Guide To Plan Finance For Studying Abroad
Many of you might have a dream to get enrolling in a reputed college abroad for your higher education. Usually, it will require you to rank in some specialized exams, such as IELTS, TOEFL, etc, shortlisting your college, securing your funds, applying for a visa, and so on. To be honest, opting for an abroad education can cost you quite a bit, so it becomes important for you to find a stable source of cash flow to fund your education abroad.
Especially in India, you can find various government banks or private banks which offer education loans, and the process for getting an education loan is comparatively simpler. With some assistance and a bit of research, any student will be able to find a suitable loan which will also help them to save their money in the long run. To make things easier for you in this article we will discuss some of the things you need to keep in mind while looking for an education loan.
- Pick the loan lender
You can easily find plenty of loan lenders in the market, which can fund your education abroad. And due to this abundance, students usually face no problem finding an education loan. But having said that, it also makes it difficult to filter out the best possible option which can help you to save your money.
All the loan lenders will have their own advantages and disadvantages, therefore you have to carefully analyze and compare the available options. And always make sure to read all the terms and conditions as it will help you to make a smart and well-informed decision.
- Select the type of loan
Basically, there are two types of loans, which includes the loans having collateral, and then those without collateral. If you are going for the first option then you have to give some type of collateral or security that has a similar value to your overall loan amount. However since the lender will have a comparatively lower risk, the loan amount can also be a bit higher than the value of the collateral, along with low-interest rates. On the contrary, for loans without collateral, an individual can borrow around INR 40 lakhs, and the interest rates revolve around 11 to 13 percent. On top of that, the borrower is required to pass the loan eligibility which will depend upon the income and the CIBIL score.
- Go for the lowest interest rate possible
When opting for a loan the first thing you need to look for is the interest rates, as it will mainly determine the extent of your financial burden. Comparatively, government banks usually provide much lower interest rates, than private banks. To put things in perspective you can expect an interest rate of around 8% in government banks, and for private banks, it usually starts from 10 percent. So, always try to go to the government banks first, while looking for an education loan. However, even this small difference can cost you a lot of money in the long run. Apart from the interest rates, some other things you need to look for are:-
- Loan tenure
- Moratorium period
- Processing fees
- Prepayment penalty
- Evaluate your eligibility
When it comes to the eligibility of getting an education loan, terms and conditions might fluctuate from bank to bank. For instance, if you are going for an educational loan with collateral, then some banks prefer that the value of the collateral pledged should be higher than the loan amount. On the contrary, for the education loan without collateral, the eligibility mostly depends on the monthly income of the borrower, and most banks prefer that the monthly income need to be much higher than the interest payments. And the upper limit for this monthly income will usually vary depending on the banks.
There are a lot of things you need to keep in mind while opting for an abroad education loan. However if you can do things responsibly along with an adequate amount of research, then most likely you won’t face many problems while looking for a perfect education loan. So make sure to follow the points mentioned in this article, and try your best to reduce your financial burden in the long run. In case you are facing some difficulties you can always consider approaching a financial advisor.
Also, read- Degrees or Skills? A two-way approach
Author- Adesh Chaurasia
A superior and highly experienced entrepreneur in the field of business for quite a long time now. Also, a philanthropist, author, and public speaker who believes in working towards the overall well-being and betterment of society as a whole.