How Can a Personal Loan be Used to Fund Your Education
The cost of education is skyrocketing. One way to bridge the education cost and savings gap is by opting for a student loan. However, it might not be the ideal option in all cases. Student loans have strict eligibility criteria and can only be used for defined purposes. Moreover, these loans could require you to co-pay a specific share of the education expenses.
Alternatively, a personal loan for education is a considerably better choice for funding your education in India or abroad. These loans are readily available and can be used to cover any expenses per your discretion.
Here is everything you should know about personal loans for students:
What are personal loans for students?
Personal loans for students are a credit facility offered by a bank where you can use the funds borrowed for any purpose for your discretion. The personal loan for education can serve to cover your education expenses, such as tuition fees, accommodation, etc., and non-educational expenses, including food, travel, etc.
These private student loans are not secured against any asset, which means you are not obligated to put any gold, property or other valuable assets as collateral for borrowing from the bank. However, you might be required to pay higher interest rates on private student loans.
The application process for personal loans for students is easy and quick and requires minimal documentation. Once your application is verified, the funds are dispersed to the authorised bank account.
What are the benefits of personal loans for students?
- Unsecured loan
- Easy eligibility criteria
- Minimal documentation
- Quick approval
- High sum allocation – up to Rs 25 lakhs
- Direct and quick disbursement
- Flexibility to choose loan tenure (12 to 72 months)
- Fixed interest rate throughout the loan term
Personal loans for students vs education loans
- In private student loans, you have complete freedom to use the money per your discretion. That is helpful for students who also need to cover their living and travelling cost along with their tuition fees. In an education loan, lenders specify terms and instances for which the allocated funds can be used.
- In private student loans, the funds are deposited directly in your bank account. However, in an education loan, the amount is credited to the bank account of the school or college.
- A personal loan for education requires minimal documentation and verification. Alternatively, specialised education loans require you to submit all education and fee-related documents for approval.
- Students' loans do not have strict eligibility criteria and can fund 100% of your education expenses. Conversely, education loans can come with defined eligibility rules and need you to cover a portion of your education expenses.
How to get the right personal loan for education?
- Select the right bank: Carefully choose the bank based on the name and reliability of the bank, loan terms, application and approval process, repayment terms, fund usage restrictions, etc.
- Estimate your expenses: Once you have selected the lender, calculate your expenses - tuition fees, travel expenses, accommodation and food, cost of books, etc. You can speak to your family or ask your friends and seniors to understand the cost of education. That will help you determine the personal loan for education amount.
- Check your eligibility: Check the terms and eligibility conditions for private student loans of the selected bank. You can also contact the bank directly to assess if you are eligible for the loan.
- Decide on the loan term and repayment: Choose a loan term that is most financially convenient. Loan duration affects your private student loan EMIs (Equated Monthly Instalments). Choose pocket-friendly EMIs.
- Apply for the loan: Once through, apply for the personal loan for education with the selected bank and submit the documents required - ID, address and income proof. You can apply online or visit the nearest bank branch. Once approved, the personal loan amount is transferred within a few minutes.
Overall, a personal loan for education is a wise choice for you if you want to cover your education and other related costs. Further, the easy eligibility, minimal documentation, quick fund dispersal and flexible loan terms make private student loans an attractive choice to fund your education.
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