Computer loans have become a very popular personal financing product for borrowers in the last 10 years, but there are only a couple of borrowing categories most predominate in this kind of lending.

One group of borrowers being college students, and the other borrowers being military personnel. We will discuss these borrowers in detail at Clf. Keep in mind, of course, that it’s not just people serving in the military and/or students heading off to college – there are millions of American’s (from California to NewYork), and from Ontario to Vancouver (Canada) who are actively applying for a personal loans to buy a new computer.

College students are the most common borrowers for computer loans in the United States and Canada. College student loans out number military service personnel 5 to 1 statistically when it comes to borrowing money for computers. We’ll now talk about the different loans students have been applying for and what men and women in the military have been applying for. In this post we will be covering college student loan scenarios, and we will do a separate post just for Military computer loans later this week.

College Student Computer Loans – Bad Credit or Good Credit

College students who were not raised in rich (or well-to-do) families are the most common borrower when it comes to computer financing. They don’t have the financial resources to buy a desktop, laptop (or ANY top). They have to have a Mac or a PC to work on, so it’s really critical in today’s society. A computer is no longer just a luxury – it’s a necessity.

Before we do our number crunching for a computer loan, we need to discuss the differences between college students who have good credit, and those who have bad credit.

Computer Loans for College Students with Bad Credit

If you are a college student with bad credit (these are the most common visitors to this post) you can’t use your Visa card, Mastercard, or Amex card to buy a Mac or PC because your credit card is maxed out, or close to being maxed out. It’s also very likely that, IF you have a credit card with nothing owing on it, there is n0t enough credit left on the card to buy the Mac or PC laptop you need.

We will be doing some calculations for these kinds of low FICO score loans. These are short term, high APR loans, that must be paid off quickly in order to stave off high interest rate costs. Let’s face it – some of these kids are literally drowning in debt – in some of our case studies we have seen students who owe tens of thousands of dollars BEFORE they even look for a student loan.

For example, we had a potential student write to us at Clf telling us about her attempts to get financed for her college tuition at Berkeley, but lenders in California were declining her no matter who she applied with. She needed a reputable lender to help her out, but she never succeeded in getting herself off to college – let alone buy a Mac or PC. I’m sure there are thousands of examples of this for students going off to UCLA as well.

Our advice for students who have bad credit, or no credit, is to consider borrowing from a family member to buy a laptop. A family member can lend you money for the purchase of Toshiba Notebook or a Macbook and they don’t have to charge you interest on the dollar. A family member won’t charge closing fees, and they won’t charge administration fees either – no paper work, and no hassle either. Just the underlying pressure of paying them back is there. Which is fine. A family member will have a personal interest in you succeeding in your studies as well, without being only interested in making money off your loan.

We understand that millions of students in the United States and Canada don’t have any family members that can afford to buy a Mac or PC for the kids in their families going off to college in Boston, New York, Los Angeles, Texas, Ohio, or Florida – so let us do some loan calculations for Mac and a PC. Oh, wait a minute – first we’ll make a note for college students who DO have good credit.

Computer Loans for College Students with Good Credit

Even if you are a college student who does have good credit, you may not want to use a line of credit, or use your credit card to buy a computer. I can see this for a few reasons actually.

You might need to keep your line of credit, or college fund intact and need to have your credit card(s) completely clean and paid up. This really makes good sense if you are living on campus and you are an out of town student. Once again, a family loan is best, but if that is not an option we recommend using your line of credit or college fund to buy the computer – it’s really important that you have a good computer to work on.

Don’t go cheap when buying your laptop either. I would recommend a Mac over PC, and I can state this from a position of experience. My wife and I have owned over 15 desktops and laptops over the years, and the Macbook has been the most reliable and most powerful of all these computers. You don’t want to be half way through a semester and then have your PC break down, and lose all your data. Heard of this happening to college students and it’s a real nightmare. This takes us to the next point.

Low Budget Computers for College Students – Buy a Laptop that does NOT Require Borrowing a Great Deal of Money

If you are on a really low (tight) budget and you need the rest of your money for food, tuition, transportation, clothing, and/or your dorm room, then you need to buy a laptop for cheap. If you do, we have a few suggestions for you.

– make sure you buy a laptop that is made by a reputable company
- make sure you buy a laptop that is new with some warranty
- make sure you buy a laptop that is small and easy to carry around
- make sure the laptop is light BUT has a long lasting battery

For example, I’m typing this post using a Toshiba notebook which is only 10 inches in screen size. They retail now for just under $400 dollars. It’s been fine and it’s really fast to type on. It has lots of memory and the screen is really bright. The audio is quiet and the screen is small so I don’t recommend it for watching movies and doing allot of graphics work. Of course, if your course studies require allot of video and/or graphics work, I would NOT buy a little mini-laptop like this one – I would buy a Mac Pro laptop with a 14 or 15 inch screen.

