7 Things To Keep In Mind While Taking an Education Loan
Now-a-day, education in India has become quite expensive, as many colleges can charge around 8-10 lakhs for higher education, which is quite a sum for the middle-class population.
And, this sum will only increase if you’re looking for overseas colleges for higher studies. This is where education loans come to the rescue!
You can find a lot of education loans and schemes, however, you shouldn’t go for the first thing you come across. To help with this important decision, we will discuss some important things you should be keeping in mind while applying for an education loan.
So, let’s begin!
1. Cross-Check The Availability Of Your Education Loan With Your Course:-
Before you go for any particular curriculum or a college, always check to see if you qualify for student loans. And, if that college or university isn’t qualified for the student loan you want, then look for some alternatives. Also, make sure you have all of the necessary documents and paperwork on hand so that your application process can go without a hinge. Having complete and spotless paperwork will automatically raise your credibility.
While choosing any student, always prioritize their down-payment, as it might differ from bank to bank. In most cases, if you’re applying for an education loan below Rs 4 lakh, you probably don’t have to worry about that. However, when that loan amount goes up from 4 lakhs, then you will have to make an upfront payment of 5 percent.
And in case you’re applying for an overseas college, then that amount goes up to 15 percent. However, you might find some banks which can allow you to pay your down payments in installments, so make sure to compare all the options that are available at the moment.
3. Know Your Limits:-
As you might know, you can get any amount as far as is under your credit limit. But, if you can cover your expenses in a lesser amount, then it will not be practical to pay interest for those extra bucks. Always go for the minimal option, as it will also help you to repay your loan faster.
4. Do Holistic Research:-
Do blindly grab onto the first loan you get, as if you have good paperwork, then you will be getting plenty of options. Make certain that you understand the key aspects of college loan policies. Different banks provide various sorts of education loans, some of which may appear more appealing than others. Before you decide to take out a loan, be cautious and consider everything. And, always evaluate the interest rates offered by various banks and make an informed decision.
5. Understand the criteria For Domestic loans as well as International loans:-
If you go to any bank, you can avail education loans for both Indian as well as any international courses. The maximum credit for studies within our country is Rs 10 lakh, whereas the maximum loan for international education is Rs 20 lakh. Check to see if the college or institution where you intend to study already has relationships with banks and can provide you with appropriate education loans. This could help you get the loans faster, and in some cases, it might also boil down your interest rates to some extent.
The payback notice time is one of the key advantages of any education loan. You don’t have to worry about paying back to the bank until six months or a year after you finish your study. This allows you time to find a job that pays well enough to repay the debt.
Furthermore, the payback period spans from five to seven years, providing ample time to settle everything. However, you must ensure that your education will provide you with a good career that pays well, or you will be unable to repay your debt.
7. In Case You’re Unable To Repay Your Debt:-
Make sure to go through the loan documents and pay attention to their policies, in case you are unable to repay your debt. If you find yourself in such a scenario, then make sure to properly explain your current situation to them. They might cooperate after hearing your issues, however, this usually does not occur. However, if you can bring a third party, who can hold you responsible for repaying your debt then it might put things in your favor. However, it will adversely affect your credit score, which implies you’ll have a difficult time getting any loans in the future.
There are a lot of things to consider while applying for an education loan, as one small overlook can become a costly mistake for your wallet. So, make sure to evaluate everything and if possible, try to have a thorough discussion with an expert in this field. If you have any questions regarding the points we have mentioned, feel free to have a chat with us!
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Author- Achal Chaurasia
A superior and highly experienced entrepreneur in the field of business for quite a long time now. Also, a philanthropist, author, and public speaker who believes in working towards the overall well-being and betterment of society as a whole.