Student loan simulation
Studies constitute 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 take out credit to be able to meet all of their needs. In order to find the best deal, it is necessary to go through an evaluation stage - for this, the simulation of the student loan is essential.
The principle of student loan simulation
The simulation of the student loan has several advantages:
- Forecast : The simulation of the student loan allows first of all to calculate the amount of the monthly repayment installments corresponding to the credit that one wishes to carry out. Most credit organizations, primarily banks, offer credit simulators online. As with any loan, you just have to enter the desired amount of money as well as the envisaged duration. Nevertheless, a student loan is of a special nature. A real bet on the future, many banks use refinement criteria in their assessment basis, in particular age, course, university establishment, number of years remaining in studies, year of 'obtaining the last diploma or the city of residence.
- The comparison : Since most banks use online simulators, and it is always possible to obtain offers directly from institutions, the student loan simulation allows you to choose the most interesting offer. The first clue is the rate charged. For this, we must take into account the APR, that is to say the annual percentage rate (sometimes simply called TEG) which corresponds to the real interest rate charged, that is to say the interest rate basic and other costs (administration fees, insurance, etc.). But the student loan simulation also provides other useful data for comparison. In particular, the range of amounts that can be granted. The minimum is generally around 1500 €. The offers differ mainly on the maximum that can be loaned: while it is generally € 45,000, it sometimes reaches € 60,000, or even € 75,000. In the event of significant financial need, the simulation of the student loan makes it possible to quickly and directly eliminate offers that are too low. Also, the repayment terms may vary between the different organizations, in particular the period during which the borrower will be free from any payment. Likewise, various other data are essential in the comparison. Many institutions encourage the subscription of insurance that protects them against the risk of credit default during the occurrence of various events (illness, death, etc.). It is generally offered directly by the lender, but it is always possible to take out it with the insurance institution of your choice. However, the amount of insurance remains a factor that should not be overlooked when comparing the different offers via the student loan simulation. Finally, banks also take into account the personal situation of the borrower. This is why they often ask for various information when simulating the student loan. The chosen course is an important factor since large schools are often partners of banking companies. It is therefore wise for the student to check with his school, prior to the simulation of the student loan, to find out if such a partnership exists. If so, very favorable conditions and rates exist.
- Security : Since the simulation of the student loan is a way of predicting in advance the terms of repayment and the conditions of the contract, it also makes it possible to realize the importance of the commitment taken out. Any credit must be repaid. While it is essential help in times of need, it also represents a significant burden for many years to come. The student loan simulation allows you to adjust your needs in relation to your capacities so as not to contract a loan that you will be unable to meet. This is why it is an important step. Especially since a student loan often corresponds to the first major commitment made by a young person. To be able to be done in complete safety, the simulation of the student loan implies a first step which is the assessment of the needs.
Personal needs assessment or the pre-simulation stage of the student loan
Student loan simulation requires the borrower to carefully assess their needs. In fact, the higher the amount borrowed, the higher the monthly payments and the greater the risk of credit. The preliminary study is therefore not trivial.
It is advisable to make an inventory of foreseeable expenses. For a student, they can be broken down into two categories: expenses related to schooling and those related to the costs of daily living. Among school expenses, it is above all necessary to take into account the cost of registration as well as the costs of social security and mutual insurance. The student, during the study prior to the simulation of the student loan, must also account for the ancillary costs related to the acquisition of the tools necessary for his studies: expenses related to books, supplies, even sometimes the purchase of a computer. Second, the student loan simulation involves the inventory of daily living costs which include rent & rental charges, transport costs (urban transport subscription or car costs), various subscription costs (telephony , internet), food-related expenses as well as other expenses (for example registration for an extracurricular activity, clothing expenses as well as everything related to leisure: cinema, outings, etc.).
After the list of expenses, it is necessary to draw up the possible incomes that the student receives: they can constitute in scholarships, a salary or the remuneration of an internship, a housing allowance or even assistance given by the family.
Once this inventory has been drawn up, it suffices to calculate the difference between the expenses and the foreseeable income to obtain the financing need. This will allow you to calculate the amount needed and to simulate the student loan.
This step can seem long and tedious. Yet it is essential: not only because it allows the student to realize the budget at his disposal, but also because it is the means of precisely assessing his needs and getting involved for good reasons. . What is more, the student is not immune to a pleasant surprise and the inventory can result in a negative balance showing that the student in fact has a financing capacity.
However, if this is not the case, after the expenditure / income calculation, the student will have to compare, via the simulation of the student loan, the offers offered by the different organizations to choose the most advantageous. As such, online credit comparisons are very useful.
Online credit comparisons
Many sites have specialized in recent years in comparing credit offers. Very useful, they facilitate the choice of future borrowers. Complementary to the student loan simulation, they often have their own assessment tool and can thus help the young borrower to make the best choice.
Most comparison sites, offering a student loan simulation, ask for classic information: the number of months of repayment chosen and the amount of the loan desired. They then make it possible to obtain a list of credit organizations for which the amount of monthly payments is indicated, while describing each offer. As such, it is necessary to monitor several points:
- Some sites do not take insurance costs into account 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 of them are not totally specialized in student loan simulation and do not ask for information which, however, can prove to be important for the calculation of a loan offer, or even for obtaining credit. This is particularly why it remains essential for a student to obtain prior information from his school to find out whether partnerships linked to his course or place of registration exist.
- Also, it is not uncommon for comparison sites, offering a simulation of the student loan, not detailing with precision the services offered by the organizations. It should 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 under guarantee of the State is possible only during the subscription of the credit with an established list of banks.
In view of all these elements, the use of comparative sites must be made on a complementary basis. It can be used to make a first simulation of the student loan for information purposes, or to provide overall information to the future borrower on the organizations to be studied and on the general services that can be offered to him. However, it does not replace the personal analysis that must be carried out, both in terms of financing needs and the comparison of offers. It is therefore certainly useful; but let us remember it, simply on a complementary basis.
In conclusion, the student loan simulation combines several steps and is guided by three keywords:
- The forecast of the amount granted and the reimbursements to be made;
- The comparison of the different offers to obtain the most advantageous service;
- Security for the borrower who, by carefully preparing his project, risks not finding himself in a situation of over-indebtedness.