InCred

October 12, 2018

An educational loan can really give wings to your dreams. There is no denying the fact
that availing of an education loan for study in India or overseas, can help you kickstart
a career, or give a much-needed boost to an existing one.

Choosing the right lender is important

However, while getting an educational loan may be easy, there are several factors
to keep in mind before you narrow down on your education loan provider. Choosing
the right lender becomes important because a student loan is not a short-term
prospect. You are, in fact, going to be interacting closely with your financer
over the duration of the educational loan. Here is a quick list of things you
should keep in mind before taking the decision of choosing one education loan
lender over another:

• Education loan interest rates – It’s no secret that a loan can be
  expensive, owing to the education loan interest rates. When you’re researching
  for the right loan and lender, do ask for the education loan interest
  rates being offered, because not all rates may be the same. Do check
  whether the interest rate applicable on your loan is fixed or floating.
  Additionally, a lender might offer a discount on the education loan interest
  rates, which can add up to substantial borrower benefits over the life
  of the loan.

Further, do check whether the education loan lender can provide you with a tax
rebate under Section 80E of the Income Tax Act, because this will also bring
down the cost of the loan.

• Loan types –The education loan type will also determine the overall
  cost of borrowing and flexibility. Do your homework on the types of loan
  beforehand so that you know what to expect. Understand whether you’re
  going to avail of an unsecured loan, or a secured loan wherein you will
  need to provide collateral security to the lender; for example, property.
  Typically, a larger loan amount would require collateral to be pledged
  to the lender, but a lot also depends on the course and college you select.
  The right education loan lender will be able to guide you through understanding
  this part of the process and make it seamless for you. Choose a lender
  who will provide financing that is best suited to meet your goals.

• Payment options – It’s possible that it is difficult to land a job
  immediately upon course completion, possibly owing to economic conditions
  beyond your control. There could also be a scenario wherein you are unable
  to complete your programme by the estimated time. In such exceptional
  scenarios, the education loan lender needs to be accommodating to help
  you tide over this period. Typically, a supportive lender would assist
  by extending your repayment or moratorium period.

Of course, the onus is on you to repay the loan in a timely manner subsequently.
Do remember that while education loan interest rates might not be as high
as personal loan, it still adds up to an amount that has to be repaid in
full. How you treat your education loan will directly reflect on your credit
score, which in turn is essential for a healthy financial future.

• Other fees and charges – Be on the lookout for any additional fees
  and charges, such as application or origination fees. These amounts,
  however small, do ultimately add up to the cost of your loan, so be sure
  to understand them in detail. The right lender will not have any hidden
  costs; in fact, they are likely to help you understand the paperwork
  in great depth and help you get a loan that benefits you the most. Compare
  the terms and charges with the lenders you have shortlisted. Choosing
  a lender that offers you the best loan terms and not necessarily a larger
  loan amount, may just be the one to go with.

• Customer service – It is easy to work together with an education loan
  provider who is responsive to your queries at every stage of the process,
  whether at the time of availing the educational loan or anytime during
  the loan tenure. It thus becomes important to keep in touch with your
  loan provider and to update them on even the smallest change in your
  contact information. A good lender is in turn, one with whom it is easy
  to communicate with, and welcomes interaction with the borrower.

  Accessing your loan account becomes especially important if you are studying
  overseas, because it is not possible to visit the lender for every service
  request. Ask yourself how easy it is to access your lender online, and
  whether you can independently manage your account round the clock. This
  is crucial when you’re studying, because you would need to take time
  out from your schedule, and being able to do so at your convenience is
  what’s required.

Going the extra mile

Of course, it is important to read the fine print on any documentation always. A
reputed lender will be more than willing to walk you through the entire educational
loan application process, and answer any questions you may have. Explore your
options and go with the lender with whom you are comfortable, because it’s important
to know what to expect from your chosen education loan lender.

In conclusion

Making the right decision when it comes to your lender is to ensure that you get
the best value for money. This yardstick does not apply just to the educational
loan alone, but is also applicable with regards to the education loan lender
itself. Your education loan for study in India or abroad can help your career
soar.

Availing of a student loan is a big decision, and the right lender will make all
the difference to your experience. Make an informed decision after carefully
weighing all aspects of the loan and the services your preferred lender offers.
Starting your credit or lending journey in a prudent manner from the beginning
itself will ensure that you are able to look forward to a stable financial future.