Over the past several decades, the price of education has been rising significantly. You can find yourself in a scenario where your present savings won’t cover the cost of further education. A personal loan can be an excellent choice if you’re a parent who wants to make sure your kid gets an education.
A Personal Loan allows you to not only pay the tuition fees but living expenses as well. Even though you may receive an education loan tax benefit if you opt for an education loan, a Personal Loan may still be a better choice depending on your needs.
In this article, we’ll discuss what a Personal Loan for education is and the 7 ways in which a Personal Loan may be right for you.
What is a Personal Loan for Education?
A Personal Loan is a type of loan or credit facility offered by NBFCs and banks. The proceeds from a Personal Loan can be used for any purpose including education. If you take out a Personal Loan for education, you can use the funds to pay your tuition fees, your accommodation charges, and meet your living expenses and any other expenses.
A Personal Loan is not secured. This means that you don’t need to provide any collateral such as property or jewelry when you opt for such a loan.
You can apply for a Personal Loan online. You don’t even need to visit an office or branch of the lender. The loan application process does not take more than a few days, and you can have the funds in your authorized bank account within a few hours of the loan being approved.
Benefits of a Personal Loan for Education
Here are some of the reasons why you should consider a Personal Loan to meet educational expenses.
Credit Score for Personal Loan
You don’t need a very high credit score to be eligible for a Personal Loan. A credit score is accorded to each individual by CIBIL according to how credit-worthy they are. The higher your credit score, the easier it will be for you to receive a loan. Lenders always check your credit score before approving a loan.
The credit score for Personal Loan just needs to be above 750. You don’t need to provide complicated financial details about yourself when availing of a Personal Loan. Lenders trust your credit score for Personal Loans; if it meets the criteria, half the work is done.
Use for Any Purpose
As mentioned earlier, a Personal Loan can be used for any purpose, unlike an education loan.
If you take an education loan, then the proceeds of that loan will be directly disbursed to the specified bank account belonging to your school or college. However, if you take a Personal Loan, then the proceeds of the loan will be deposited into your own bank account.
Hence, you can use a Personal Loan to meet any type of expenditure including living expenses, accommodation costs, and so on. In contrast, an education loan can only be used to meet your school or college fees. This is the main benefit of a Personal Loan compared to an education loan, even though there are education loan tax benefits.
Also Read :- How a Personal Loan can be used for Education Abroad?
No Need for Collateral
Personal Loans do not require the borrower to provide collateral such as property or jewelry. Since these loans are completely unsecured, the borrower does not need to worry about losing their belongings or property in case they fail to repay the loan on time.
Even though the unsecured nature of such loans means that the borrower needs to pay a higher interest, it reduces the stress involved with taking out such loans. Further, you do not need to own expensive assets to avail a Personal Loan. The eligibility requirements are less strict when compared to other types of loans.
High Loan Amount
The loan amount of a Personal Loan can be as high as ?30 Lakhs (might vary from lender to lender). It’s clear that such a loan amount will be enough to pay for a good education within India. You may have enough funds to meet other expenses apart from your college or school fees. This high loan amount without providing any collateral makes Personal Loans a highly attractive option for students.
The high loan amount also means that you have the flexibility to choose the sum you’re comfortable with. You don’t need to avail a smaller sum due to loan limits and then worry about meeting monthly expenses.
Flexible Tenures
Depending on the lender, a Personal Loan can be repaid in nearly 60 months (or 5 years). You can choose the tenure of the loan while making your loan application. This flexible loan tenure means you can prioritize lower interest payments or monthly payments, depending on your needs.
A longer tenure will mean that the overall interest that you need to pay will be higher. In contrast, a shorter tenure will mean that the monthly payments will be higher.
Quick Disbursal
College and school admissions do not wait for anyone. You need to deposit the relevant fees for the year within a short period from getting accepted. This is where the quick disbursal of Personal Loans can help.
The entire loan application process can be completed online. Once you’ve applied, the loan officer will quickly check your application to see if everything is in order and then sanction the loan within a few days from the date of application.
Once the loan is approved, you will receive the funds in your authorized bank account within 24 hours.
Cover more than the institutional expenses
A Personal Loan for education can be availed of not just to fulfil institutional expenses like tuition fees and study material but to cover other costs as well, especially if you are studying abroad. As a multipurpose loan, a Personal Loan for education can cover expenses like:
Accommodation: A Personal Loan for education can help you cover your rent and accommodation costs in a stress-free manner.
Daily living expenses: Studying while adjusting to a new city comes with its own set of financial hurdles. A Personal Loan for education can fulfil living expenses without any hassle.
Medical expenses: Medical emergencies are unexpected, and the costs involved may not be covered by a simple education loan. However, a Personal Loan can help you pay for medical expenses without affecting your education budget.
Minimal Documentation
Lenders understand that the loan application process must be as hassle-free for the borrower as possible. This is why they only ask for the necessary documents so that it is easier for the borrower to arrange the required documents. Since a Personal Loan is an unsecured loan, the documentation required is straightforward.
Usually, only the following documents will be required:
Identity proof
Address proof
Income proof
Employment proof
Wrapping Up
A Personal Loan for education can be the best option when you consider how to fund your child’s education. Such loans are tailor-made to be hassle-free and convenient. Since the loan is collateral-free, the borrower is stress-free. Even though you don’t receive the education loan tax benefit, there are several other benefits of taking a Personal Loan when compared to an education loan.
