Taking any kind of loan requires a good amount of research before you can arrive at one conclusion and make a final decision. With a high competition for admission in colleges and increasing number of students registering every year for a higher education, the fees structure has also increased gradually. In this generation, many students even want to go abroad for their higher education but their financial situation often comes up as a barrier for their bright future.
Deciding the amount of loan- Before applying for an education loan, you should calculate the amount of the loan on the basis of these factors.
- Your course fee.
- The monthly Loan installments which candidate is comfortable in paying.
Check Interest Rates- Before applying for an education loan at a bank, make sure of the interest rate. Check if the interest rate is fixed or is it a floating rate of interest. Banks often provide good deals with the fixed rate of interest, so you need to decide what to choose. In our experience, floating rate of interest has turned out to be more beneficial for people for even maintaining a good credit score, as you have the flexibility of changing the rate of interest.
Choose Government Bank- While searching for an appropriate bank, go for a government bank or a government recognized bank because from a government bank you can avail tax benefits under the section 80-E of the Income Tax Act.
Advance Payment- In the case of education loan, the repayment system is a little different as compared to other types of loans like home or personal loan. In education loan, there is a Moratorium period which is the duration of your course plus 1 year or 6 months depending upon the regulations of your bank and also your employment status. You don’t have to pay anything during this period but if you pay a few installments beforehand, it would help you lighten the burden of rate of interest which would be accumulated over this time period.
Don’t take the complete amount of Loan in one go- The rate of interest charged by a bank is calculated on the amount which is disbursed by the bank. If your college has semester wise payments, then you can withdraw the loan amount in every 6 months instead of taking it one lump sum, this will put less pressure on you as the rate of interest accumulated on a larger amount will be much more than the rate of interest charged on small amounts.