Quality education is a building block to a successful career. However, with the rise in cost of quality education, many miss out on getting admission into prestigious universities and institutes, particularly those who deserve it on merit basis alone. Coming to the aid of these deserving candidates are banks and other financial institutions offering student loan. In India, education loans provide the much needed support to candidates interested in pursuing professional or technical education within the country or in foreign places. Candidates who have gained admission into medicine, management, engineering or any other career related course will be able to avail such loans. Some believe that student loans must be repaid as early as possible, while others are more relaxed about the entire thing and consider it the new normal. How one should see it is a personal choice. In this article, we will look at means to pay off your student loan, interest on education loan, the bearing credit score has on your loan and ways to improve credit score fast.
The fees charged can range from INR 5 lakhs to INR 35 lakhs for most professional courses in the country. The loan amount, including the interest on education loan, is expected to be repaid back to the financial institution once the borrower gains employment. The interest on education loan is an important element to consider, and it plays a big role in the time you take to repay back the full sum. Depending on how much is the interest on education loan, you can determine whether or not you have to pay off the loan early. When the interest on education loan is high, it will take you a longer time to repay back the amount. Some lending institutions have EMI calculator facility on their websites to help candidates determine the interest on education loan and how much they would have to pay back each month as instalments.
Choosing the right repayment plan is crucial. Do not just settle for the smallest monthly payment option as this usually results in payment of high interest amount over the life of the loan. Making biweekly payments instead of monthly payments is one means of repaying back your loan faster. Pay more than required if you can each month. You can also consider asking your employer, mostly large corporations, to pay off your debt. They may be willing to do so in exchange for a lower salary until the loan amount is repaid. An increasing number of students are also taking up part-time jobs to earn and save some money. By doing so, you reduce your debt obligations. Additionally, you can consider part prepayment of the loan amount. However, you need to be aware if the lender permits this and what will be the terms and conditions involved with prepayment. Various financial institutions are nowadays insisting that the borrower take out an insurance cover. They require that the cover be equivalent to the loaned sum, such that if something happens to the borrower then the insurance company will take care of the pending amount.
Some other important factors to consider are the impact student loans have on CIBIL score and the ways to improve credit score fast. In addition to prompt repayments, your score plays a big role in your financial journey. The credit bureau views student loan as any other kind of loan. This means that you are expected to adhere to all the EMI payments as and when they are due. In case you default on your payment, your credit score takes a beating. A low CIBIL score can have a lot of negative consequences, especially when you are fresh out of college. You may have to work harder to pay off the dues and improve credit score. You may also find it difficult to land that dream job of yours on account of a poor score. When you have managed to clear yourself from all debt, you must look into ways to improve credit score fast. The credit bureau has taken up initiatives on counselling students taking up loans as well as guiding them on ways to improve credit score fast. Remember, the credit bureau will keep an eye on your repayments. Hence, it is very crucial that you strictly follow all the deadlines and put into action the different ways to improve credit score fast, starting with timely repayments.