Education has been one of the growing sectors which keep increasing. It becomes difficult to pace off with the rising cost. To get a quality education today, one needs a fat bank balance. Sadly, the best of all fails to cater to the investment it requires. The education loan is the best rescue to fulfill the dreams and endeavors.
An education loan is the easiest way to take up the financial burden of quality education. Be it a prestigious institution or a foreign course you can get ahead with a loan. However, before opting for a loan a little research and few steps are essential towards a wise decision. Taking an education loan needs a lot of planning and considering a few of the determinants like eligibility, tenure, loan amount, and installments. Before you take a plunge, be careful to consider each of the factors of the education loan process.
What is an education loan?
An education loan is an amount that is taken as a debt from financial institutions, banks, and lenders. This amount has a specific end-use that is for education expenses. It covers up the entire fee structure and other associated needs like hostel fees, library, and expenses. An interest rate is applied and EMIs are determined for debt repayment. The best thing about education loan is, unlike other loan you don’t need to pay the installments during your course. Repayment starts once your course finishes off.
Where to get an education loan from
Luckily, you would have an ample number of banks and financial institutions ready to provide you an education loan. Usually, an education loan is of two types, private and government education loan. Thanks to digitalization, this has made the online application easy and simple. You can shop around well and finally apply for an education loan at the comfort of your home.
Benefits of an education loan
Education loan comes with its bunch of benefits and perks. However, let’s discuss a few important benefits which make it an appropriate choice for your career.
- Low rate of interest: The interest rate applied education loan is comparatively less than other loan types. A minimum of 8% and a maximum of 10% are applied. Though it varies, generally interest rate is low compared to other types of loan in the market.
- Repayment flexibility: Unlike other loan, in education loan, one does not need to repay debt until the course gets over. You need not pay anything while the course in on. It does not give an immediate burden of repayment, making it a flexible choice for the students.
- Fund your dreams: A quality education is costly, while the prestigious institutes have a pricy fee structure. A negligible percentage of students can afford such education hence education loan is a relief and it funds your education. You can easily apply for a loan and continue with your course without any hurdle.
- Long tenure: The tenure of an education loan is a flexible one. You can customize it according to your need. Well, it starts from 12 months to 60 months, where you can choose the duration of your choice.
- Tax rebate: One such perk of education loan is you get tax benefits on the amount you pay for the education. You get to save a good amount yearly. This makes education loan a good choice for many.
5 most important factors to consider
- Eligibility: Every type of loan comes with its eligibility criteria set by the lender. Though the criteria can change and vary, most of it remains unchanged. The criteria set for education loan is quite different from other loan. It focuses on the educational background, the institution, and yes income of your parents and siblings. One needs to be an Indian citizen having good academic records. It is a plus point if you are having employment, if not, your parents’ income is considered. There will be few banks or lenders focusing on the institution you are aiming for admission.
- Rate of interest: An important thing to consider, the rate of interest is an important factor to think before one takes up a loan. There would be ample of banks and lenders who provides education loan. The thing is, shop around till you get the lender with a minimum interest rate. The general interest rate stands from 8-10% and it varies with each lender. Remember, the less the interest rate the less you need to pay back. A low-interest rate keeps your EMI in control.
- Down payment: Down payment is the amount that you need to pay at once in the starting. Decide on the amount so that you do not end up spending more than you have. Usually, for Indian institutes, the down payment is 5% of the total fees, while for foreign ones it is 10%. So, having the down payment ready can help your loan process easier.
- Loan tenure: Loan tenure counts for the duration of the loan that you decide. It is an important factor as it directly affects your EMI. The more the tenure the less you pay and vice versa. If you are going for a short tenure, you end up paying huge EMI monthly to finish off your loan in time.
- Repayment: Repayment is the most responsible aspect of a loan. Many do borrow but they do not responsibly deal with the debt repayment. Be careful to handle this carefully or else you start making your financial background a risky one.
Conclusion:
Education is a priority and education loan makes it easy. Enroll yourself for an education loan to get your dreams fulfilled. In a nutshell, a quick outline of the education loan can help you learn the education loan process and make a wise decision. All the very best for your bright future decisions and upcoming endeavor!
