Top 5 Mistakes To Avoid While Getting An Education Loan On Property

Mistakes To Avoid While Getting An Education Loan On Property

The cost of higher education loan education in India is one of the highest appreciating domains, and it requires a substantial quantum of funds. Recently, loan against property for education has emerged as the most financially prudent solution for numerous individuals who want to fund their children’s education at some of the top institutions in this country. 

However, in the haste of securing their children’s future, parents often overlook some critical elements of availing these loans, which results in them getting less favourable terms. Here are some common mistakes committed by borrowers while availing a loan for education in India which must be avoided.

Taking On More Than They Can Chew

Before you apply for an education loan in India, it is crucial that you know the exact amount required for the course your child is enrolled in. Most educational institutions offer a general idea of their course fee and other related expenses straight up. Mistakes To Avoid While Getting An Education Loan. If you opt for a substantially higher loan amount, repaying it is going to pose a significant financial challenge.

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The Flexi Loan facility offered by Bajaj Finserv may prove to be advantageous in this situation. This feature allows you to withdraw the required funds from a pre-sanctioned loan. You may withdraw multiple times as and when you need funds. Interest needs to be paid just for the utilised amount and not on entire education loan. 

For example, some educational institutions charge their students at different times of the year, such as at the beginning of the semester or before exams. Withdraw the exact amount you require at different times and pay interest only on that amount. This facility also allows borrowers to pay interest-only EMIs and repay the principal as per their convenience.

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Not Comparing The Interest Rates And Features Of Different Lenders

In India, financial institutions are free to set the rate of interest on their loans. One of the biggest mistakes that a prospective borrower makes while availing a loan is not comparing the rates offered by different lenders before finalising on the lender. 

Lenders like Bajaj Finserv offer Loan Against Property for education in India at an extremely favourable rate of 10.10% to 11.50% for salaried individuals and 10.50% to 14.50% for self-employed individuals.

You should also look for additional features which are favourable for you. For example, Bajaj Finserv further brings you pre-approved offers that make availing loans easy and quick. Pre-approved offers are available on numerous financial products including secured credits like home loans and loans against property, unsecured credits like business loans and personal loans, etc. You can take a look at your pre-approved offer by providing your name and phone number.

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Not Calculating The Favourable Tenure Beforehand

Loan against property for education is typically a long-term loan. NBFCs like Bajaj Finserv offer it for tenures as high as 20 years for salaried individuals and 18 years for self-employed. It is crucial that you choose a tenure that best suits your repayment capabilities. 

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Note that it is the tenure which determines the amount you pay as EMIs. If you choose a longer tenure, your EMI will be lesser, but the total cost of the loan will be higher and vice versa. Analyse your repayment capacity carefully. Make sure that your debt-to-income ratio stays well below the 50% mark, and choose a tenure accordingly. 

Not Reading The Fine Prints Thoroughly

As they say, the devil is always in the details. It’s crucial that you scrutinise all the loan related documents and available education loan details carefully. Make it a point to check the charges on your loan against property. Lenders may charge various fees such as processing fees, part prepayment and foreclosure charges, penal fees, EMI bounce charges, etc. All these should be factored in before finalising which lender to opt for. 

Applying For A Loan Without Meeting Eligibility Criteria

Every financial institution puts forth some criteria based on which they decide whether one is eligible for an education loan. It is essential that you meet them before you apply for the loan. Standard eligibility criteria include:

• Indian residency.
• Age limit.
• Proof of employment or business vintage.

Conclusion

Once you meet the education loan eligibility criteria and submit supporting list of documents needed to apply for a loan, it won’t be a trouble to get it approved. Use the loan amount to meet the educational expenses of your child and guarantee a safe future for your dear one.

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