Taking education loan? 5 things you must keep in mind
Notably, banks in our country have made paying education fees an easy affair through such loans, but there are few things that one should know.
Pursuing higher education has become a costly affair in recent times. This is why most of parents prefer an education loan facility to fulfil the dreams of their children. Such loans are very useful when it comes to courses at premier institutions, which cost a lot and parents are not in a position to afford them. Although education loans can be funded by jobs that are fetched after completing the course, it can be a big burden if it is not managed well. Those who are willing to go for this facility should first know all the nitty-gritty so that they do not face any difficulty in repaying that.
Notably, banks in our country have made paying education fees an easy affair through such loans, but there are few things that one should know. One very important aspect you should know that if you are not earning at the time of taking loan, your parents/guardian can become co-applicant, who would be needed in full time courses, while you would be primary debtor.
Prior to taking such loan, you should be very clear how much amount will serve your purpose. A proper research should also be done interest charged on the loan. Here are five things you should keep in mind:
1. Awareness about your bank
There are many banks which offer educational loans, but security is needed for them. Those who are eager to avail this facility should choose a bank that will provide the best moratorium period, interest rate as well as terms to pay back. You should also make sure that you have option of repaying the loan early, along with knowing if you are allowed to pay EMIs in advance or make part payments towards the loan.
2. Keep a tab on details
If you are planning to study in India or abroad, you should know the details of your further studies and the loan amount you have taken. In case of being abroad, you would face interviews at the airport about your purpose and details despite having a VISA. You should have adequate preparation to answer such questions, besides knowing our personal details very clearly.
3. Cost over EMI
Generally, people go for the loan with longer duration so that they have to pay lesser EMI, but the cost of loan in this situation will be much higher due interest payment. Therefore, if you can have a better paying job after completing the course, you should rather prefer a shorter loan tenure. Your EMI would be higher, but loan will be cheaper and you would be able to finish it faster.
4. Moratorium periods
This is holiday periods that is actually the duration of the course, plus one year after completing the course, or 6 months after getting an employment, whichever is earlier. You need not make payments on your loan during this period but interest will accumulate. If you can pay off the interest during the moratorium period, it will help lessen the burden of the loan, besides making the loan cost less when you actually start paying EMIs.
Watch this Zee Business video
5. Defaults and Extensions
If you are unable to land a job due to certain reasons that you may find it difficult to make banks understand. In case of exceptional situation, banks may extend your repayment or moratorium period. You should know that this occurs in truly exceptional cases. However, you should never default on paying your educational loan. If your parents a co-borrowers, it will hamper their future credit opportunities as well as yours.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.