Everything you need to know about graduate loans

Graduate loans are typically taken out by people who have recently left university. Depending on the bank or financial institution with which you are considering applying for your loan, you may have to open a current account with them if you are not a customer already. Many banks will not even consider lending money to a person who does not own a current account with them. Graduate loans are particularly good because they are usually very low in interest. This is because the bank recognises it may be a while before the person is on their feet and able to pay back a substantial loan.

Graduate loans can be used in a variety of ways and while you can use them to continue with your education, there is no hard-and-fast rule that says that is the only thing you can do with one. In fact, many graduates use the loans to start their own business, usually something that takes advantage of their university education. The loan enables them to fund start-up costs, as well as cover the first few months while the business gets up and running. Graduates are drawn to this type of loan over a small business loan because the interest rate is significantly lower, sometimes it may even be fixed for a period of time.

Most high street banks and specialist lenders will offer graduate loans packages. Both Barclays bank and Santander have packages specifically designed for graduates, featuring competitive rates. Before committing to anything in writing, visit a comparison website to make sure you are getting the best deal. Check the interest rate for the whole term too. Some banks offer low interest for the first 6-months but a high interest rate kicks in after this time. Don't be tempted by a low rate that may see you end up paying more.

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