Before taking an education loan, take a few precautions:
1. Ways to reduce debt burden:
•Let the future return on the education loan dictate your choice.
•A big loan to go to a second-tier college is a bad idea.
•Try to service at least the interest component on the loan during the grace period, if not right through your course.
•Deploy any windfall to prepay as much loan as possible after 6 months of disbursal.
•There is no prepayment penalty by public banks.
•Let the future return on the education loan dictate your choice.
•A big loan to go to a second-tier college is a bad idea.
•Try to service at least the interest component on the loan during the grace period, if not right through your course.
•Deploy any windfall to prepay as much loan as possible after 6 months of disbursal.
•There is no prepayment penalty by public banks.
2. If you fail to repay the loan:
•Inform your bank immediately about the reasons for your failure, to manage either a lower Equated Monthly Instalment or a longer moratorium period.
•If you don’t do so, a penal interest over the regular rate will be charged on the overdue amount.
•After a few months of default, the bank will usually issue a notice.
•The last step is to repossess the pledged assets.
•Inform your bank immediately about the reasons for your failure, to manage either a lower Equated Monthly Instalment or a longer moratorium period.
•If you don’t do so, a penal interest over the regular rate will be charged on the overdue amount.
•After a few months of default, the bank will usually issue a notice.
•The last step is to repossess the pledged assets.
3. What you should never do:
•Don’t take an education loan without careful comparison - some banks may have cheapest rates, but may not give the fattest loans.
•Defaulting on a loan will damage your credit report, making it impossible to obtain a credit card or home/car loan in the future.
•Don’t give in to the temptation of taking a top-up loan on your existing debt, even if the bank is willing to give you one.
•Don’t take an education loan without careful comparison - some banks may have cheapest rates, but may not give the fattest loans.
•Defaulting on a loan will damage your credit report, making it impossible to obtain a credit card or home/car loan in the future.
•Don’t give in to the temptation of taking a top-up loan on your existing debt, even if the bank is willing to give you one.