Things to Keep in Mind Before Taking an Overseas Education Loan
Studying abroad is a life-changing experience that opens a gateway to globally intertwined career opportunities. However, the first step in the journey is to secure an education loan, which necessitates thoughtful planning. Whether you are an overseas education aspirant mapping out your academic future or a parent exploring financial avenues, understanding the nuances of education loans is paramount.
Join us as we delve into the intricacies of this financial undertaking, exploring essential considerations of student loans for studying abroad that can make their academic journey seamless!
7 Things You Should Know Before Applying for a Study Abroad Education Loan
With multiple financial institutions offering education loans, you should know a few things before making an informed borrowing decision. Here is what you need to keep in mind.
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Loan Type
The most important aspect to consider is the loan limit which determines the cost of borrowing and flexibility. Conduct in-depth research on different loan types to learn what suits you best. Comprehend the critical differences between non-collateral and collateral loans, collateral is where you need to secure your loan with a physical asset. You must finalize your loan type as it can profoundly impact the interest rate, loan amount, and loan tenure.
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Borrowing Limit
According to the cost project, students should look for an appropriate financial institution. Government banks are perfect prospects for collateral loans, with borrowing limits of up to 1.5 crore and a non-collateral loan has a maximum of up to 7.5 lakhs. On the other hand, private banks provide a collateral loan of up to 1 Cr, and a non-collateral loan of up to 55 lakhs.
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Interest Rate
Another significant thing to examine is the rate of interest (ROI) that a bank charges its borrowers. The ROI of financial organizations varies throughout time; but if the interest rate is high, it can amplify the total cost of the loan, impacting both monthly repayments and the overall affordability of education financing. On the contrary, a lower interest rate not only reduces the total cost of borrowing but also makes monthly payments more affordable.
To better understand interest rates, you can connect to any of the best online loan services for studying abroad for their professional guidance.
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Processing Time
A bank requires a specified processing time to sanction the loan amount. This time depends on the type of financial institution you are targeting. Some financial lenders only take up to 3 days of processing time, whereas some can take up to 1 month. When choosing your financial lender, check their processing time for loan sanctioning; a swift processing period is advantageous as it ensures the timely disbursement of funds.
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Interest During the Moratorium
The moratorium period consists of the course duration and the additional tenure specified by the financial institution. When you take an education loan from a government bank, paying simple interest during the moratorium period is not mandatory. However, in private banks, it is also compulsory to pay simple interest during the moratorium period.
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Loan Tenure Repayment
The payback terms for loans vary depending on the bank and loan type. Government and private bank loan payback terms may go up to 15 years, whereas overseas lenders provide repayment terms up to 10-12 years. Furthermore, it would help if you also learned whether your chosen financial institution offers a grace period to its lenders (if required).
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Additional Services Offered by the Financial Institution
Once you go through the mandatory necessities of an overseas education loan, check for the additional services your targeted financial lender offers. In this context, you can see if any concessions are available on the interest rate, whether the bank provides an easy online application method, etc.
Ultimately, before taking out an education loan, it is critical to be well-informed and analyze all relevant aspects. If the article provided helpful information and you want to learn more about how to get an education loan for abroad studies, overseas education loan experts can significantly assist.
