How To Pay off Loans Your Parents Co-Signed

Co-signing a loan with a parent is a great way to help your child manage the costs of going to college. Co-signing a loan for a student also works as a security blanket in case your child falls short on their finances and cannot make payments on time or at all. We are going to show you how How To Pay off Loans Your Parents Co-Signed.

Parent PLUS loans

The loans require no credit check. So you can qualify even if your credit report is less attractive. However, they need you to co-sign the loan with the student to receive any funding.

Credit history will not prioritize if you choose to take out this type of loan. You can get a fixed or variable rate for the parent PLUS loans depending on the financial institution you go through to get this loan.

Stafford Loans 

Stafford loans are one of the lower interest rate options that require your child to have a good credit history to get approved. However, unlike private Stafford Loans, Stafford federal loans do not always require co-signing.

Some institutions will allow you to fill out an application with just your information. Other places may want both you and your child’s information before approving any funding. It all depends on what changes were made when they reissued their Stafford loans.

Perkins Loans

Perkins Loans require both your and your child’s information on the application to be eligible for any funding. . The interest rate on these loans varies depending on whether your child goes through a private school or a public school.

However, you can pay until six months after your child graduates or drops below half-time status, which is a plus.

Private Loans

The interest rates on these loans vary depending on whether you choose a variable loan or a fixed-rate loan. It also depends on your credit score and the amount you request from the institution. 

Private Student Loans

Some organizations are set up specifically to offer a private student loan, but these are not linked directly to the government. The interest rates vary depending on the organization.

However, this is a less popular option amongst student loan borrowers since it can take more time for them to get approved.

How to repay the loans

The last thing you’d want is to be in debt and unable to make your payments. If you’ve ever been there, you know that it can add negative stress to your life. 

However, if the only consequence is guilt, then the time has come to let it go and take steps towards becoming debt-free so that you can sleep better at night:

1) Make a list of all debts owed

The balance left on each account, interest rates, and minimum monthly payments due. Include any outstanding loans from parents or relatives who cosigned for you.

2) Calculate the total amount of all debts owed

This includes adding up all balances on any outstanding loans your parents co-signed with you.

3) Calculate the monthly payment for each debt owed

If possible, include interest rates and minimum payments due (if you cannot calculate it, don’t worry about it).

4) Add your total monthly payment to your monthly expenses.

 Include rent or mortgage payments, utilities, and food costs. This will help determine how much money you can save per month toward paying off these loans.

5) Make extra payments on loans first if needed

You can find more information about this by visiting MoneyTips’ ” How to Pay Back Debt. ” Depending on what method works best for you, make extra payments on top of the minimum monthly payment.

6) Divide each debt owed by its balance to get the daily interest rate 

This will give you an idea of how much interest is accruing on your debt per day (and increase your loans’ overall balances).

7) Set aside 10% of your income for paying off your debts

You can always devote more if you want or less if that works better; be sure it’s 10% of what you earn. If you’re already giving up half of all your income towards rent and bills. However, it may not be possible to do so without finding additional sources of revenue.

8) Keep track of your balance each month

This will help motivate you to keep making extra payments each month. 

9) Once you’ve paid it all off, do not co-sign on any loans for other people

Doing so should only lead to heartache again if things don’t go so well for them. 

10) Celebrate!

You finally did it! Take time out of your day or week to celebrate by doing something you enjoy and deserve. You’ve worked and made sacrifices for this, and now you can enjoy the fruits of your labor.

These are ways How To Pay off Loans Your Parents Co-Signed. Keep track of your balance to help motivate you to keep making extra payments each month.

If possible, set aside 10% of your income to pay off all debts (if you cannot afford to do so, then decrease or increase the amount as needed).

Tags

  • personal, loans
  • private lenders
  • student loan
  • primary borrower
  • student debt
  • student loan
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