6 Factors to Consider Before Getting a Personal Loan for Education!

12 MAY, 2022

Personal loans are valuable financial products. You can avail them easily from any financial institution at easy terms, and you need not worry about repaying them immediately. As they are not designed for a specific end-use like a home loan, the loan amount can be used for any purpose. One important goal you can fulfil through a personal loan is financing your children’s higher education. While availing a personal loan for your child’s education, you need not drain your hard-earned savings and instead can utilise them for other goals.

With a personal loan for education, you can ensure that a lack of funds does not hamper the future of your children. With the funds, you can arrange the education of your children at the best institution and secure their future. However, before availing a personal loan for education, there are certain factors that must be considered. Read on.

• Choose the right lender

Applying for a personal loan to fund education could be an easy process. However, you must research well and choose the lender carefully. You must check the lender’s reputation and review their terms and conditions and fee structure. Moreover, it would be best to apply for a loan with a lender that has the easiest eligibility criteria. You must be able to meet their eligibility criteria and get the best interest rates. Personal loan eligibility is usually based on your age, place of residence, credit score, income, etc. Check your eligibility before you apply to avoid getting rejected.

• Pick the suitable loan amount

You must also choose the loan amount as per your needs. You might need to pay for the entire cost of education, viz., fees, accommodation, course material, travel, etc. Ensure that the amount you choose can suffice all your costs. However, you must not apply for more than needed as it will only add to your debt burden.

• Keep all your paperwork ready

Typically, everything is digital now. You might not need to visit the financial institution’s branch to deposit the documents physically. However, you need to scan and upload them with the application form on the lender’s website. Therefore, while planning to finance your child’s education with a personal loan, keep your documents ready. You might need to furnish your recent passport-sized photograph, income documents like payslips and form 16, a copy of your Aadhaar, passport, driving license, etc.

• Choose a suitable repayment option

Personal loans are available for one to five years. You must evaluate your ability to repay the loan comfortably. You must assess your expenses and income and choose a tenure that helps you get an Equated Monthly Instalment (EMI) amount within your financial capacity. You can use a personal loan EMI calculator to determine a suitable tenure for you. If you choose a longer tenure, you will have to pay a lower EMI amount but the interest outgo will be higher. On the other hand, a shorter tenure will help you repay the loan faster but can put pressure on your budget.

With a personal loan for education, you can fund the expenses of your child’s higher education conveniently. However, you must ensure to choose the right lender and loan amount to repay the debt comfortably.