Here Are 5 Mistakes to Avoid With an Education Loan
Going in for an educational loan to achieve your further studies is a great idea. You don't need to burden your parents or ask relatives for financing; simply take out the loan and pay it back when you start earning. It's one to show the world you are ready to stand on your own feet and will also give you a great sense of accomplishment. However, on taking an educational loan, a lot of students make some common mistakes that sometimes lead to them defaulting on their repayments. This article will highlight some of these mistakes so that you can stay away from them and enjoy a smooth loan experience & a bright future ahead.
The first mistake is not exploring alternate options:
You need to consider all your college options. Sticking to only one college because it's popular or because your friends are going there is not such a good idea. Rather, you should look for colleges that offer the same course at lowered fees. This doesn't mean you should lower you goals, rather look for other colleges that give you a similar quality of education&equal job opportunities at lowered fees.
Second on the list is not doing enough research:
Some people just go in for the first Education Loan their eyes come across. They visit a bank they trust or apply at a financial institute their friends or relatives suggest. However, third hand information is not your best source of guidance. Instead, you can turn to the internet, there are many crowd-source question-answer sites where you can ask questions and have them answered by experts or people who've taken such loans recently. Moreover, there are loads of aggregator sites that will allow you to compare the feature of lenders after which you can make an informed decision.
Next Education Loan mistake is borrowing more than you require:
Some banks and lenders will push you to take a loan amount higher than you needs. Never fall for such ploys, the higher the loan amount the more interest you have to pay. Some people take more than they need and use the extra money to sustain overly comfortable lifestyles. Remember, the loan is only to complete your education and not to give you a good lifestyle during your college days. It may seem like mother's advice, but if you follow it, it will help you get out of debt faster and start earning for yourself faster.
Number 4; don't go for over-optimistic repayment plans.
Now that you've chosen a college with lower fees and got the best possible lender along with the right loan amount, you shouldn't be over optimistic with your repayment plans by selecting a short repayment schedule. You should be conservative and choose slightly longer repayment tenure, one that you can safely repay your loan without straining your wallet. Some students opt for quick repayment plans thinking they'll be able to handle repaying the loan but only end up defaulting on payments and paying more towards late payment charges.
The last mistake people make with an Education Loan is to ignore prepayments:
Making prepayments before you join your university may not attract prepayment charges and will reduce the total interest you have to pay. Further, if you get a job before the repayment schedule starts, you can begin to make prepayments and reduce the burden when the time comes to pay back the loan.
These were some of the most common mistakes people make when taking an Education loan. We hope it has been helpful and all the best!