Lenders offer education loans to qualified students who need help furthering their studies. Lenders have strict criteria that you must meet in order to obtain a loan. You can always apply for a personal loan for students if you are not eligible for an education loan. A personal loan can be used for all expenses, including tuition fees, accommodation, and miscellaneous expenses.
This article highlights why personal loans for students are a good choice if you do not qualify for an education loan.
How do you get a personal loan for students?
1. Calculate how much you need.
It is vital to know your needs before applying for a personal loan for students. Personal loans offer lump sum payments, and you should know the precise amount you need for fees and other study-related costs. It will allow you to borrow enough money to cover your study-related costs.
2. Determine your loan eligibility.
You may be eligible to borrow more (or less) than you need. It depends on your credit history, CIBIL score, monthly income, previous loans, and other factors. Lenders often consider these factors before determining the amount you are allowed to borrow.
3. Find a credible lender.
There are several choices for getting a loan since many banks and NBFCs offer personal loans for students. To reap the most benefits, compare loan options from several lenders. You can compare the interest rate, processing fees, late payment costs, pre-closure fees, user reviews, etc.
4. Determine if you can afford the EMI.
You may calculate your monthly payment online using an EMI calculator. You have to input the principal amount, tenure, and interest rate. The calculator will calculate your EMI amount. Unlike school loans, the EMIs for personal loans for students begin instantly. As a result, ensure that you or your parents or guardians can repay the debt sum you choose and that monthly payments will not cause financial stress.
5. Submit your application.
Once you have accessed all the parameters of the loan, you can apply for a personal loan for students. You can complete the application form online (via the lender’s website) or offline (by visiting their office). Remember to submit all the necessary documentation. The principal amount will be deposited directly into your account.
What should you consider when getting a personal loan for students?
1. Interest Rate
Personal loans have the highest interest rates. They can range from 12 to 28% per year. On the other hand, the interest rate for a student loan is between 6 and 13% per year. If you have a good credit history, you should use this when negotiating with the bank for a lower interest rate.
Since a personal loan is an unsecured loan, you do not need to provide any assets as collateral. This makes the process simpler, as your assets do not need to be evaluated. Since these loans do not require any collateral, you do not have to fear losing your assets if you do not repay the loan on time. However, this also means that the loans have higher interest rates.
3. Processing charges
You must pay a processing fee when applying for a personal loan for students. Processing fees can range from 1 to 3% of the total loan amount.
4. Prepayment and foreclosure fees
Many lenders charge prepayment and foreclosure fees on personal loans for students. These fees range from 2–5%, depending on the lender. Therefore, go over the terms and conditions before signing.
What are the benefits of a personal loan for students?
1. Personal loans are based on credit scores.
CIBIL gives you a credit score based on how low of a credit risk you are. You can be eligible for higher loan amounts and lower interest rates if you have a good credit score. Before approving your loan application, lenders always look at your credit score. For a personal loan, you need a credit score of 750 or higher.
2. You can get a higher amount.
A personal loan for students can have a principal amount as high as INR 30 lakhs. However, you can also be eligible for higher loan amounts. As a student, the amount will depend on your credit score, the income of your guardian (if you do not work), credit score, and credibility. Personal loans are a great choice for students because you can borrow a lot of money without putting anything up as collateral.
Personal loans are also different from education loans in that they can be used for things other than education-related costs.
3. Personal loans for students have quick disbursals.
Personal loans for students have an extremely swift application and disbursal process. The application process can be done online. After you apply, the lender will verify your application to make sure everything is in order. The loan will be approved within a few days. Once the personal loan for students is approved, the principal will be deposited in your authorised account within 24 hours. After this, you can spend the money you wish.
A student personal loan is the best way to pay for college if you do not qualify for education loans. Personal loans have reasonable interest rates. You can apply for personal loans with your parents or legal guardians if you do not work or are under 18 years old.
You can get a loan depending on your and your guardian’s credit history and income. Personal loans for students are an easy alternative to education loans. You can use this principal amount as you wish.
If you want to know more about personal loans for students, visit Piramal Finance. Piramal Finance offers competitive personal loans with affordable EMIs and market-value interest rates.