Applying for education loan is an essential part of the current high-cost education scenario. This is the most important step in your higher education journey and you should act smartly. The financial institution you choose will provide you with your fees installments and you cannot mess with that. More important than that, you need to ensure that the institution has easy repayment policies.
Applying is an easy part but the confusion arises when there are so many options to choose from in the market. Banks, NBFCs, private financial institutions, all use good bushes for good wines, and thus it becomes really difficult to choose a proper lender. This often leads borrowers to make mistakes and leave some loopholes while applying for education loan. So it is always advised to plan your loan well before applying.
We have curated some tips to guide you through some of the important points you should keep in mind.
Decide on Your Course
Deciding your course has 2 important reasons from the perspective of education loan.
1. Many banks make specific schemes suitable for particular courses. These schemes often have attractive interest rates and rewarding benefits. So when you have already decided on your course, you can utilize them.
2. Choosing a course that interests you will help you in getting a good job. A good job, in turn, will help you in repaying your education loan.
Explore the career options of your course and whether it will land you in a well-paying job, then opt for it and decide to pursue your studies in the same field.
Select Your Institute
Selecting institute is an important part as you need to ensure that your college promises good placements. Your college should also have the necessary certificates and accreditations and should not be black-listed.
If you are planning to study in premier institutes like IITs, IIMs or NITs, banks will offer you a completely different scheme with higher loan limits.
Choose Your Bank
The most important thread. Thorough research should be done about the bank including the interest rates, concessions, repayment terms, loan quantum, etc. Choose a trustworthy bank which can provide you installments on time and also only when you want them. There are also many good reputed NBFCs and MFIs available to choose from.
Calculate Your EMI
Calculating EMI is important as it always comes out to be more than what we expect. People believe that longer the duration, lesser the EMI, but this way more interest is accumulated. You also remain under debt for a longer time. So calculate your EMI and choose a loan amount best suited to you.
Get Your Loan Sanctioned in Installments
Banks calculate interest on the amount of loan disbursed and thus it is important that you take your loan in installments. Also, ensure that the bank gives you installments whenever you ask. This way you will have to pay less interest.
Have a Plan for Repayment
An increasing number of education loans are going in default, 9% to be specific. Make sure you don’t become a part of that. Plan out how you will repay the loan. Assess the scenario of not getting a job. Your co-borrower can also help you.
Pay Before Time
Procrastination is not something to be tested with your education loan. Save your money, cut down on expenses, and use your bonus cash to repay the loan as soon as possible. The more time you take, the more will be your interest. Certain banks allow you to pay interest even during the moratorium period.