Are you planning to study further to enhance your employment prospects but are worried about the fees of your course? To tackle this problem, we have education loans offered by most banks and financial institutions.
With higher education becoming expensive with changing times, taking an education loan has become quite commonplace. The benefit of this loan is that you have the option of starting the repayment once you start working. This is a big relief as it does not burden the family under any circumstances. However there are few factors that can make your loan work much more effectively. You need to check these factors while going for an education loan.
The interest rate is most important factor for any loan and the same goes for an education loan as well. The interest rate determines the overall cost of the loan. Education loan rates are usually lower than the interest rate charged on a personal loan but slightly higher than the home loan rates. The rate charged differs from lender to lender and also depends on the loan amount. Higher the loan amount, higher is the interest charged and vice-versa.
Some banks offer a ‘fixed' rate of interest while others offer ‘floating' rate of interest. So if the difference between the two types of rate is only of around 1% then it better to go in for a fixed rate as these loans have shorter repayment period of 5 to7 years. However some banks offer fixed interest rate with reset clause which means that the lender can alter interest rate whenever it feels the need. In such a situation it is better to opt for a floating rate. This rate is linked to the prime lending rate (PLR) of the bank. The interest is normally payable on a quarterly reducing basis but some banks also charge it on a monthly reducing basis which is better for consumers.