Education plays an important role in everyone’s life. With changing times there are a lot of courses which are available today, which was not available in the past decade. Every course has its own merits and also has its own fees structure. If a student wants to pursue engineering, the student can easily see a fee structure from 5 to 15 lakh rupees depending on how reputed the institution is. India being an emerging country and lot of its population still lying in the middle class genre, it’s really hard for a middle class family to support their children’s Education.

This is where an education loan comes into the picture. There are a lot of loan options available in the market depending on your requirements. This loan is provided to students who would like to pursue further studies with higher fees structure.

Banks and financial institutions have different Education Loan options which will help you complete your education with ease. There are different schemes depending on your education course, duration, of course, place of course etc. Each education loan is tailor made for the type of courses to make life easy for parents and students.

Even today there are a lot of myths and confusions revolving around education loans. Today we will sight you some benefits of education loan over other similar loan and also how to apply for one.

Education loan vs. Personal loan

Many parents have perception stating a personal loan is better for higher education and can be beneficial for them, but this absolutely not true. A personal loan comes with higher interest rates as compared to education loan and also the repayment tenure is termed maximum to 60 months. On the other hand, an education loan can help you get your higher education done with less interest rates compared to a personal loan and also you can start the repayment after you get a job, i.e. you do not have to pay EMIs immediately after taking a loan.

Getting this loan depends on the parents as well as the student’s cibil score. If the cibil score is not up to the mark, the parents may have to take a personal loan for low cibil score with higher interest rates compared to market standards.

What are the benefits of education loan?

Easily available: This type of loan is easily available throughout banking institutions. While applying for one, do a thorough research on available options in the market

Varied amounts: There is no cap on the amount. For example, a similar course can cost 5 lakh rupees in a normal institute but if your entrance score is great opting for a high-end institute is logical which can cost you between 10 to 15 lakhs.

All courses: There are no limitations on courses; you can apply for a loan if needed for any course.

Easy repayment: The repayment terms are flexible as compared to other loan options available in the market. You can easily pay off your loan within 5 to 7 years.

How to apply for an education loan?

Applying for a loan is no rocket science, but you will have to fulfill criteria’s laid by the lender,

• Factors which influence your loan are the course fees and the applicant’s family income
• A co-applicant is mandatory, which can be father or spouse or sibling
• If the loan amount is above 7.5 lakhs, collateral is needed. Collateral can be your existing property, land, etc.
• If the loan amount is less than 4 lakhs there is no need of guarantee, on the other hand, if the loan amount is more than 4 lakhs but below 7.5 lakhs, a guarantor is needed and the guarantor should not be amongst family.
• If the student plans to study abroad taking an education loan, he/she will have to take insurance. It is mandatory.

Interest rates

The interest rates can vary from 12% to 16%, depending on which lender you are opting loan from. There are a lot of factors which could influence the interest rate, a credit score being one of them.

Repayment terms

You do not have to pay any EMIs while you are studying, neither your co-applicant (If any). You will have to start making repayments after the course completion; usually, the lender will give you the spare time of 6months to 1 year to find a job.

If the payment is not made in time, you will not only affect your credit score but also the co-applicant (if any).

Getting an education loan is easy. The process will get much easier if you do your research before selecting a lender. There are a lot of hidden benefits associated to this type of loan so choose wisely today so that you live in financial harmony in future.

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