7 tips for comparing no-collateral loans for international students
Although uncommon, a variety of lenders offer student loans to international students with no collateral required. That means you don’t have to back up your loan with land, jewelry or another asset, though you do need to meet other lender requirements.
If you’re an international student looking to take out a no-collateral student loan to fund your studies in the U.S., use these seven tips to compare loans so you can find the right lender and loan for you.
1. Compare the interest rates
When taking out an international education loan, finding a low interest rate is a top priority. A low rate can mean lower interest charges over the life of your loan. It often means lower monthly payments, as well, so your student loan bills, hopefully, won’t break the bank after you graduate.
Let’s say, for example, that you borrow a US$15,000 student loan and pay it off over 10 years. If you had a 15% interest rate, your monthly payment would be US$242, and you’d pay US$14,040 in interest over the life of your loan. But if you shopped around and found a 10% rate, your monthly payments would be lower at $198, and you’d pay US$8,787 in total interest charges, US$5,253 less than you would with a 15% rate.
As you can see, the rate at which interest accrues on your student loans can make a big difference on your overall costs of borrowing.
2. Review the repayment terms
As you compare no-collateral loans, it’s also important to review your repayment term options. Find out how long you have to pay the loan back. A standard repayment term is 10 years, but options can vary by lender.
The length of your repayment term will directly impact your monthly payments and total interest charges. Let’s say, for instance, that you borrow US$15,000 at a 10% rate. Here’s what your loan would look like on different repayment terms:
| Repayment term | Monthly payments | Total interest charges over the loan term |
| 5 years | US$318.71 | US$4,122 |
| 10 years | US$198.23 | US$8,787 |
| 15 years | US$161.19 | US$14,014 |
| 20 years | US$144.75 | US$19,741 |
As you can see, a longer term makes your monthly bills more affordable, but it leads to higher interest charges overall. A shorter term means higher monthly payments, but you’ll get out of debt faster and save money on interest.
Along with reviewing your available repayment plans, find out when your first payment is due. Some lenders offer a grace period, allowing you to postpone payments while you’re in school and for a few months after you graduate. Others expect you to make interest-only payments while you’re in school or enter full repayment right away.
Finally, you might ask the lender if it offers any forbearance programs if you run into financial hardship. Some lenders will let you temporarily postpone payments if you lose your job or experience a natural disaster. These protections can come in handy if unexpected events leave you unable to pay your student loans.
3. Watch out for additional fees
As you search for a no-collateral loan with the lowest costs of borrowing, keep an eye out for any fees that could make your student loan more expensive. Some lenders charge an origination or administrative fee, for instance, that’s a percentage of your loan amount. Others charge fees for late payments or insufficient funds in your account.
As you compare no-collateral education loans for international students, read over the fine print to see if there are any hidden fees you should know about.
4. Find out about cosigner requirements
No-collateral loans, also known as unsecured loans, don’t require you to put up collateral. Since these loans aren’t secured by an asset, you don’t have to worry about losing any of your valuable possessions if you fall behind on payments.
However, you’ll still need to meet other requirements to qualify for the loan. Many lenders in the U.S. require international students to apply with a cosigner in lieu of collateral. Adding a cosigner to your application reassures the lender that someone else will repay the loan if you don’t pay your bills.
If the lender requires a cosigner, it may want that cosigner to be a U.S. citizen or permanent resident. Don’t worry if you don’t have a cosigner, though – some lenders, such as MPOWER Financing, offer international education loans to students, with no cosigner or collateral required.
5. Make sure you meet eligibility requirements
As you compare no-collateral education loans, it’s also worth keeping an eye on any other eligibility requirements. Besides requiring a cosigner, lenders may want to see a minimum credit score, annual income or debt-to-income ratio.
Most want to see that you’re enrolled in an eligible school or program. Some lenders may also look at your program or even grades to determine your earning potential and assess your risk as a borrower.
6. Check out loan minimums and maximums
Each lender sets its own loan amounts, so look for one that will provide the amount you need for school. MPOWER Financing, for example, offers loans from US$2,001 to US$100,000. Other lenders may offer different amounts.
While you don’t want to overborrow, you also want access to enough funding to complete your education and earn your degree.
7. Prequalify for a loan, if possible
Comparing no-collateral loans may sound time-consuming, but it doesn’t have to be. Some lenders let you prequalify for a loan online, meaning you can check your rates and terms in a matter of minutes.
If the lender offers prequalification, you can simply enter a few basic pieces of information to see your loan offers. This prequalification won’t impact your credit, and it allows you to shop around and compare options without any obligation to borrow. MPOWER Financing offers a student loan prequalification tool that allows you to search funding options for 400+ schools.
As you compare loan offers, remember to keep an eye out for the loan’s interest rate, repayment terms and fees. By taking the time to loan shop, you can find a financing option that best meets your needs.
