Education loans are one of the most sought loans now-a-days. The scenario of taking an education loan in the earlier days was difficult but the time has changed because of the rules put up by central government in order to promote education as well as the entry of non-banking finance companies (NBFC’s) into the arena. Today, banks provide various options for the borrowers along with exciting interest rates to attract customers and expand their growth in the market. Several government and private banking sectors provide education loan easily to the customers without much hassles. Sometimes particular institutes link with the bank with the help of an education loan desk in its premises and thus provide customers to the bank. However, loan is not something which can be decided in a jiffy in the influence of the institute. It requires a plan and proper diligence. Hence, it is crucial to not get lured by the exciting offers put up by the bank and think before leaping into one. Here, we have provided you a guide to help you on deciding the right choice for you:
- Calculate the loan amount:
The first step to any loan research begins with the interest rates. Banks usually provide additional benefits on the loan if the student gets admission in a premier institute. First of all, determine the total amount of the course along with the tuition fees, hostel fees and the other expenses. Secondly, reduce the amount which you will be getting from your parents then you will be left with the loan amount. Scout for banks and look for the lowest possible interest rates on the amount. Also, make sure that your course is good enough to repay the loan.
- Look up for interest rates:
Now, that you have calculated the exact amount your next step should be to hunt down the rates. Keep in mind that you can take advantage of add-ons if you are admitted in an institute like IIT or IIM. Different banks have different clauses. For example, a bank can ask for a gurrantor if the loan amount is high. Secondly, the interest rates also depend on the loan tenure. The EMI’s for long tenure loans might be low but the overall interest rates are higher. Usually, banks provide education loans up to 10 years. So, think thoroughly about it while leafing through the bank agreements.
- Don’t misuse moratorium:
Moratorium period is the prime benefit of an education loan. This moratorium period ensures that there is no pressure on the borrower after getting a job. For example, the borrower can choose to not pay the EMI up to twelve months after the completion of course or six months after being placed. Although the moratorium period is not interest free and you still have to pay some minimal amount before actually paying the EMIs. However, it is advice to begin the repayment of loan as soon as possible to avoid excessive burden in the later period.