If you don’t need a bigger screen and multi-media functions, you can find these new mini-laptops (or notebooks) coming on the market more and more. Just make sure you back up all your school work on a couple of USB flash sticks a couple of time a week, and keep the USB sticks in different locations for redundancy purposes.

With these small notebook laptops you can AVOID GETTING A LOAN JUST FOR YOUR COMPUTER! That is the main thrust of this small footnote here.

Examples of Computer Loans For College and University Students

Here we will calculate some laptop and desktop computer loans for College and University students so you can see for yourself the cost of borrowing money for a Mac or PC. These are all installment type loans we are calculating here and we are not talking about Payday Loans or Loan Shark rates – these are loan from real and conventional lenders.

Example #1 – College Student Borrowing $1500 Dollars for a Macbook

This is a very typical computer loan whereby students borrow fifteen hundred dollars to buy a basic Macbook (white which is older, or silver which is newer). These Macbooks go from between $1200 (rounded up) and $1500 depending on whether you buy the silver (newer) model or the white (older) model. I own the older white Macbook and it has never failed me. Keep in mind the prices are generally the same whether or not you live in Canada or the United States. The link above goes to an Amazon page, but Best Buy sells them to of course. Shop around.

So for this computer loan we are looking at these numbers;

Macbook Loan Principal amount = $1500
Length of loan = 3 years
Interest rate (short term loan) = 12%
Biweekly Payments (every 14 days)

So we use our calculator below to do the math. The calculation is below;

Macbook Loan Results
Total Amount to be payed = $1,773.46
Total amount of interest over 3 years = $273.46
Biweekly Payments = $22.67

So by the time this student has paid of the loan, their Macbook will be 3 years old, and out of warranty (most cases anyway unless you buy the extended warranty which we’ll get into here next) and they will have paid $1773.46. The problem here is that no account of REALITY is taken into account. Let’s do the same calculation except this time using REAL WORLD numbers in the loan equation.

Example #2 – College Student Borrowing $3000 Dollars for a PC

In this example we use some real world numbers for our calculation which take into account the extras – extra memory, extra warranty, a laptop carrying case, a mouse, a wireless keyboard, a couple of USB flash sticks, etc.
In this example the student wants a laptop top that has a TON of power, and is made to handle extreme graphics gaming applications. He or she wants to be able to watch movies, play games, download full length movies, thousands of songs, and run bulky software programs for photo, audio, and video editing – in other words, all the bells and whistles.

This student want the Toshiba Qosmio laptop with a 17″ screen, with a protective travel bag, and the bells an whistles listed above. This is big money we’re talking about here and it makes sense that a young student would need to find some outside financing to make it happen.

Here is the breakdown of costs for this entire computer loan;

Toshiba Laptop = $3200
Extra Warranty = $230
Laptop Bag = $70
Two USB Sticks = $120
Extra Memory = $60
Software = $1700
Games = $90
External Mouse = $30
Other = $20

Total before taxes = $5,520
Total after taxes = $5906.4

So for this loan the student rounds it all up to an even $6,000 dollars. I know it sounds crazy, but we see students wanting to buy these kinds of super-computers (laptops) all the time. In fact, these are the kinds of computer loans we see asked about the most on our site.

In this computer loan case the student borrower wants/needs to borrow using the following lending criteria;

Super-PC Loan Principal amount = $6000
Length of loan = 5 years
Interest rate (short term loan) = 18% (bad credit applicant)
Monthly Payments (every 30 days)

So we use our calculator below to do the math. The calculation is below;

Super PC-Laptop Loan Calculation Results
Total Amount to be payed: $8,744.48
Total amount of interest $2,744.48
Payments: $143.74

So you can see how this computer loan sizes up. VERY expensive to go this route, and this is obviously based on a student’s wants and not his needs. I say his because this is normally what a male student would want for college. Most female students heading off to University only want a bare-bones laptop which has just enough computing power so they can run some basic word documentation software and spreadsheet software.

In this computer loan example we used a case study from an actual visitor to our site who was going to be going to a tech college in southern Texas. His name will not be posted, but his studies DO require something along the lines of a monster super-computer.

You can see the cost almost $9000 dollars in total after the principal and the interest is all paid up in the 5 year term. The payments are close to $150 dollars a month, which really adds to his costs after you include tuition, food, accommodations, a used car for travel, fuel, clothing and food. In this case our student had no financial help from his parents he could rely on. This is why he was looking for a computer loan – obviously.

Conclusion – How Much Computer Does The Student Need, and Do You Really Need to Borrow the Money?

So if you are are student yourself, or perhaps you are a parent who want to buy your son(s) or daughter(s) a computer before they travel away to college, we encourage you to get the extended warranty, and buy a computer that can be paid off in one year (3 years at the most). Don’t let a lender talk you into buying a super-computer as in the second example, and borrowing ten thousand dollars.

Just use a credit card, a line of credit, or college fund account, and buy a reasonable notebook for under $500 dollars. Something like the the small 10.1 notebook I’m using right at this very moment.