Can I get a loan after I have graduated?
Key takeaways
Graduate loans can help you get back on your feet after leaving university.
If you're continuing your studies rather than leaving education, consider a postgraduate loan.
Graduate loans may offer better terms than regular personal loans, especially if you have an existing relationship with a bank through a student account.
What is a graduate loan?
A graduate loan is a personal loan that's tailored to people who've finished further education and are likely taking their next steps into the working world.
It’s one option for graduates who can also apply for a regular personal loan or a postgraduate loan - if they’re continuing in education. They may also have access to a graduate bank account and overdraft.
Taking one out could help you fund a relocation to a new city to start a new job, for instance. Or allow you to replace that old car for a new one that'll ensure you can get to your workplace smoothly.
How do graduate loans work?
Graduate loans operate much like any other loan. You apply for a certain amount of money, get approval, receive a lump sum, and then repay it over time with interest in monthly instalments.
The key difference lies in the target demographic of recent graduates as they move away from university and into the working world.
How to apply for a graduate loan
Compare and choose
Before committing to any sort of borrowing, it's crucial to compare loan options. Look at interest rates, deal lengths, total repayment amounts, fees, and early repayment charges. Using tools like MoneySuperMarket's loan calculator can give you a clearer picture of what to expect financially
Apply for the loan
When you're ready to apply for your graduate loan, a soft search can be conducted through MoneySuperMarket. This preliminary check shows which loans you're likely to be approved for without impacting your credit score or showing up on your credit report. Once you've found the right loan, you can apply online. You will need to give details including your name, address and bank account and also information on your income.
Receive the money
Upon approval, you'll receive the money as a lump sum in your bank account. It's essential to budget effectively to ensure you can make the monthly repayments. Setting up a direct debit can help to avoid missed payments, which can lead to extra charges and damage your credit score
Are graduate loans cheaper than standard personal loans?
Graduate loans can sometimes offer more favourable terms than regular loans, especially if you've maintained a relationship with a financial institution through a student account.
This existing relationship can sometimes translate into lower interest rates and better overall loan conditions.
Who can get a graduate loan?
Eligibility for a graduate loan typically includes being over 18, a UK resident, and having a clean financial history. Some lenders might require you to have held a graduate account with them for a certain period.
Been refused for a graduate loan? You may want to check your credit score with our Credit Score tool and examine if any errors on your credit history could be to blame.
What types of graduate loans are there?
Graduate loans can take the form of...
Personal loans
A graduate loan is simply a form of unsecured personal loan, albeit one that's tailored to the needs of students who are leaving education.
Because you don't need to put up any security, such as a house or car, they're generally more accessible than secured loans.
However, as the lender takes on more risk, interest rates may be higher compared to secured loans, where the loan is backed by collateral.
Secured loans
If you take out a secured loan, you will be required to put up collateral such as a house or a car. And if you default on payments, your security could be repossessed
Postgraduate loans
These loans are for people who are continuing their education (full time or part time), who may need help with tuition fees or living expenses while they study.
They're provided by the Student Loans Company and you can apply for up to £13,206 to help with your studies.
How much will a graduate loan cost?
The cost of a graduate loan depends on various factors, and that’s why it’s crucial to compare providers and loans. Look closely at the following when shopping around:
Interest rate/APR: this is the money you will pay back on top of the loan amount
The length of the loan: a longer loan will have lower monthly repayments, but you will be paying interest for longer, so it will cost you more overall.
Fees: you may be charged early repayment fees, if you want to clear the loan early, and if you miss a payment you could face a fee and a mark on your credit score.
How long is the repayment term for graduate loans?
Graduate loan terms can range from three to ten years. While a longer term loan might seem appealing due to the lower monthly payments, it's important to consider the total cost over the life of the loan. If you are repaying a loan over a longer period, you will end up paying more in interest payments.
What are the alternatives to graduate loans?
Graduate loans aren't the only way to borrow money. Credit cards and overdrafts can offer short-term solutions, but it's important to understand the terms and ensure you can clear the debt promptly to avoid high costs.
What can I do if I'm struggling to repay my graduate loan?
If you find yourself unable to make repayments, it's crucial to contact your lender immediately. They may offer solutions like a payment holiday or loan restructuring.
Additionally, organisations like StepChange and National Debtline can provide free advice and support.
Other useful guides
For more detailed guides on borrowing as a young person, consider reading up on:
Finding the right loan with MoneySuperMarket
If you’re looking for a loan, MoneySuperMarket can assist you in finding the best deal possible. The comparison service includes a soft search to show deals you're likely to be approved for, helping you make an informed decision without harming your credit score.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.
Author
Rebecca Goodman
Personal Finance & Insurance Expert
Rebecca is an award-winning financial journalist with over a decade of experience writing for print and online media. Her mission is to take the jargon out of personal finance and to help everyone...
Reviewer
Alan Cairns
Senior Content Editor
Alan breaks down money, home, and energy topics into plain English to help you save money. Ask him about pound cost averaging or Balkonkraftwerk.
