Taking an education loan for overseas studies is one of the best choices. An education loan covers the course fees along with associated costs like living expenses, study equipment and coursework material. Furthermore, education loan comes with tax benefits. However, an education loan may not be enough for covering all the expenses related to overseas studies. In such cases, you can apply for a personal loan online.
As per the RBI guidelines, banks don’t sanction a 100% amount for your overseas studies. 15% of this sum has to be managed by the student. In addition to this, travel expenses and lifestyle expenses are also not covered by an education loan. For all such auxiliary expenses, you can go for a personal loan.
Availing an education loan makes sense if you are unable to afford higher education from a reputed university. As most of the time, getting a well-paying job is guaranteed after the completion of the course, you can easily repay your loan. In addition to that, education loan offers great tax benefits and has low-interest rates.
Read on to know why taking an education loan for overseas studies is a good idea.
Benefits of Taking an Education Loan
- Tax Saving
As per Section 80E of the Income Tax Act, students can claim a tax deduction for up to 8 years on their education loan interest payments. This helps save the interest amount of your borrowed amount. You also get a concession on Tax collected at source (TCS).
- Moratorium Period
The best thing about availing an education loan is that repayment does not begin until the completion of your course. You further get a moratorium period of 6 to 12 months, after the course completion. This is the time during which banks expect you to find a job and get settled. In case you take a personal loan for education, the repayment begins much early.
- Interest Rates
Education loans are usually secured against collateral. Because of this, the interest rate on education loans is low. In addition to this, there is further concession offered on education loans for girls. Also, as per RBI, banks cannot charge any processing fee or upfront fees on education loans. Further, a1-2% interest concession may be extended to you if you serve the interest during the study period.
Things you should know beforeapplying for an education loan
- Eligibility criteria
Education loans are not extended to all courses. To avail an education loan you must secure admission in a professional or technical course. The better the reputation of the university, the higher your loan approval chances. You must also secure a certain percentage to get an education loan.
You can avail an education loan with your parents or guardian as co-applicants. Though education loans are offered as both secured and unsecured variants, for larger loan amounts you need to submit collateral. For loans above Rs. 7.5 lakhs, you need to submit collateral in the form of property, gold, bonds, stocks, investments etc.
To get an education loan you will have to submit your admission letter or the acceptance letter from the institution. Along with the college fee structure, and previous marksheets. You will also have to submit the KYC documents, and income details (if any).
When should you consider a personal loan over an educational loan?
A personal loan is highly flexible and easily available. In situations where an education loan fails to meet your needs, you can rely on a personal loan. Read on to discover the pros and cons of choosing a personal loan over an education loan.
- Easy application
With the advent of loan apps and online lending websites, you can easily apply for a personal loan online. Digital processing has made it much easier to avail a personal advance for education.
- Quick disbursals
It is not only easy to apply for a personal loan onlinebut the disbursal process of instant loans is also very quick. Many banks disburse the loan amount within 24 to 48 hours of your application.
- No collateral
You can avail a big-ticket personal loan without submitting any collateral. The loan amount sanctioned depends on your loan eligibility and your choice of lender. This makes availing a personal loan much easier.
- Flexible end use
You can use a personal loan for any purpose you deem fit. You can use the loan amount to book flight tickets, manage accommodation, pay for food and other associated costs of living. You can also use this money for school trips, buying study materials and more.
- Minimal documentation
Unlike an education loan, you don’t need to submit your college acceptance letter or your marksheets for a personal loan. When applying for a personal loan online, you just need to submit your KYC documents along with your income details or your co-applicants income details. This makes apersonal loan your only choice if your college or course is not eligible for an education loan.
- Simple eligibility
Personal loans have simple eligibility criteria. Like, you can avail a personal loanif you are in the age range of 21 to 58 years. You are an Indian citizen and your monthly income is at least Rs. 15,000. There is no requirement for getting into a particular college or achieving a certain grade.
- Easy Repayments
Repaying a personal loan is much easier in the form of equated monthly instalments. You can start a part-time job and repay your loan EMIs. While availing the loan make sure to compare the interests and select a loan tenure and amount that offers you an affordable EMI.
An education loan can be your best bet for financing overseas education. These loans are specially designed to meet your financing needs for higher education. Today, there are different lenders in the market offering a range of features. You must go through all these offers before selecting the one most suited for you.
In cases, when an education loan cannot suffice your needs, you can rely on a personal loan. You can easily apply for a personal loan online and get instant funds to meet your financial needs.