses. In addition, it should be noted with the loan for young people that the various loan offers sometimes differ considerably in terms of terms. Therefore, a comprehensive comparison should be made before concluding a contract.