Congratulations! You have made the decision to take your education to a higher level by attending college. This is certainly a significant achievement own but one obstacle standing in your way is the high tuition costs. No problem, you say, I’ll just apply for a loan. Sounds simple enough but the process is much more involved than you think.The basics of college loan interest ratesFinding student loans is almost like shopping for a new car as you should never make a decision unless you have carefully weighed all the pros and cons. At first blush it can even seem like a daunting task to find a loan that meets your needs as you will most likely be concerned about what your interest rates are going to be.Depending on which loan you qualify for the interest rates are likely to be variable which means that the rates will fluctuate. Before you sign any documents it is absolutely essential that you look over all the terms and conditions. You may even be able to qualify for loans that have fixed rates may be a better alternative if you are concerned about rates increasing in the future.How rates affect your paymentCalculating how much your interest will be on a loan is not too difficult. For example, if you pull out a loan for $15,000 with an interest rate of 6% then you simply multiply the numbers together and divide by 12 months for the year. The number you are left with is $75 which is what you can expect to pay per month in interest fees.While it may be tempting to choose college loans that have a low interest rate it should definitely not be the only deciding factor. Instead you should always compare the Annual Percentage Rate (APR) of student loans as this represents the true cost of a loan. Always get several quotes before you decide on which one to pick.
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