Personal Loan or Education Loan: Which Is Better?
Higher studies are expensive, especially in foreign universities. So, many people take loans to pay for these courses. Education loans are available, of course. But you could also take a Personal Loan for higher studies. Find out about the pros and cons of education loans vis-à-vis Personal Loans for higher education.
The Advantages of Taking an Education Loan
Let us first look at the advantages of an education loan.
- Affordable: Education loans have a specific purpose. They offer support and financial backing to students. So, these loans are cheaper than Personal Loans. They are also available at lower interest rates. Female students get an extra 0.5% concession.
- Repayment: This is the biggest advantage of an education loan. You can start repaying the loan after you finish your course and get a job. The EMIs start one year after you complete your studies, or six months after you land a job, whichever is earlier.
The Disadvantages of Taking an Education Loan
- Difficult eligibility: An education loan is not the easiest loan to get. Lenders often have to deal with defaulters. So, they put every application through stringent scrutiny. Only if you meet the complicated eligibility criteria will you get the loan.
- Margin: You may have to pay a margin of 15% of the education cost. This may be too steep at times. Not every student can afford to pay this from their own pockets.
Say, you fail to get an education loan or you feel the loan does not suit you. Then consider taking a Personal Loan to fund your studies.
- Quick and simple: You can get a Personal Loan for higher studies in a matter of hours. You can check your Personal Loan eligibility and then apply for it online. Say, you meet the requirements and get loan approval. The loan amount will then reach you in just 72 hours.
- No restriction on spending: You do not have to explain to the lender how you are spending the loan money. Use the loan to fund your travel expenses, tuition fees, and rent.
The Disadvantages of Taking a Personal Loan for Higher Studies
A Personal Loan may seem like a great choice. But there are some demerits that you must be aware of.
- Expensive: Personal Loans are more expensive than education loans. The interest rates are high. So are the different fees and charges associated with the loan.
- Immediate EMIs: This is another major disadvantage of using a Personal Loan for higher studies. You have to start repaying the loan immediately. This is unlike education loans, which you can repay after you get a job.
The bottom line
Both education loans and Personal Loans for higher studies offer the funds you need. So, before you apply for the loan of your choice, keep the pros and cons of each in mind. Then analyse them against your own requirements. Check out Personal Loans from Bajaj Finserv today.