Explained: 3 types of Students Loan repayment options.

Posted by anayashroff2 on July 17th, 2018

Students Loan are becoming a popular option amongst students. It’s not without reason - the cost of education is rising like the mercury on a hot day in the desert. So, when given the option of an educational loan, most students will jump at it.

And why not? These financial instruments provide aspirants up to 100% funding at interest rates between 10 & 16 percent – this is much lower in comparison to person loans that usually entail interest rates between 16 and 22 percent.

Moreover, most lenders also offer to cover other related expenses such as living expenses, the cost of books and/or a laptop, the fees for entrance exams, any deposits and more!

In case of an overseas student loan, most lenders will also offer to foot the cost of your Visa, provide proof of funds and even cover the airfare. All these benefits make a student loan a very good way to take care of the cost of your education. The only thing you need to do is get your research done.

That’s where this article aims to be helpful – it will detail 3 types of repayment options so you can make an informed decision and come out of debt successfully!

1. Without repaying your Students Loan until you’ve completed the course/found a job.

In student loan jargon, this is called making use of the moratorium period. It means until 6 months of completing you course or finding a job you don’t have to pay a single rupee toward the repayment of your loan. It’s a great option as it allows you concentrate fully on your studies and keeps the stress of repaying the loan at bay.

2. Paying only interest during the moratorium.

Moratorium periods are great but they come at a cost. Though you do not make any payments to service your Student Loans In India, the lender is always charging you simple interest on your loan. That means, if you’ve borrowed 5 lakhs, they could be adding 10% of that amount to your principal amount for every year you go without repaying the loan.

You could avoid this by agreeing only to pay the interest rate during the moratorium period. In exchange for this, your lender should provide you a concessional rate. This allows you to save a good amount of money.

3. Paying EMIs right from the start.

You could choose to completely junk the moratorium period or the idea of paying interest rate during this period and opt to start servicing your loan right after you’ve borrowed the amount. Most lenders should compensate you for this and provide you some benefits. This will also ensure you loan prepayment is stretched out, resulting in smaller EMI amounts.

You will have to choose a repayment option for your Students Loan depending on your financial capacity and personal preference such as your inclination to get a part-time job, your capacity to balance studies with working, etc. We hope this article has been helpful for you. Good luck and all the best!

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