Apart from offering you new learning and career opportunities, an overseas education can be the experience of a lifetime. You meet students from across the globe, experience new cultures, learn from best professors, and enjoy modern research facilities. However, as exciting as this sounds, it can place great strain on your wallet, especially when you factor in all the costs involved. As such, you can consider financing this dream via an educational loan for abroad studies or a personal loan for education.
Here are 5 important factors to check when funding your overseas education and decide between education loan and personal loan for education.
Loan Amount in Proportion to Your Overseas Education Expenses
The first thing you need to do is know how much your overseas education will come to. This amount will include flight costs, tuition fees, accommodation expenses, exam fees, and other living costs. Next, you will need to know how much of this will be covered by your loan.
If you are wondering, ‘Are Education Loans Worth It?’, the first thing to do is to check the loan amount offered. At times, higher educational loans cover just the tuition fee and require collateral in case you need to borrow an amount that exceeds Rs.4 lakh, or in some cases, Rs.7.5 lakh. So, to answer the common question, ‘Do education loans cover living expenses?’, keep the above in mind.
This is not the case with a personal loan for education. For example, Personal Loan lets you borrow finances up to Rs.25 lakh without collateral. You can use this amount to cover all aspects of your overseas education, including living expenses, affordable. With the flexi loan facility, you can borrow on the go from your total sanction and pay interest only on the amount withdrawn. In this way, you can pay for travel, accommodation, and tuition as and when the need arises without incurring any extra interest.
Loan’s Eligibility Criteria and Disbursal Policies
In terms of eligibility, personal loans are a simple form of borrowing. Personal loan eligibility criteria involve simple income, age, and employment requirements. These can easily be met by you or your parents. Disbursals are made to your bank account and so, you enjoy maximum freedom.
In case of higher education loans, proving your eligibility can be more cumbersome. You need to give VISA proofs, acceptance letters from your college, and provide any other document your lender requires. To add to that, disbursals may not be made directly to you but may go straight to your institute’s financial aid department in order to take care of tuition fees.
Interest Rates That Are Attached to Loans
When deciding on a loan, one of the key parameters you need to look into is the interest rate. At times, this varies greatly from one lender to the next. The best thing for you to do is to meet the eligibility criteria and have a good credit score to get the most competitive rate of interest.
Moratorium Periods and Repayment Terms
In case you would like to pay off your loan after completing your studies, then an education loan is a better solution. This is because while EMIs for personal loans start soon after disbursals while education loans have a moratorium period after which EMIs need to be paid. This period usually lasts for at least the length of your course. However, the interest you owe during the gap is added to your amount due, which increases your cost.
If you prefer a personal loan for education, one way to make your EMIs affordable is by using Bajaj Finserv Flexi Loan facility. It allows you to pay interest-only EMIs through the tenor and the principal at the end of the term. This way you can pay back comfortably when you start earning more.
Tax Deductions That You Can Benefit From
One standout benefit that education loans have over personal loans for education is the yearly tax deduction you can claim. The interest you pay on an educational loan can be claimed via Section 80E of the Income Tax Act. Additionally, there is no cap on the maximum amount you can claim. However, remember that deductions can only be claimed by the official loan borrower and not any other family member even if they pay the EMIs.
Now that you know what to look out for when seeking to fund your overseas education if you are wondering, ‘How to compare lenders?’, here are 3 tips that will help you choose the right one.
Tip #1: Choose the lowest interest
Low-interest rates mean that you pay lower EMIs, and on a whole, your borrowing becomes more affordable.
Tip #2: Go for the most flexible terms
Flexible loan options allow you to align your borrowing to your needs. For example, the easily accessible features offered via Bajaj Finserv Flexi Loan facility allow you to finance a great education abroad with a personal loan and pay for any unexpected expense affordable too.
Tip #3: Opt for quick application and disbursal
Finally, since you want to waste no more time on paperwork, settle for a lender that has an easy online application and promises a speedy disbursal. If a personal loan ticks the right boxes for you, then check your pre-approved personal loan offer from Bajaj Finserv. A single-step verification gives you instant approval, a chance to apply via a customized deal, and a chance to expedite the quick 24-hour disbursal process.
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