5 reasons to go for an Educational Loan

When you plan on pursuing your higher studies, you will be planning everything systematically. Be it preparing for the entrance exams, choosing the best educational institute that suits your requirement, finding the best accommodation for yourself are usually the things on top of your to-do list. However, the most important question that comes before all of this planning is how will you manage the necessary expenses? Where will the funds come from?

Nowadays, educational loan have become much more affordable than they were before, and applying for them has also become quite easier. And to help you clear your doubts, here are 5 benefits of educational loan:

1) They offer 100% Financing:

Unlike other loans, like a home loan or a car loan, which cover only specific expenses and don’t offer extra incentives, educational loan cover a wide range of your necessary expenses. An educational loan covers not just your tuition fees, but it also covers your travel expense, the cost of buying study material, accommodation expenses, etc. As these expenses are covered entirely by the loan, you don’t have to worry about having to spend a single penny out of your pocket.

2) You don’t need to provide security:

When you apply for any kind of loan, the thing that you are required to give to the lender is some kind of collateral. It could be your house or any other property that you own, any life insurance that you have. It’s not the same when it comes to educational loan. Many financial institutions offer education loans that require no collateral whatsoever. So you don’t have to worry about keeping your house as security when applying for an education loan.

3) Interest rates are quite reasonable:

One of the things that bother people most before applying for any loan is the interest rate of the loan. When you pay the EMI for the loan taken, the interest is also applied to it, which could drastically increase your expenses. But educational loan have very flexible interest rates in comparison to personal loans. Personal loans have interest rates that can easily exceed the 15% margin, whereas the interest rate for an educational loan can be between 8% and 12.5%. So this makes getting an education loan very affordable.

4) There is a moratorium period for the repayment of the loan:

The repayment process of most loans starts almost immediately when the intended expense is covered. So if it is a home loan, then the repayment begins as soon as you get possession of the house. The same applies to a car loan. Educational loan on the other hand are different. There is a moratorium period after the loan amount is disbursed to you. You will get a holiday period that can be of 6 months post your course completion or of 3 months after you land a job, and you don’t have to worry about paying a single EMI during the completion of your course.

5) You get tax benefits on your education loan:

In many loans, the interest that is applied on your EMI gets taxed under the total income, which increases the burden on the amount of tax you have to pay. However, the interest that is applied on educational loan doesn’t get taxed as total income under Section 80E. So that means whenever you pay an EMI for your education loan, the interest will be deducted and won’t be considered as part of your total income.

These are some of the reasons of getting an educational loan for your higher studies. We hope this article has helped in explaining to you.