Saving up for your higher studies can be difficult, especially when the cost of education is increasing each day. Taking an education loan has become a viable option for those wanting to complete their higher education.
Many lenders offer instant personal loans to help with financing your higher education. Repayment of a loan can effectively cut down on your disposable income. Here are a few things to keep in mind before applying for an education loan:
1. Do your research
After finalising on your university and course of your choice, you need to do a thorough research between lenders before finalising on a lender. It is best for you to consider all available loan options after your admission to a specific university for a specific course has been verified. Check for maximum loan amount, the rate of interest and repayment tenure when it comes to education loan. As it will be a huge debt to repay, a thorough research can help in getting a loan that will best suit your needs
2. Check the eligibility criteria
Before applying for an education loan, you should familiarise yourself with the eligibility requirements, since each financial institution has its own set of terms and conditions. To be eligible for a study loan, you must be an Indian citizen who has enrolled in a recognised college. If you do not have any income at the time you apply for an education loan, your parents or siblings become co-applicants. Since the loan sum varies from lender to lender, it's a good idea to double-check the types of courses covered by the loan to prevent any potential misunderstanding.
3. Evaluate the interest rate
It is critical to compare the rates of interest offered by various lenders, as well as the time available for repayment. In the event of a loan default, certain banks may normally need a guarantor. This person is usually a parent or a guardian for students.
4. Scrutiny when it comes to repayment tenure
Since students at the start of their careers do not earn much, they can choose a study loan with a longer repayment period, such as 10-12 years. This significantly reduces the debt burden on the student by allowing for smaller EMIs.
5. Check for any pending loans
If any of your guardians or parents have taken out other loans, you can check with them before taking out more. And if the current loan amount is minimal, there is no need to be concerned. If the loan is large, it is best to avoid taking out another large loan at the same time.
6. Read the fine print
The terms and conditions for accepting an education loan differ from one bank to the next. Many of the terms and conditions mentioned in the terms and conditions section may not be communicated to you at the time of loan disbursement, but you can review them all before proceeding with the loan. Read the clauses carefully to make sure you understand all related costs, such as processing fees and fees associated with pre-payment or late payment of EMIs, among other things.
7. Check with your lender for any special schemes
Many Indian banks, especially government-owned banks, have special schemes for female students who take out education loans. Some banks also provide a 1% interest rate discount for female students seeking higher education. In certain situations, the government provides a rebate on the interest paid on the loan sum to female students when they are enrolled in school. Hence it is important to check with the lender for any special schemes offered.
Since this is a student's first loan, taking out an education loan is a huge step toward maintaining a positive credit score. If you repay the study loan on time and without defaults, you would be in a better position to apply for a home or car loan in the future.
Bajaj Finserv offers an instant personal loan of up to Rs. 25 lakh with minimal documentation, quick approval and disbursal, affordable interest rate and flexible repayment tenures. You can apply for the instant education loan from the comfort of your home with the Bajaj Finserv app.
