Bar loans are becoming a common tool for the law school students, to complete their degree successfully, and get their place in the State Bar Association!
Bar examinations are costly, which might even touch $1000 depending on the state, and are also tough to crack. You need to study very hard, with experts saying at least to dedicate 50 hours per week for bar exam preparation!
There are times when students need to take good training to help them out with their subjects, and these definitely include private tuition fees!
Also, there are other small costs that can add up to good amounts like transportation costs and hotel booking costs if your exam center is way too long from your home, or if you are applying in other states too!
Hence, if you find that taking out another federal student loan is next to impossible, then you can surely try out these mini student loans, called bar loans, offered by private companies, to help you cope up with the bar exam costs!
What are the pros of Bar Loans? How effective can they be for you?
1 The first thing that attracts law students to Bar loans are their attractive loan terms!
The interest rates are typically lower than other student loans offered in the market. Also, the loan amounts are not too high and they are easily payable.
You might even want to consider a co-signer with a good credit profile to get even better loan terms.
Like for example, the Sallie Mae is ready to offer bar loans at interest rates starting from 4.24%.
2 Bar loan amounts are very useful and can become a great strategy for you to save money.
Writing a bar exam contains many hidden costs like I already discussed, you have preparation fees, transportation costs, etc.
These expenses, if you plan to do with the help of your credit cards, will end up to be more expensive.
Many students take up a lump sum amount of bar loan, say $8K or $10K, and use the money for various purposes.
It is actually sensible to make use of what you borrow to the fullest!
3 Typically bar loan comes with no origination fees or disbursement fees attached to it!
When you apply for a bar loan, it's just a plain and simple procedure with the maximum lenders charging no fees.
This is a big add-on compared to other student loan options!
4 The lenders might offer you discounts up to 1% on interest rates if you opt for the loan payments automatic from your checking account.
But yes, this might pose a problem for some if you don’t want to make automatic payments and disclose your checking account details!
Also if you take out a loan from your existing student loan lender, then there are high chances that you will get attractive discounts on your bar loan!
What are the cons of Bar loans? How can it be a hassle at times?
1 Since at the end of the day, it’s just another form of debt, you will be bound financially once you take out a bar loan.
Even though the amount is low and convenient to use, this will add up to your existing student loan debt (if you already have a hefty student loan) and overall getting rid of student loan debt is a tedious task!
2 The application procedure might become a hassle.
Since you are a student of law, you are already struggling with various other form fill-ups, and signing for another new loan might just feel like some extra work.
The bar exam itself is a big headache and incurring debt on top of that along with paperwork can actually hamper your peace of mind!
3 If your required amount for bar preparation is low, then you seriously don’t want to consider taking out a loan for it!
There’s a minimum set amount you should borrow to take out a bar loan. The amount is $1000. But think carefully, is it really worth it, if you only require some $5000 or $6K?
Who would love to pay interest charges on such small amounts? I consider it to be a big loss!
If you can budget for 1 or 2 years prior to your bar exam, you can definitely save the desired amount and don’t need to use credit!
Hence, think carefully before you plan to take out this loan! You might just don’t even need this loan!
4 Last but not the least, these are private loans!
Beware of this fact.
As these loans are only offered through private lenders; the interest rates will be high and sometimes the rates might also fluctuate as per the market if the rates are variable!
And not to take anyone’s side, these private lenders already have a bad reputation that the interest loans are too much when it comes to parent loans!
So think twice or thrice before you take out a bar loan. If the amount to be borrowed is just an acceptable amount like some $8K to $15K, then you can surely take out a loan. But, if you need some $4K or $5K, then I would suggest you give it a second thought and plan to do budgeting and save that amount, so that you don't have to pay interest charges for no valid point!
