An education loan is a right option for students who want to pursue higher studies abroad but do not have enough money to fund the studies. In today’s time, getting an abroad education loan in India has become relatively easier. But, in absence of proper information and guidance, many students end up taking education loans at a higher rate of interest or make some avoidable mistakes. To avoid such situations, here are the top factors that a student must compare or know before applying for an abroad education loan:
Interest Rate
Interest rate is unquestionably the most vital factor to consider while applying for an abroad education loan. Also, the interest rate on loans does not always remain the same throughout the loan tenure and therefore it is essential to look at whether the interest rate is fixed or floating.
A loan with or without collateral
Most of the features of an abroad education loan are based upon the fact that whether you are going for a secured or an unsecured loan. The ROI (rate of interest) is notably lesser in the case of loans with collateral. Loans without collateral, as they don’t require any tangible or intangible asset to be vouchsafed, include a higher ROI that can be somewhere between 11-15%.
Moratorium Period
The moratorium period refers to the grace period during which you will not have to make any principal amount repayment. It’s the waiting period after which your loan repayment will begin. Usually, the banks give a moratorium period of 6 months to 12 months. Also, according to the type of loan you choose, you might have to pay a simple or partial interest rate during your study period.
Processing Fee
In addition to the loan amount, banks also impose some other charges that have to be compensated by the applicant and one of these charges is the processing fee which can range from 0-2% of the loan amount based upon the lender. It is essential to know about the processing fees at the beginning of the loan process. You must take this expense into consideration as well while deciding on the abroad education loan.
Pre-payment Penalty
A pre-payment penalty is levied by the lender when you pay off the loan before the pre-decided loan tenure. This penalty differs on the basis of the time at which you are doing the loan foreclosure. This penalty can range from 2-4% of the remaining loan amount. It is important to plan for such an event in prior, specifically for the students of premier colleges who have excellent odds of getting a well-paying job and would be able to pre-pay the loan easily.
All the above features might sound quite burdensome for you to compare as they take in an insightful understanding of financial verbiages. With GyanDhan, you can now put all the troubles of choosing the best education loan product for you on them. It is a study abroad financing marketplace that helps abroad study aspirants in securing education loans from government banks, private banks, and NBFCs- free of cost!
All you need to do is to check your loan eligibility and if you are eligible, their education loan counselor will contact you and will suggest the best education loan options for you! You can stay at peace in your home and GyanDhan will do all the work to make sure that you get an abroad education loan without any trouble!