Simulation of the Student Loan
Studies are a period of transition: the young student is no longer a child, but not yet fully adult. While most of them receive financial assistance from their parents, it may be necessary to obtain credit in order to meet all the needs. In order to find the best offer, it is necessary to go through an evaluation stage – for this, the simulation of the student loan is essential.
The principle of the simulation of the student loan
The student loan simulation has several interests:
Forecasting : The simulation of the student loan first makes it possible to calculate the amount of repayment monthly payments corresponding to the credit one wishes to make. The majority of credit agencies, primarily banks, offer online credit simulators. As with any loan, all you have to do is enter the amount of money you want and the amount of time you want. Nevertheless, a student loan is of a special nature. Real bet on the future, many banks use criteria of refinement in their base of evaluation, in particular the age, the curriculum, the university establishment, the number of years remaining in studies, the year of obtaining the last diploma or the city of residence.
Comparison : Since most banks use online simulators, and it is still possible to obtain offers directly from the institutions, the student loan simulation allows you to choose the most interesting offer. The first index is the rate practiced. To do this, we must take into account the APR, ie the annual percentage rate of charge (sometimes simply called TEG) which corresponds to the real interest rate applied, ie the interest rate. basic and other expenses (fees, insurance, …). But the simulation of the student loan also allows to have other useful data for the comparison.
In particular, the range of amounts that may be granted. The minimum usually runs around 1500 €. The offers differ mainly on the maximum that can be lent: if it is generally 45 000 €, it sometimes reaches 60 000 €, even 75 000 €. In case of significant financial need, the simulation of the student loan can quickly and directly eliminate too weak offers.
Also, repayment terms may vary between different agencies, including the period during which the borrower will be free of any payment. Likewise, various other data are essential in the comparison. Many institutions encourage the underwriting of an insurance which makes it possible to protect them against the risk of unpaid credit at the occurrence of various events (illness, death …). It is usually offered directly by the lender but it is always possible to subscribe to the insurance institution of your choice. However, the amount of insurance remains a fact not to be overlooked when comparing the various offers through the simulation of the student loan.
Finally, banks also take into account the personal situation of the borrower. This is why they often ask for various information during the student loan simulation. The chosen course is an important factor since large schools are often partners of banking companies. It is then advisable for the student to inquire at his school, prior to the simulation of the student loan, to find out if such a partnership exists. If so, very advantageous conditions and rates exist.
Security : Since the student loan simulation is a way of predicting in advance the terms of repayment and the terms of the contract, it also helps to realize the importance of the commitment made. All credit must be repaid. While it is an essential aid when needed, it also represents a significant burden for many years. The simulation of the student loan makes it possible to adjust one’s needs according to one’s capacities so as not to contract a credit which one will be unable to respect. That’s why it’s an important step. Especially since a student loan is often the first major commitment made by a young person. In order to be safe, the simulation of the student loan involves a first step that is the needs assessment.
Personal needs assessment or the pre-simulation stage of the student loan
The student loan simulation requires the borrower to thoroughly assess their needs. In fact, the higher the amount borrowed, the higher the monthly payments and the higher the credit load. The preliminary study is therefore not trivial.
It is advisable to draw up an inventory of foreseeable expenses. For a student, they can be divided into two categories: tuition-related expenses and those related to the costs of daily living. Among school expenses, the cost of registration, as well as social security and mutual insurance costs, must be taken into account. The student, during the study prior to the simulation of the student loan, must also count the ancillary costs related to the acquisition of the tools necessary for his studies: expenses related to books, supplies, sometimes even the purchase of a computer.
Secondly, the simulation of the student loan involves the inventory of the expenses of the daily life which include the rent & the rental charges, the expenses of transport (subscription to an urban transport or expenses of car), the various expenses of subscription (telephony , internet), food expenses and other expenses (for example, registration for extracurricular activities, clothing expenses and all things related to leisure activities: cinema, outings, etc.).
After the listing of expenses, it is necessary to establish the possible income that the student perceives: they can constitute in scholarships, a salary or the remuneration of an internship, a housing allowance even the help given by the family.
Once this inventory is drawn up, it is sufficient to calculate the difference between the expenses and the foreseeable income to obtain the need for financing. This will calculate the amount needed and perform the simulation of the student loan.
This step can seem long and tedious. Yet it is indispensable: not only because it allows the student to be aware of the budget available to him, but also because it is the means to precisely assess his needs and to commit himself for good reasons . Moreover, the student is not immune to a good surprise and the inventory can lead to a negative balance showing that the student actually has a financing capacity.
Nevertheless, if this is not the case, after the calculation of expenses / income, the student will have to compare, via the simulation of the student loan, the offers proposed by the different organizations to choose the most advantageous. As such, online credit comparatives are very useful.
Online credit comparisons
Many sites have specialized in recent years in the comparison of credit offers. Very useful, they make it easier to choose future borrowers. Complementary to the student loan simulation, they often have their own assessment tool and can help the young borrower to make the best choice.
Most comparative sites, offering a simulation of the student loan, ask the information of conventional information: the number of months of repayment chosen and the amount of the desired loan. They then make it possible to obtain a list of credit institutions for which the amount of the monthly payments is indicated, while describing each offer. As such, it is necessary to monitor several points:
Some sites do not take into account insurance costs and do not have an option to consider it in their analysis. It is therefore a cost that the student will have to compare himself.
Most are not fully specialized in the simulation of the student loan and do not ask for information that, however, can prove to be major for the calculation of a loan offer, or even for obtaining credit. This is particularly why it is essential for a student, to inquire beforehand to his school to find out whether partnerships related to his curriculum, or his place of registration, exist.
Also, it is not uncommon for comparison sites, offering a simulation of the student loan, do not detail the services offered by agencies. It must therefore be borne in mind that a deposit will almost always be required. It happens that this is not the case, but this is subject to certain conditions: in particular the student loan on the state bond is possible only when the credit is subscribed with an established list of banks.
Given all these elements, the use of comparative sites must be done in a complementary manner. It can make it possible to make a first simulation of the student loan as an indication, or to inform globally the future borrower on the organisms to study and on the general services that can be offered to him. However, it does not replace the personal analysis that must be performed, both in terms of financing needs and the comparison of offers. It is therefore useful; but let’s remember it, simply in a complementary way.
In conclusion, the simulation of the student loan includes several stages and is guided by three keywords:
- The forecast of the amount granted and the repayments to be made;
- Comparing different offers to obtain the most advantageous service;
- Security for the borrower who, by carefully preparing his project, may not end up in a situation of over-indebtedness.