An education loan is a ray of hope for students who wish to study in the premier institutes worldwide, including India. What’s more, today, availing of finance for higher education is a hassle-free process.
If you are a potential applicant who is about to take a loan for education, here are a few critical things to keep in mind before signing the loan document.
Look for the accurate mention of interest rate
Before signing your education loan documents, double-check the interest rate printed in your loan agreement. Whether you have chosen a fixed or floating rate of interest, it should be clearly mentioned in the documentation.
A fixed interest rate is charged at a fixed or constant rate for the entire loan tenure. Whereas a floating ROI, also known as the variable interest rate, may undergo periodic revisions depending on RBIs repo rate. No one ROI format is better than the other. Before availing of education finance, research the interest rate type most suitable for you.
Check the loan sanction letter for repayment schedule and loan amount
Make sure you double-check the loan amount the lending institution has sanctioned. Do this to rectify any typos or unforced errors the lender might commit. Along with the mention of the correct loan amount, your loan papers must enlist the repayment schedule in detail. Read through the repayment terms thoroughly to ensure you are comfortable with the pay-out duration.
Additional Read: Education Loan needs to be repaid? Here’s what you can do
Figure out whether they are offering you interest flexibility or not
Not many know this, but a loan for education often comes with flexibility on interest repayments. Meaning, a borrower can choose to start repaying their loan interest and principal once they find a job. Such an understanding is called interest flexibility, and it should reflect in the loan paperwork. So, make sure you check for it before signing the loan document.
Additional Read: Are Education Loans Tax Deductible?
Check the mention of the down payment
You may already know that a down payment is necessary when availing of education loan. Only in rare cases is it waived off. The lending institution usually covers 80% to 90% of the total loan amount.
For instance, say you want funds of Rs. 40 lakhs to finance your education, and the lender sanctions Rs. 36 lakhs, you will need to make a down payment of Rs. 4 lakhs. Whatever your down payment amount is, make sure it is mentioned in your loan documents.
To sum up
All set to avail education finance? Well, then get your documents required for education loan together and reach out to one of India’s leading financial institution Tata Capital. We offer education finance at attractive interest rates, flexible repayment tenures, and minimal documentation.
We also extend personal loans with competitive terms to help you reach your higher education goals without difficulty. Reach out to our financial experts for more information on availing personal finance for education.
Lastly, if you wish to calculate your potential EMIs on education or personal finance, we recommend logging on to our website and using our personal loan EMI calculator. So, don’t wait any longer! Reach out to us and apply for a loan for education today!