An education loan should indeed be considered as an instrument that allows you to pursue your chosen subject at a top-ranked university. It can help you establish the foundation for a successful career in the future. However, owing to the Covid-19 pandemic’s job crisis, today’s youth are obviously worried about getting their desired career and repaying their education loans. You should keep in mind, however, that an education loan has its own set of benefits. To avail one, keep in mind to have a good CIBIL score. Check your free Credit score on any of the third-party services websites. Let’s take a look at the advantages of taking out a student loan.
Raising your CIBIL score will help you get a better job.
A credit information report (CIBIL) provides a summary of your credit history up to that moment. A score of 750 is considered satisfactory on the CIBIL scale, which runs from 300 to 900. An education loan will improve your CIBIL score because timely EMI repayment will aid in the development of the required score, making it easier to secure a loan in the future.
You are not obligated to sell your valued assets.
Typically, parents liquidate considerable assets to pay for college tuition, which disrupts long-term financial plans such as purchasing a home or a flat, children’s marriages, and so on. When you take out an education loan, banks keep your liquid assets, such as FDs, insurance, and government bonds, as collateral and issue you a loan. As a result, you won’t have to sell any of your valued assets.
Interest rates that are lower
Education loans are far less expensive than other types of unsecured loans, such as personal loans. These loans have reduced interest rates because they are granted to students for their future studies.
The terms of repayment are straightforward.
HDFC Bank offers reasonable education loan interest rates, with preferred rates available for top-ranked universities and institutes. To make loan repayment as straightforward as possible, we also provide a choice of collateral and co-borrower options.
Advantages in terms of taxes
Interest paid on student loans is fully deductible under Section 80E of the Income Tax Act of 1961. Axis Bank’s tax advantage calculator displays the benefit. There is an increased tax benefit for students studying abroad. Any transaction made abroad that surpasses Rs. 7 lakh is subject to a 5% TCS under current legislation (Tax Collected at Source). As a result, if a student is studying abroad and paying for the course herself, she will be required to pay 5% TCS. If the student gets out an education loan from an Indian banking institution, the TCS is only 0.5 percent.
Your ability to pay back the debt
Students who borrow money for their education must repay the money to the lenders once they have finished their study. This assures that the student devotes his entire attention to his studies and career.
Taking care of your parents’ financial obligations
Taking out an education loan can relieve parents of all financial obligations because the student is accountable for paying off the loan after finishing his education and the moratorium period has passed.
With a long moratorium period, pay after your schooling.
One of the most major advantages of a student loan is this. The student is not obligated to make any repayment until the EMIs begin during the moratorium period. The moratorium period usually lasts for the duration of the course plus 6 months/1 year, allowing students to concentrate on their studies. A long moratorium period applies to education loans, which lasts for the duration of the course. After the student starts working or finishes school, several banks grant a six-month or one-year extension.
As a reason, the student may not have to bother about paying off the loan anytime soon, and the family will indeed be able to more effectively plan their budget around this timetable. Students from low-income families are eligible for the loan under the government’s ‘Subsidy on Interest’ programme.
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Taking out an education loan is a handy way to start and finish your higher education. You do not need to be concerned about the cost of your education. You only need to focus on your studies, and if you have a solid job, you will be able to return the loan. The most significant factor that lenders evaluate when considering an education loan is your CIBIL score. You should always check CIBIL score (सिबिल स्कोर) before opting out for an education loan to avoid rejection of your application.