A higher education degree from a reputed institute can help one in leading a quality lifestyle. The cost of education has been, however, spiralling over the years. Despite years of savings, individuals may face shortage of funds. In such scenarios, an education loan or a personal loan for higher education can help cover the gap between the required amount and shortfall.
Personal loan vs education loan: Which is the ideal option?
When it comes to funding education, an individual can choose from these two different loan options. Determining which of them offers greater benefits will require you to undertake a detailed comparison between them.
- Availability of loan amount
It is one of the most important characteristics of any loan. An individual choosing an education loan can only avail of the sum necessary to fulfil course fees and other associated charges. Moreover, if fees is more than Rs.4 lakh, an applicant may have to arrange a certain part of finance by himself/herself.
On the other hand, a higher education loan allows one to pick a loan amount as per his/her eligibility and preference. Additionally, an applicant can avail of the entire sum required, without the need for making arrangements for margin money.
- End-use restrictions
An education loan permits an individual to use the proceeds of such a credit to finance the academics only. Nevertheless, students who enrol in colleges far away from home also need to arrange for additional expenses, including transportation, food, and others. Education loans do not provide any provisions for such added expenses, which are not directly linked with education.
A personal loan for education, on the other hand, does not come with any end-use restrictions. Thus, borrowers can use the loan amount as per their requirements. After paying the course fees, any excess funds can go towards catering to additional costs during the course tenor.
- Pursuing courses abroad
If you seek a loan for abroad studies, the choice between education and personal loans is more difficult. These courses involve substantial costs, which unsecured loans cannot fulfil entirely. Nevertheless, such credits can help one deal with a considerable portion of expenses related to higher education abroad.
Thus, a personal loan help you study abroad with its considerable loan principal.
- Repayment term
Personal loans come with limited repayment tenor, which can limit the total interest payable on such credits. On the other hand, an education loan tenor can vary between 5 and 15 years. Moreover, some education loans also provide a relaxation period of 6 to 12 months after the course completion. However, during the course period and even relaxation period, simple interest keeps accruing on your loan amount.
A higher education loan applicant needs to provide a host of documents to prove admission into the course for which he/she is availing of the loan. Additionally, it involves increased hassle, which can stretch the loan application process significantly.
On the other hand, you can save time by applying for your personal loan for education online. With minimal documentation and hassle-free application, approval for these loans is almost instantaneous.
Plus, the likes of Bajaj Finserv Personal Loans get approved within minutes if an applicant successfully meets all eligibility criteria. With a maximum loan principal of Rs.25 lakh, such advances are ideal to finance your education.
The NBFC also provides pre-approved offers to simplify and accelerate the loan application procedure. These offers are available on a range of financial products, including a personal loan for education, business loans and more. You can check your pre-approved offers by submitting your name and phone number.
As for personal loans for education, they provide enhanced features and benefits, making it a viable option to fund your child’s future. As always, choose the loan amount after carefully considering your repayment ability.