Studying abroad is expensive. Parents and students both know this, and hence have a fair idea of the expenses they are about to incur. Meritorious students aim to bag scholarships to avoid paying higher fees and save money for hostels and food. Others depend on loans. As a large percentage of the students often find it difficult to finance their higher studies abroad, we help them get a significant amount in the form of a Personal Loan for education for abroad studies. However, a Personal Loan for education is different from conventional Education Loans offered by traditional financial institutions.
Let’s compare and know the difference between an Education Loan and a Personal Loan. Students comparing loans offered by private and conventional lending institutions will find this article helpful.
What is an Education Loan?
The cost of education is hard to manage until and unless your parents have saved enough for you. All this helps with college expenses or in gaining admissions into reputed universities. If that is not the case, an Education Loan for students helps meet the educational requirements. Almost all lending institutions offer an Education Loan for abroad studies. Funds acquired from this type of a loan get deposited into your school/college's financial aid office.
A Personal Loan is what we specialise in, and the approved loan amount is provided to the borrower instead of directly to the university. So apart from the tuition fees, you can use the loan for a variety of purposes. It can be utilised to cover travelling, accommodation expenses, books, and much more.
At Hero FinCorp we offer students an instant Personal Loan without physical documentation. Also, we require only the basic documents, making it easier for you to get the loan.
Difference Between Education Loan and Personal Loan
Let’s learn about Education Loans vs Personal Loan difference. We have compared the two loans based on different parameters.
Particulars
Education Loan
Personal Loan
Coverage of Funds
75,000 minimum
50,000 minimum
Interest Rate
Starting 11.15% p.a.
Starting 15% p.a.
Tax Benefits
Under Section 80E of the Income Tax Act, 1961
No deductions
Government Interest Subsidy Schemes
For more than Rs 10 Lakh loan, interest subsidy available for the interest charged
No subsidy available
Moratorium Period
Up to one year
No moratorium period
Prepayment Penalty
NIL
Specific fees based on the outstanding loan due
Loan Tenure
Up to 84 months
Up to 60 months
Guarantor and Collateral
The guarantor serves the guarantee that students will pay the loan; they’ll pay back in case of default on payments.
No guarantor and collateral needed
Which is the Better Option Between a Personal Loan and Education Loan?
The funds received from an Education Loan get directly deposited to your college's financial aid office. It is an amount that simply cannot be used for any other purpose. If you are unable to find a job after completing your degree or if your income level does not match the required EMI ratio, it can be difficult to repay the loan amount. These circumstances can adversely affect your credit history and lead to significant stress in managing expenses post completion of the higher studies.
Personal Loans on the other hand can be a good option if you need to handle other expenses in addition to education. The loan without end-use restrictions, a competitive Personal loan interest rate, and flexible repayment tenure. Even the applicants with a low credit score canuse ourloan appto applyand get instant funds.
Conclusion
Hope you learned the Personal Loan for Students vs Education Loan difference. Personal Loans have become popular financial tools due to their flexibility and versatility. Unlike conventional Education Loans, Personal Loans can be utilised for a wide range of purposes beyond education expenses. This makes them an attractive option for individuals who require funds for various needs. It means Personal Loans offer the advantages of flexibility, simplicity, and favourable interest rates when compared to Education Loans. Their unrestricted usage, simplified application process, and competitive interest rates make them a suitable option for those seeking financial assistance beyond education-related expenses.
FAQ:
1. Can I Use a Personal Loan for Education? Personal Loans can be used for education, as these loans have no end-use restrictions. It can also help you cover various expenses related to your education.
2. Is It Better to Take a Loan for Education? Taking a loan for education provides financial support, but it's important to consider factors like interest rates, repayment terms, and other fees and charges.
3. Can I Get an Education Loan Without Interest? No. Education Loans come with interest. However, the interest rate may vary based on the creditworthiness of the applicant as well as the prevailing rates.
4. How to Repay an Education Loan? The repayment of a conventional Education Loan begins post completion of the education course, while the repayment of a Personal Loan for Education begins soon after disbursal.
Katyaini is a finance expert with a focus on the non-banking financial sector, bringing over 8 years of experience in NBFC. She specializes in simplifying complex financial concepts for readers, helping them navigate the NBFC landscape. Outside of work, she is passionate about travelling.
