Education loan: Several studies indicate that students rely on bank loans to fund their education. Students are willingly pushing themselves out of their comfort zones to pursue higher education abroad, and they are well aware that it can be prohibitively expensive when other factors such as accommodation, tuition fees, day-to-day expenses, and so on are considered. To achieve lower interest rates, better terms, and other benefits, it is critical to select the right source of funding for higher education. The main question is, which type of loan should one choose? Borrowers frequently face the decision between personal loans and education loans for paying for school, as each has advantages and disadvantages. Let’s take a closer look at them.
Personal loan vs. education loan:
Coverage of loan- Education loans provide the greatest benefit of cost coverage, with loan amounts ranging from Rs. 7.5 lakhs to Rs. 1.5 crore, but may not cover your accommodation, day-to-day expenses, and so on.
A borrower’s personal loan amount can range from 25 lakhs to 40 lakhs and can be used to cover other expenses as well. Obtaining a personal loan is a simple process.
Repayment of a loan-
If you want to get lower interest rates, better terms, and other benefits from an education loan, you must choose the right source of finance for higher education.
There is no moratorium period offered to repay a personal loan. It begins in the first month.
Eligibility for an education loan is determined by a student’s academic record, the institute to which he or she is applying, and the course chosen. If the student does not meet the criteria, his or her loan may be denied.
Personal loans can be used for any purpose; however, in order to be eligible for the loan, the primary applicant must have a credit score of at least 750 and a stable source of income.
Rates of interest-
The interest rate on an education loan ranges from 8.45% to 13.45%. Unsecured education loans may carry a higher interest rate of up to 14%.
A personal loan’s interest rate ranges from 10.5% to 24%.
Borrowers can save on income taxes by using an education loan to fund their studies. The interest component can be deducted, which lowers our taxes.
A personal loan, on the other hand, is not tax deductible in our country.
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