According to recent studies, the number of students who secured an education loan in 2019 was 2.5 lakhs which is much lower when compared to the sanctioned education loans in the year 2015 which was 3.34 lakhs. This analysis shows that the number of Indian students hoping to apply for an education loan abroad is significantly decreasing. Ironically, the total amount of loan disbursed has jumped from INR 16,800 Crore in 2016 to INR 22,550 Crore in 2019 signifying that banks are keen on delivering high-value loans to worthy candidates. But the question is how can this factor help you? If you are careful with the study loan procedure and do not miss on any consideration, the chances of your loan approval rise. Also, it is integral to avoid the common reasons for loan rejection and prefer well-known financial institutions that do not burn a hole in your pockets and take care of all your study requirements. This blog post discusses some important factors that will help you make the right choice while searching for the right financial assistance.
1. Rate of Interest
Although the difference in the ROI of every lender varies from 8 percent to 16 percent and doesn’t seem very significant, even a one percent increase in your interest rate can make a huge impact in your installments per month. For instance, if you wish to start the Avanse education loan process and the loan amount is INR 30,00,000 at 13% ROI with an 8-year repayment period. In this case, your monthly EMI is INR 61,893. Now, keeping all other factors the same, let’s calculate the EMI if the ROI is 12%. The monthly EMI decreases to INR 58,998, leading to the big difference in savings up to INR 277,920 over the repayment tenure. This proves that even a small increase in interest rates can be detrimental to your future financial interest.
2. Processing Fees
Education loans require the students to cough up several fees and charges like processing fee which can vary between 0% to 5% based on the lender. Many times, the processing fee blindsides the applicant once their loan is approved but it can actually make a huge difference. For instance, An unsecured Avanse education loan of INR 40 lakhs will have a processing fee of 1 to 2 percent only, whereas an International lender will demand at least INR 2,00,000, making you go on a significant loss even before the loan is disbursed. Lenders like Avanse education loan have a negotiable processing fees which is very beneficial to the student.
3. Tenure of the Loan
Loan repayment is a long-term commitment that can last up to a decade. This makes it necessary for the applicants to think about two main elements before selecting a suitable tenure. One of them is the total interest which us higher for longer tenures and the other is the income which should always remain more that the EMI of the study loan. Before opting for an Avanse education loan or any other loan, it is recommended to calculate your total interest and difference in EMIs per month. To understand it clearly, please check the example illustrated below. If you take a loan of INR 20L @ 11% for 10 years, your total interest will be INR 19,42,412 with monthly EMI of INR 32,853. But if you select your repayment tenure as 15 years, your interest payment will increase to INR 28,79,413 with monthly EMIs of INR 27,108. The whopping difference of INR 9,37,001 in payable interest and a tiny difference of INR 5,745 per month in EMI signifies that shorter repayment tenures are wiser financial options.
The Bottom Line
Eduloans, for years, have been in collaboration with world-renowned financial institutions like Avanse Financial Services so that the students in India can take full advantage of Avanse Education Loan and build a successful career ahead. We make sure that your loan application isn’t lost under of pile of files and allows you to dive deeper into your dreams of study abroad. We help you check if you qualify for a particular loan and save considerable time in the application process. Our loan counselors evaluate your profile to advocate you with the best-suited and most cost-effective loan products from lenders. We also make sure that the loan process is expedited by coordinating directly with the lender and tracking the status of your application on an everyday basis. Please register today and start your loan application with ease.