5 Factors to Consider Before Taking an Education Loan
Education loans have become the only possible way to finance higher education. Most students studying in top educational universities hope to earn high salaries at the end of their studies. Public and private banks offer education loans to students who wish to pursue higher education. These education loans are provided for both graduate and postgraduate courses. Some banks have a list of courses and grant loans only for those courses. Let’s look at some of the essential factors to consider before taking an education loan.
Factors to consider before taking an education loan
1. Eligibility for an education loan
Before applying for an education loan, you must know the eligibility criteria. As different banks have a lot of terms and conditions. To apply for a loan, you need to be an Indian citizen and should have been admitted to a recognized college. If you are not earning when applying for a loan, your parents or siblings become the co-applicant of the loan. The loan amount offered differs from bank to bank. If the guardian’s income is insufficient, then banks often ask for collateral to approve a loan amount between INR 4 and INR 7 lakh.
2. Interest rate and the repayment period for
After your admission to a university for a specific course is confirmed, you should evaluate all available loan options. It must compare the interest rate provided by various banks and the time of repayment allowed. A loan of INR 4 Lakhs or fewer comes with an interest of 10%-15% payable within three years, while a higher amount is given at lower interest rates but with a more extended repayment period of 5-7 years. Some banks ask for a guarantor in case of a default on the loan amount.
3. Future EMI burden
Students at the start of their careers don’t earn much. Hence they should opt for longer loan tenure that goes up to 10-12 years. This dramatically helps the repayment burden on the student with relatively smaller EMIs.
4. Check existing loan amount.
If your guardians or parents have already taken other loans, consider them before burdening them with more loans. And if the remaining loan amount is small, then there is no reason for you to worry. If the loan amount is huge, then it is better to avoid another big loan. This is one reason you need to have great job opportunities after graduating.
5. Read terms and conditions well.
Terms and conditions for approving loans differ from bank to bank. The bank rules mentioned in the terms and conditions section might not be conveyed to you at the time of loan disbursal, but you must check them all before going ahead with the loan. Read the sections carefully and make sure you are aware of all associated charges, such as the processing fees, charges involved in pre-payment, or late payment of EMIs.
Where To Find Education Loans?
Getezo is one of India’s Largest Upcoming Online marketplaces, which you can access from anywhere in India. Just Log on to Getezo & search for Education Loan after providing a location. The page takes you to a place where a list of financial institutions/banks offers their Loan services.
If you liked this article, check out our post–Top 5 Tips to Get Best Education Loan
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