The 6 Biggest Education Loan Mistakes You Can Easily Avoid

Introduction

Today I Am Going To Tell You The Seven Biggest Mistakes Students Make While Taking Their Education Loan By What Happens Is Students End Up Predicting The Number Of Years They Require To Finish Their Loan On The Lower Side What If There Is A Recession When You Graduate And It Takes You More Than One Year To Get A Job What If You Lose Your Job What If You Know Your Salary Is Not As High As You Expected Taking These Kind Of Loans Like A Personal Loan Or Loan Against Property Or Loan Against Fd Or Gold Loan Students Do This Because Such Loans Are Easily Available These Are Processed At A Faster Pace Because Bank And The Bank Staff Has Commercial Targets On These Loans You Will Be Confused And Shocked When You Will Look At Your Loan Account Statement So This Is The Biggest And The Most Common Mistake I Have Seen Students Making And Later Suffering Through This So Please Avoid It

1st Mistake – Choosing shorter Repayment tenure

Coming To The First One Choosing The Shorter Repayment Tenure So When You’re Filling In The Loan Application Form There Is A Question Asking In How Many Years Would You Actually Repay The Loan So Students At This Phase Of Their You Know Life When They Are Actually Making The Application For University Or Education Loan They Are Very Optimistic Of About Their Job About The Salary They’ll Be Getting After Finishing Their Abroad Studies So That’s Why What Happens Is Students End Up Predicting The Number Of Years They Require To Finish Their Loan On The Lower Side So For Example Any Student Who Is Going To The Us Would Assume That Five To Six Years Is Actually Enough To Complete Or To Repair 45 To 50 Lakhs Of Loan Technically Speaking Yes It Is Correct Five To Six Years Is Actually Enough But What I’m Advising Here Is That You Should Also Take Some Buffer For Some Unforeseen Incidents For Example

Unforeseen Incidents

What If There Is A Recession When You Graduate And It Takes You More Than One Year To Get A Job What If You Lose Your Job What If You Know Your Salary Is Not As High As You Expected You Know Beforehand So What I’m Saying Is You Know You Should Not Neglect These Things I’m Not Telling You To Be Pessimistic Or Negative Of Things You Know Even Before You’re Starting Your Journey But I’m Just Telling You To Be Realistic So What You Should Ideally Do Is You Should Opt For A Minimum Loan Dinner Of 8 To 10 Years And Please Note That You Can Repay Your Loan As Early As You Want There Are No Foreclosure Charges In An Education Loan Unlike Other Loans Because Foreclosure Charges Are There In Other Loans Yeah But If You Take Loan Tenure As Five Years And Later You Want To Increase It Then There Will Be A Penalty So This Is The Biggest And The Most Common Mistake I Have Seen Students Making And Later Suffering Through This So Please Avoid It

2nd Mistake – Taking loans other than education loans

Taking A Personal Loan Mortgage Loan Or Fd Loan For The Purpose Of Your Higher Education Is Again The Most Silliest Mistake Students Make When They Are Trying To Fund Their Higher Education See Taking These Kind Of Loans Like A Personal Loan Or Loan Against Property Or Loan Against Fd Or Gold Loan Students Do This Because Such Loans Are Easily Available These Are Processed At A Faster Pace Because Bank And The Bank Staff Has Commercial Targets On These Loans Whereas On The Other Side Education Loan Has No Targets For The Bank Staff That’s Why The Bank Staff Is Never Going To Push You For These Kind Of Loans But Guys You As A Customer You Need To Understand That The Education Loan Comes With A Lot Of Benefits For Example Education Loan Has A Moratorium Period Which Allows You To Pay After Your Course Is Over Unlike Any Other Loan

Government Subsidies

An Education Loan Has A Lot Of Government Subsidies Wherein Your Moratorium Period Interest Is Waived Off Plus There Are Some Tax Exemptions Under Section 80e Which Is Again Not Available For Any Other Kind Of Loans Right In Addition To That There Is This New Foreign Or Remittance Tax Which Is Called Stcs Uh Which Is Charged At The Rate Of 0.5 If It Is An Education Loan But Five Percent If It Is Any Other Kind Of Loan Or Your Personal Funds So These Are All The Reasons Why You Shouldn’t Take Any Other Kind Of Loan And You Must Take An Education Loan Only Guys At The Same Time I Understand That Bank Stuff Puts It As The Last Thing And That Might Bother You Because The Process Will Be Delayed But I Don’t Think That Is Something You Should Be Worried About Because If We Make Scholars We Only Do Education Loans And That’s The First And Prior Thing For Us

