If you are aiming for higher education, that too from a premium college or institution, it calls for a lot of expense. Moreover, if you are willing to acquire a degree from a foreign institution, then it becomes all the more expensive. Given this situation, an education loan is very helpful. It takes away all the worries about your college fees, cost of books and study materials, boarding expense along with transportation and all expenses related to your study. It helps you to concentrate fully on your studies only.
Do Not Default
Though and educational loan is helpful, you have to manage it efficiently so that it does not become a burden in the future. A careful and strategic planning will help you get rid of your education loan. The first thing you must keep in mind is not to default any EMIs. If you do so then yours as well as your co-borrowers, your parents in most of the cases, credit score is spoilt. Non-payment or more than 90 days results in a NPA account and if the loan amount is big enough, then your collateral security is also jeopardized.
Plan Your Repayment
Though you do not have to start paying immediately after you take the loan, you must have a repayment strategy ready well in advance. There is a period of time called the ‘moratorium period’ wherein you do not pay any EMIs. You will have to pay after this ‘repayment holiday’ ends, which is after one year after completion of your studies or six months after you get a job, whichever is sooner. But it is better to be ready than to wake up one morning and find your creditor calling to remind about your payment due.
Capitalize And Make Use
You can capitalize on the provisions allowed for students and make the best use of your moratorium period. It starts by saving and reducing some of your expenses from the very day you receive the loan amount. It will help you in creation of fund and save from the trouble of searching for the best debt consolidation loans. You can start repaying your loan once the repayment holiday is over. You can also take the entire loan in installments which will reduce the rate of interest and its burden. If a sufficient corpus is created, then you can pay the interest on the principle while you study. It will help in reducing your further EMIs. Click here to know more.
Plan Your EMI
There are few banks in some states that offer repayment facility which are related with your income. As you proceed with your profession, your income also increases accordingly with it. Banks calculate EMIs with respect to your income, so that you do not feel the burden. Also if you take a loan on floating rate of interest mode, then you can save some amount in the EMI as and when the rate falls. This extra money can be treated as a buffer stock for times when interest rise along with the EMI. So, plan your EMI carefully so that your loan can be paid easily and effectively and never becomes a burden to you.