Other student loans

There are other types of non-Government issued loans available to students. Some financial institutions offer regular consumer loans for school, lines of credit and emergency loans.

Lines of credit are pre-set amounts of money from which you can withdraw sums as needed. You pay interest only on the money you withdraw. Other specialized loans, like Emergency loans are usually disbursed by your school’s financial aid office. They are short-term loans—usually for 90 days—and are for students who are in dire need.

Differences between government student loans and bank loans

  Government student loans Non-government student loans
Do I need someone to guarantee the loan? Generally, this is not required. Yes, it is possibly required.
Does interest build up while I am in school? Interest does not have to be paid by students with full or part-time federal student loans until they have left post-secondary education or have reached their lifetime limit for assistance. Yes, interest accrues (builds up) while you are in school. Interest rates may be higher or lower since the rates are not set by the government.
How soon do I have to start paying back the loan? Six months after leaving post-secondary education. Repayment terms may be more aggressive than with government-issued loans. Immediately after receiving the loan, you are expected to start paying it back.
Is there help available if I have trouble paying back the loan? Yes, some forms of repayment assistance, such as getting a temporary relief on paying principal and interest, are available. It varies by loan provider and is typically more difficult to get.

Negotiating a bank loan

There is a lot you can do to get a bank loan at a good interest rate.

  • Shop around

    Ask your preferred financial institution to match a competitor's best offer. If you or your family have frequently dealt with a certain bank in the past, ask for a preferred lending rate.

  • Don't feel intimidated

    Banks want to have long-term relationships with their clients to maximize their profit. Ask them to explain any unclear terms. If you don't agree with their terms and conditions, consult another bank.

  • If you are turned down for a loan, find out why

    Your credit rating might be based on an inaccuracy. Get a copy of your credit record from your local Credit Bureau - everyone has the right to receive this.

  • Always ask for a lower interest rate

    You can always try to negotiate an interest rate. Ask your bank for a rate that is a quarter- to a half-percentage point lower than their original offer. If they agree, you could save a lot of money in the long run.

  • Ask about lump sum payments

    Find out if you can make lump sum payments without penalty when you’re paying back your loan. This is important, especially if interest rates start to rise.

To find out more about your rights and responsibilities when dealing with banks, visit the Web site of the Financial Consumer Agency of Canada.

Bank loan repayment guidelines

  1. Make payments on time! This boosts your credit rating and improves your chances of getting future loans at reasonable interest rates.
  2. Keep records of your payments—banks can make mistakes, too.
  3. Pay down your debt if you ever have surplus cash during school, and do it as soon as possible. Start with the loan charging the highest interest rate if you have more than 1 loan.
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