3rd Mistake – Not asking for upfront costs

Mistake Number Three Not Asking The Upfront First Now None Of Us Watching This Video Today Are Millionaires We Are Students Who Are Aspiring For A Brighter Future With An Education Loan Funding Us Which Means If Someone Suddenly Tells You Hey Your Education Loan Is Sanctioned But You Need To Pay One Lakh Rupees As Processing Charges And Another 50 000 Rupees As Blah Blah Charges You Are Going To Be In A Mess Because This Will Come As A Shock To You Because You Never Prepared Yourself For This Cost So This Is The Third Biggest Mistake Students Make By Not Asking The Upfront Cost So It Is Very Important For You To Analyze All The Costs Involved In An Education Loan At The Time Of Application Itself So Do Ask The Bank Guy Or Your Vmix Police Financial Officer What Are The Approximate Cost Which Might You Might Have To Pay When Your Education Loan Is Sanctioned And Once You Have To Avail It Right

4th Mistake – Not analyzing the costs added to your loan amount

Next Biggest Mistake Which Is Not Analyzing The Costs Which Are Added To Your Loan Amount So When You’re Repaying The Loan And Checking Your Loan Account Statement For The Outstanding Amount You Are Expecting To See The Principal Amount Which You Have Taken As A Disbursement Plus Some Interest On It Right But You Will Be Confused And Shocked When You Will Look At Your Loan Account Statement Because Every Lender Be The Public Bank Or A Private Bank Or An Ndfc Will Add Costs Like Loan Insurance To Your Principal Amount Itself So For Example If You’re Taking A 40 Lakhs Loan And The Insurance Cost On That Loan Insurance Is Generally About 25 000 To 1 Lakh Rupees They Will Sanction You Extra Amount For Example For 40 Lux They Will Sanction You For Like 25 000 Or 41 Lakh But They Will Recover This Amount Right From Your Loan Account And They Will Consider It As A Disbursement

Foreign Banks

At The Same Time Foreign Banks Add About Four Percent Of Your Loan Amount Which Is The Processing Fee For Them So On A Forty Lakh Loan It Is About One Lakh Sixty Thousand They Add This Amount To Your Principal Amount Of The Loan And They Will Start Charging You Interest On That Amount Also So Please Ask For The Upfront Cost Which You Will Be Incurring When You Are Availing The Loan

5th Mistake – Starting the loan process at the last minute

The Fifth Biggest Mistake Is Starting Your Loan Process At The Last Minute Guys Please Understand The Whole Timeline Right From Your University Applications Till You Reach The University Has To Be Very Carefully Planned And Followed Delay In Any Step Could Lead To You Having To Postpone Your Entire Plan To The Next Intake So Like Your Advice That Write Your Test Early So That You Have Buffer Time To Write The Test Again In Case Your Test Score Is Lesser Like Your Advice That Apply For Your Visa Early So That You Know You Have Enough Time To Reapply For The Visa In Case Your Visa Gets Rejected Similar To Both These Scenarios You Are Advised To Apply For Your Loan As Early As Possible Because Only Then You Are Going To Have Time To Shop Around Compare Options And Even If It Means That The Cheapest Option Is A Public Plan Which Is Going To Take Longer Time Ranging From Multiple Weeks To Months To Process Your Loan You Should Have Time For It

You Can Do All This You Know Comparison And Shopping Around Only If You Have Time And Even If Your Loan Gets Rejected You Should Have Time To Reapply To Another Lender If You Start Your Loan Process You Know 10 Days Before Your Deadline You Can Get A Loan You Will Be Given The Fastest Option Which Most Probably Will Not Be The Cheapest Option The Best Time To Start Your Loan Process Is When You Have Applied To Universities And You’re Waiting For Your Admission Letter To Come So Even Though Your Admission Letter Is Not Ready You Can Still Start Collecting The Loan Documents At This Stage

6th Mistake – Spoiling your credit score

The Sixth Biggest Mistake Students Are Making With Their Education Loan Or Loans In General Is Spoiling Their Credit Score By Not Paying Emis On Time So Why I Have Included This Point In This Post Is Because On A Daily Basis We Are Getting At Least Two Or Three Applications Wherein The Student Has Taken A Consumer Durable Loan For Their Laptop Or Phone And They Have Not Paid Emi On Time So Because Of This 50 60 000 Loan And Not Paying Emi’s On Time Their Civil Has Fallen Down Because Of Which Their Education Loans Are Getting Rejected So I Will Advise You Please Do Not Take Such Loans And Even If You Have To Take Such A Loan Please Ensure To Pay Emis On Time

Conclusion

I Hope It Was Useful And You Could Learn A Lot From The Mistakes Which Other People Make You Must Avoid These Mistakes When You Are Taking An Education Loan If You Have Any Questions Feel Free To Put It In The Comments Below.