A lot of times, the only way to pay for higher studies or advanced courses is to take an Education Loan. But just like any other type of loan, caution is of utmost importance. Avoid these five mistakes when taking a loan for education in India.
There are now unlimited professional opportunities for Indians in India and abroad. With the help of higher studies and specialized courses, Indians can now prepare themselves for a dream job that can effectively secure their life financially. But in most cases, the higher studies and more commonly, the advanced courses are expenses.
For a lot of students and parents, they are beyond their affordability. Fortunately, there are now specific Loans available to pay such high tuition fees. But just like any other type of loan, a Loan for education too should be taken with utmost caution. If you are planning to take one such loan, ensure that you avoid these five mistakes-
- Not shopping around
There are now several financial institutions that offer Education Loans. Right from their interest rates, eligibility requirements, to other terms and conditions, there can be significant differences among them. As a result, it is very important for every borrower to shop around and select one only after thorough consideration of all the different options.
- Borrowing more than required
It is highly recommended that you only borrow an amount that you actually need. Calculate the fee of the course, accommodation, books, etc. to come up with a figure that you need. Borrowing more than required will only increase the debt burden on you. Remember that you are taking the loan to pay for your educational necessities and not luxuries. Ultimately, you’ll have to repay it to the lender.
- Not checking the moratorium period
One of the most important considerations when taking an Education Loan is its moratorium period. The moratorium period is the period that you get before you start repaying the loan after finishing the course. Some lenders offer a year after you finish the course while many others have a moratorium period of 6 months after you start working.
- Not considering the currency exchange rates
If you are planning to take up a course in a foreign country, ensure that you also consider the currency exchange rates when calculating the fees and other expenses. Moreover, also make sure that you keep all the loan documents and payment receipts from the college or university as you might need them in future.
- Not having a repayment strategy in place
Once the moratorium period ends, you’ll have to start paying the loan EMIs. Thus, it is very important to have a solid repayment strategy in place to ensure that you never miss any payment. This is especially true for the students who are not taking any financial help from parents. Make sure that you have a few alternatives to start repaying the loan in case of any unexpected events.
Before you apply for an Education Loan, it is very important to know its implications. Keep these mistakes in mind when taking a loan to ensure that your professional goal is efficiently achieved.