5 Things in Mind When Comparing Education Loans in India

The cost of education is going through the roof and course fees are rising exponentially every year; so much so that not everyone can afford the foot the cost of their dream education solely on their savings. In fact some aspiring students are forced to sell their parent’s asset such as gold or break fixed deposits or surrender life insurance policies to cover the cost of their education plans.

However, you can avoid all this by simply opting for an education loan. There are many lenders in the market today offering comprehensive financing solutions that promise to help you achieve all your education plans without having to worry about the funds. So if you are thinking of opting for an study loan, then you are indeed thinking on the right track.

But taking an education loan isn’t so simple; you cannot just opt for the first loan offering you come across. In fact, you should compare a few financial product based on certain factors before finalizing on one particular loan product and this article will highlight some of these factors on which you should compare education loan in India.

1. The loan amount being offered:

Some lenders provide up to 70% of the cost of you education, some offer to foot the entire cost; so depending on your needs you should compare and choose accordingly. However, most lenders will provide you around Rs. 10 lakh for studies in India, and around Rs. 20 lakh for studies abroad.

2. Compare education loans in India by their interest rates:

The interest you pay is the cost at which the loan is offered to you. The higher the interest rate, the more you are paying to avail the services of that loan. Therefore, you should compare the educational loans in India by their interest rates. Generally, education loans come with interest rates between 10% and 16.50% per annum.

3. Compare charges:

All the education loans in India have a set of charges that will be borne by you. Some of these charges can amount to substantial amounts of money and so it is important to compare the charges of the various loan offerings before selecting one.

One of the most important charges is the processing fee. Not all lenders levy this charge but if they do, you’d have to pay as much as 1 or 2 percent of the loan amount as processing fees. Aside from the processing fee, also compare late payment charges, document processing charges and other charges.

4. Compare education loans in India by tenures offered:

The tenure offered by the lender will decide how smooth or pressurizing the repayment process will be. Most lenders provide tenures between one and ten years, depending on the loan amount, the repayment capacity of the borrower, nature of the course, etc.

5. Need for collateral:

Not all lenders will require you to put up something as collateral. But if they do, you might be required to offer your property, gold, fixed deposits, life insurance or non-agricultural land as collateral.

There are many education loans in India, each one having their pros and cons. Use these above mentioned factors to compare between them and choose one that fits your needs and requirements.

I am a financial blogger since 2005, I am currently Working at Auxilo Finserve Pvt Ltd as financial blogger, I love to share blog or article on Education Finance and Policy, Education Loan and Interest Rates.