Although we know that personal loans are availed without any collateral, loan against property seems to be a better option to meet educational expenses owing to their prolonged tenure, high loan amount and lower interest rates compared to unsecured loans.
Availing loan for your further study is become easier if your parents own a property. According to the survey the rate of availing education loan in india increases 32%. While you avail loans there are certain aspects that you should keep in mind such as loan amount, interest rate, etc. Some of these are discussed below.
- Loan AmountBefore you apply for a study loan, the first step to keep in mind is the loan amount. Analyse your available funds and future expenses to decide on the loan amount. Also, the amount of such loan against property for education will depend on the market value of the property to be mortgaged. In case the amount borrowed does not serve the purpose you can apply for a top up loan if your lender provides such facilities. To avoid an accumulation of extra debt, always try to keep the borrowed amount lower than the property value. Also, consider your repayment capacity before applying for a higher amount.
- Loan TenureThe loan tenure will affect your EMI amount and the interest rate on loans for students. If you wish to make your EMIs affordable, consider opting for a longer tenure. However, if you have adequate cash flow and financial stability, you can choose to have a shorter tenure, which might also lower the interest rate. While you determine the ideal tenure of your loan against property, consider your age, loan amount and interest rate.
- Interest RateBefore you apply for a student education loan, check the interest rate and other applicable charges such as –
- Processing fee- Charged for loan application formalities.
- Late payment charges- Charged in case of non-payment of EMI/s before the due date.
- Statement charges- Charged to issue loan statements.
- Part-payment fees- Charged for part prepayments.
- Foreclosure charges- Applicable on foreclosing the loan.
- EMI bounce charges- Charged in case of insufficient amounts in your account on the day of EMI payment.
Apart from the above, there are other charges that are applicable, such as security fee, property evaluation charge, etc.
- Having a ‘second’ PlanWhile you avail a student loan in India, make sure have a second plan as a backup. Analyse your finances appropriately and plan your repayment. Having a pre-scheduled repayment will ensure that you never miss an EMI. In case you do miss a payment, make sure you have a plan for that too. You can consider debt consolidation, which helps to manage your finances better or transfer your existing dues to another loan with lower interest.
- Application ProcessThe application process for such loans is favourable, and you can do so both online and offline. To apply online, visit the official website of your lender and fill up the application form with your financial and personal information. After you submit the application form, a representative of your lender will contact you within 24 hours to collect the required documents. Your lender will approve your loan amount within 48 hours after receiving the papers from the representative, and your loan amount will be disbursed accordingly.
Several financial institutions and NBFCs provide pre-approved offers to make the application process of such loans fast and hassle-free. Bajaj Finserv is one such NBFC that provides pre-approved offers on financial products and both secured loans like home loans and unsecured credits such as business loans and personal loans.
However, to enjoy a pre-approved offer, you have to be an existing customer of your lender. Also, pre-approved offers depend on your credit score and financial stability. Having a pre-approved offer will also help in availing loans at a lower interest rate. NBFCs like Bajaj Finserv provide such Loan Against Property for Education at competitive interest rates against minimum documents with instant approval. They also provide balance transfer facilities, online account access, minimum part-payment and foreclosure charges, flexible tenure, considerable loan amount up to Rs. 3.5 Crore and several other benefits.
Apart from the above-mentioned aspects, there are specific other things that you should keep in mind, such as the documentation process, eligibility criteria, repayment process, tax benefits on loans for students, etc. Also, make sure to pay your dues on time to avoid hefty penalty charges.