You are not eligible for government loans and bursaries or they are not enough to meet your needs?
Financial institutions offer credit to students. Interest rates on these loans are higher than student financial assistance and interest will have to be paid during the study period. With a student budget that is often small, interest can be very heavy if you use these types of credit right from the start of your studies. After a while, part of the loan will be used to pay interest!
However, this type of credit can be useful if a student who is not entitled to loans and bursaries uses it to complete his last year of studies.
Student credit lines of credit
Some financial institutions offer student lines of credit. A line of credit allows you to withdraw money directly from your personal account up to a limit established with the financial institution. Interest must be paid from the moment the money is used until the full repayment of the loan. The amount becomes available when the account balance is zero. When margin money is used, the account balance becomes negative.
- As a minimum, interest must be paid monthly, including during studies.
- Interest is between 4 and 6%.
- Loan repayment begins approximately 6 to 12 months after graduation.
After 6 to 12 months, the interest rate rises. The increase varies from one institution to another, but averages between 5% and 8%. Why? Because the line of credit is turned into a personal loan. The interest rate is lower than that of a regular loan.
Once completed, the student can also convert this margin into a personal line of credit.
Student credit cards
Some financial institutions have student credit cards. It is important to be well informed and to shop as there are several possibilities that can be more or less advantageous depending on the student’s situation and interest rates. In general, these are equivalent to those of a normal credit card.