As a full-time student it can be difficult to juggle intensive studying and personal finances, but it’s in your best interest to keep on top of both! Failure to keep on top of your money could mean that you’re left struggling to afford regular payments. In this circumstance, a bad credit loan or personal loan might come in handy.
Borrowing more money on top of your student loan might seem like an odd move, but if you’ve managed to overspend and need a quick boost, getting a loan that you can comfortably repay would solve the issue. Have a read below of our short guide telling you everything you need to know if you’re considering getting a loan as a student.
What to do if you’re a student struggling with money
If you start struggling for money, here are some steps you should take:
- Write down a list of all your incomings and outgoings
- Work out the difference between them and find out how much you need to make up the shortfall
- See if there is anything you can cut back on (food, going out, subscriptions etc.)
- Explore if there is any way to increase your income (getting a job to fit round your studies, any additional bursaries you can apply for)
- Research online using the Money Advice Service
- Seek financial advice from your university or student union
Whilst your student loan and related bursaries will usually cover all your major expenses such as tuition fees and accommodation, you will often find that there are many more expenses that can leave you out of pocket.
They include textbooks, stationery, public transport, petrol, car insurance, buying a computer and licences for software packages. The list goes on, as there are different expenses depending on what course you are studying, which can leave you struggling for money at some point during the year.
Differences from student loans
Personal loans for students should be a last resort, but can still be useful in some circumstances especially as you’re free to spend it as you please. You will find the following differences between a personal loan and a student loan:
- Tuition fee loans go straight to the university – if you have successfully applied for a tuition fee loan it tends to go straight to the university rather than into your account, unlike a maintenance loan or a bursary
- Repayments are based on your income – when it comes to government loans, you only have to start making repayments once you earn a minimum annual income (currently set at £21,000). Repayments for personal loans, on the other hand, usually start a month after taking out the loan and continue every month until the entire amount is repaid
- Acceptance criteria based on being an enrolled student – whilst your acceptance for a government loan is based on you being enrolled as a full-time student, a personal loan is often based on your income. This means you will normally need some sort of income from a part-time job to be accepted for a personal or bad credit loan
What should I do if I need to borrow money as a student?
A credit card is one way to assist with an expensive month, but as long as it is used responsibly and you can make regular repayments. Like an overdraft, it is money that isn’t yours, so will need to be paid back eventually, so it’s worth planning ahead.
One form of bad credit loan is a guarantor loan, which means you would get someone to act as a guarantor (normally a family member). This is an option for a student wanting to borrow money, but will put yourself and your guarantor under pressure to repay. As above, only take this loan out if you can comfortably repay the total amount.
What should I avoid when borrowing as a student?
There are a few things you should avoid when it comes to borrowing any sort of money during your time as a student:
- Spending all at once - should try and avoid overspending on your student loans so you aren’t forced to apply for a personal loan in the first place. Instead, work out a weekly budget and stick to it. This will make sure you don’t get into financial trouble and you stay on top of your money management throughout the year
- Payday loans – these types of loan can seem attractive in emergencies, but often they have very high interest rates and can be expensive to pay back over a short term. Stick to a personal loan or bad credit loan with a reasonable rate
- Taking out a loan without being able to repay – if you have to take out a loan, you will only get in more financial trouble if you aren’t able to make repayments when required. Only borrow if you know you can comfortably repay the total amount within the time allowed
Compare personal loans for students
If you think that a loan would be the right thing for you, and you’re confident you can comfortably make repayments, start comparing personal loans today. Try our moneymatcher eligibility tool first, as you can find out the likelihood of you being accepted before you apply. If you have a bad credit score, you might want to consider a bad credit loan instead.