Education Loan: Keep these things in mind while taking an education loan, there will be no problem in repaying the loan...
Expenditure on education is increasing day by day, especially in higher education. It is not easy for a middle-class family to raise all the money for higher education. That's why many people take education loans for the higher education of their children. Nowadays its trend has increased a lot in India.
It is very important to keep some things in mind before taking an education loan for studies. Therefore, education loans (Education Loan details) should be taken with utmost care only after a thorough investigation. Doing this will not only make it easier for you to repay the loan later but will also save you money. Let us know what things should be kept in mind while taking an education loan.
It is important to know how much loan is required
There are many types of expenses involved in taking admission to any course. The main ones in this include the amount spent on course fees, hostel or living expenses, books, laptops, etc. Therefore, before taking a loan, all these necessary expenses should be assessed thoroughly and only later you should apply for the loan. The loan amount should be such that it can cover the entire expense. A maximum loan of Rs 10 lakh is available for domestic courses and up to Rs 20 lakh for studies abroad. More loans are also available for studies in big institutes like IIM, IIT, and ISB.
Determination of loan repayment period
Apart from the course period, financial institutions also give an additional moratorium time of one year to repay the loan. EMI does not have to be paid during this period. Generally, when you start paying EMI, you get a repayment period of 15 years. Interest starts from the day the loan is received. The bank can extend the moratorium period by two more years. Keeping all these things in mind, the repayment period of an education loan should be chosen very thoughtfully so that there is no problem in repaying the loan in the future.
How much interest will be charged?
The interest rate on education loans is an important fact that must be kept in mind while taking the loan. The interest rate depends on factors such as the course, institute, past academic performance, credit score, and security of the student/co-applicant. Apart from this, there may also be differences in interest rates of different financial institutions. During the moratorium period, interest is charged at a simple rate and thereafter at compound interest rate. Therefore, before taking a loan, one should thoroughly understand the interest rates of all the banks.
Estimate future earnings
It is important to know the placement history of the course and institute to which you are admitted before taking an education loan. By doing this you will get a rough idea of whether you will get a job after the course or in between. You will also get an idea of how much salary you will receive. Once you have an idea of placement and salary, it will help you in estimating your monthly income and EMI accordingly. Apart from this, it will also help in choosing the loan tenure.
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