The net worth of higher education in India was worth Rs.7,08,000 crores in the fiscal year 2017. With the rising cost of higher education, this market is only set to expand further. While the rising cost of higher education can be distressing for parents, they have a few alternatives to deal with such expenses. For instance, they can opt for a higher education loan and utilize the funds to pay their kids’ tuition fee, hostel fee, and other educational expenses.
Parents who lack sufficient funds can look for other modes of accumulating finances or apply for a personal loan. This unsecured loan is easy to avail and is less risky for the borrower. Further, consider the pointers mentioned below to ensure that you make an informed decision regarding such credit.
Factors to know before taking a personal loan-
Loan amount
Individuals can avail a significant amount by applying for a personal loan from a reputed financial institution. Some lenders can offer up to Rs.25 lakh to borrowers depending upon their eligibility.
Hence, parents can avail a loan amount, which can meet their child’s educational requirements well by revealing their creditworthiness. They do not need to hypothecate any assets to avail such personal loans.
Interest rate
The interest rate levied on a loan determines the equated monthly instalments (EMIs) that one must pay once the repayment period begins. Hence, it is vital to opt for a loan, with competitive rates of interest.
Individuals can further lower interest on a loan by ensuring creditworthiness. In this pursuit, CIBIL score for personal loan should be beyond 750. This reveals a good credit repayment history or high monthly income to get a better quote of the interest rate. The overall cost of the loan is affected majorly because of the interest rate, and hence one should be very cautious in choosing this aspect.
EMI calculator
Nowadays, almost every financial company offers an online EMI calculator tool. One can use it to determine the EMIs they will have to pay for a higher education loan. They need to input the loan amount, tenor, and interest rate to determine the EMIs. Further, they can change the tenor as per their financial standing to determine a value of EMI, which suits their financial condition.
Eligibility
Salaried individuals need to fulfil the following requirements
- Indian resident
- Age between 23 to 55 years
- Salaried employee from an MNC, private, or public organization
- Minimum salary depends upon the lender and the city of residence.
Documents
These are some important documents one need to provide while applying for a personal loan.
For salaried individuals
- Employee identity card
- KYC documents such as Aadhaar card, Voter ID, PAN card, Passport, etc.
- Salary slips
- Account statement
Other fee & charges
Processing fee, interest charge, etc. are some additional charges, contributing to the total cost of a loan. Also, some financial institutions charge for part pre-payment or foreclosure of the loan. Therefore, one should be aware of these charges beforehand and decide accordingly.
Tenor
Tenor refers to the period within which a borrower needs to repay the loan along with interest. Hence, it is crucial to find the right personal loan tenor that works best for your specific financial situation.
One can choose a longer tenor in case they want the EMIs to be smaller, which will eventually lower the monthly financial burden. Keeping the tenor short will ensure that the loan is repaid quickly; however, the monthly financial obligations will increase.
Ease of access
Some financial institutions offer customers with both online and offline modes of applying for a higher education loan. Also, they quickly process the application, and the money is disbursed within 24 hours to the borrower’s loan account. Hence, one should consider these before deciding.
Non-banking financial companies like Bajaj Finserv make the loan application procedure simpler for borrowers with their pre-approved offers. Such offers are available on several financial products such as business loans, personal loans, etc. Individuals can check their pre-approved offers instantly by inputting their name and contact number.
By keeping all the above factors into consideration, one will be able to improve their experience of availing a loan. Besides, this unsecured loan has no end-use restrictions and parents can utilize it for any purpose right from the payment of tuition fee to purchase of study material, laptops, etc.
