3 factors to keep in mind when taking education loans

 

There are a lot of things that one has to think about when it comes to taking up education loans. It is essential for a student to choose a loan plan that they would be comfortable paying back. 

Thorough and detailed research is a must before taking up any loan plan to understand its various terms and conditions. This is to be clear about crucial details like the tenure of the loan, interest rate, and monthly EMIs that the student will be paying. It is very essential to be specific about these aspects, as the interest rates on education loans depend on these factors as well.

Here are the important factors to keep in mind when you are planning on taking education loans.




1.   Interest Rates

Always remember to check whether the education loan that is offered to you by a financial institution comes with a floating interest rate or fixed rate.  This is because floating interest rates are always a bit cheaper as compared to fixed rates, and the loans that are offered on floating interest rates generally have a longer repayment period.

Some financial institutions offer you the option of repaying the interest amount right after the education loan is granted. This is a great option as this reduces your burden of repaying a giant amount.

Make sure to consider the calculations of the bank’s interest amount, and also check whether it is being calculated on a daily reducing balance or on a quarterly reducing balance.

 

2.   Education loan EMI

This is by far the most important factor that you cannot afford to miss out on if you plan on taking education loans. Once you are done with finding out the interest rates of education loans in India, you need to plan whether the specific loan plan that you are being offered is viable for you or not.

Once you are granted the loan, the repayment process usually starts once you are done with the course. Also known as the moratorium period, where financial institutions grant you a little more time so that you can secure a job and collect the funds for repayment. Even though you have the provision of the moratorium period, it is advisable to start the repayment before you finish the course itself. This is because you can finish off the repayment of the loan which will later not be a burden for you.

To make sure that you don’t disturb your finances, it is best to calculate the funds beforehand so that you would have to pay for the education loan. This can be done with the help of an education loan calculator, which would take the details of the loan tenure, the interest rate, and the total loan amount. This would provide you with an estimation of how much you are supposed to pay.




3.   Repayment options

You need to make sure that you carefully enquire about the repayment plan that each financial institution has set. This is important as you should be comfortable with the plan so that your finances do not take a hit. 

There are many study loans providers for students to choose from, so they do not have to worry about their options. Students should choose a provider that has a repayment plan which the student is comfortable with paying back. Also, students should check about the tenure of the moratorium period before the repayment period starts, as this gives them time to get a good job and start saving funds for the monthly EMIs.



We hope this article helps you.

All the best!

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