3 Things To Ensure While Taking An Education Loan

 

The cost of education has gone up significantly, which is why taking an education loan to pursue higher education, for a university overseas or in India, has become essential. Taking a student loan helps take the financial burden off your shoulders and you can focus on your studies worry free. Various lenders and NBFCs in India provide students looking to pursue higher education with a student loan. There are many things one should ensure while applying for education loans so that the whole experience is easier; here are some to help you:

1. Know the interest rate:

 

One of the important factors to keep in mind while taking a student loan is to check what the interest rate is and whether it is fixed or floating. Fixed interest rate allows you to repay your loan in fixed instalments, whereas a floating interest rate can vary over the life of the loan. Interest rates have a direct bearing on the EMI; the higher the interest rate, the more EMI you will need to pay on the loan. Checking the processing fee is also an important aspect when applying for an education loan. Make sure to check for charges such as late fees, prepayment penalties, etc. When comparing lenders, always make sure you choose the one that suits your needs the best. 

2.                  Determine the amount you need:

 

Upon completing your education, you will start the repayment process of your education loan. There is a moratorium period of a few months to a year depending on the lender. Failing to repay the loan on time will give you a bad credit score, which could affect applying for another loan in the future should you wish to. The loan amount should be affordable and something that you will be able to repay with no hassles. Therefore, it is important to know how much financial help you need when applying for a student loan and then opt for an amount you will be able to repay without stressing too much. 

3.                  Use the EMI calculator:

 

After you have figured the interest rate offered to you by the lender, make sure to use the EMI calculator. An EMI calculator will require the details of your loan tenure, interest rate, total loan amount and give you an estimate of the monthly instalments you will need to pay. This will give you an overview of your finances and give you a chance to plan your repayment process accordingly. You can use the EMI calculator by visiting the website of the lender you are taking an education loan from. 

 

Education loans not only help pursue higher education but also offer tax benefits to you. You can get a tax deduction on the interest rate you pay for your education loan under Section 80E of the Income Tax Act. Proper repayment of your loan will not only help create a good credit score but also help lower tax liabilities. 

 

You can visit the website of the lender you wish to take a student loan from for further details of what types of offers they have and choose the lender which is best suited to your needs. We hope this article has provided you with the necessary information regarding education loans.

 

Thank you! 

 

READ MORE - A Guide On Education Loan EMI Calculators