Understanding Education Loans: A Guide to Different Types and Their Benefits

Education loans are crucial financial products for financing without draining savings. With various types of loans catering to different academic needs, students can find options that suit their goals and repayment capacity. In this blog, we will explore different types of education loans and their key benefits, helping you make the right choice for your future. Read on!

What is Loan for Education

A loan for education is a financial product offered by banks or lenders to help you pay for your academic expenses. You can use it to cover tuition fees, hostel charges, exam and library fees, travel costs (in case of overseas education), and even purchase books or laptops.

Different Types of Education Loan

When it comes to funding your academic journey, one size doesn’t fit all. An Education Loan comes in different forms to suit various financial backgrounds, course types, and study destination. Here are a few:

1. Unsecured Education Loan

Also known as a collateral-free loan, this type doesn’t require you to pledge any asset or property. Lenders assess your eligibility based on your academic performance, university ranking, your co-applicant’s income, and credit score. A loan for education is ideal if you need quick access to funds and don’t want to risk personal assets.

Best for: Undergraduate or postgraduate students who are applying to reputed institutions in India or abroad.

2. Partially Secured Education Loan

This is a hybrid option where you may need to provide some form of collateral such as fixed deposits or partial property security, while still getting a portion of the loan amount. It’s a practical choice if you are eligible for a higher loan amount but can’t fully secure it with an asset.

Best for: Students who need higher funding and can offer partial security to meet lender requirements.

3. Secured Education Loan

In this case, you must pledge collateral like a tangible asset as security again the loan. An Education Loan like this often comes with low interest rate, higher loan amount and flexible repayment terms due to the reduced risk for the lender.

Best for: Students planning to study abroad or pursue expensive courses with high funding needs.

4. Postgraduate Education Loan

This loan is for you, if you’re pursuing your master’s program like MBA, MTech, MS, or other advanced degrees. The loan amount is generally high, and some lenders even consider future earning potential during evaluation.

Best for: Students enrolling in competitive PG courses with higher tuition fees, particularly in reputed institutions.        

Factors to Consider When Taking an Education Loan

Before applying for a loan, you need to evaluate certain factors that may affect your repayment and long-term financial health. Here are a few to consider:

Loan Amount and Coverage: Make sure the loan amount covers all academic and living expenses. Some lenders provide 100% financing for specific institutions or courses.

Interest Rate: Look for the lowest interest rate student loans, especially if you’re studying in India. Even a small difference in the rate can significantly affect your total repayment amount.

Repayment Tenure: Longer period may reduce your monthly EMI but increases total interest paid. Strike a balance that fits your expected income and career path.

Moratorium Period: This is the time during which you don’t need to make repayments, usually until you complete the course and secure a job. Choose a loan with a sufficient moratorium period to reduce repayment pressure.

Co-applicant: Most lenders require a parent or guardian as a co-applicant. Their credit history will impact your loan approval and interest rate.

If you’re looking for a hassle-free loan for your academic dreams, Poonawalla Fincorp offers an Education Loan of up to ₹1 crore without any collateral and with 100% digital application process.

Apply for Poonawalla Fincorp’s Education Loan

Follow the 3 simple steps below:

Step 1: Click on “ Apply Now ”

Tap on the ‘Apply Now’ button to initiate your application.

Step 2: Enter Your Details

Enter your DOB, PAN card number, monthly income, and residential details.

Step 3: Upload Your Documents

Upload the necessary or required documents for quicker approval.

Once your verification is successful, the loan amount will be disbursed into your bank account instantly.

To Conclude

An Education Loan isn’t just a way to fund your studies – it’s an investment in your future. By understanding the types of Education loan available and what each one offers, you can make informed decisions that support your career aspirations. So, if you are looking for a transparent and customer-friendly lender, Poonawalla Fincorp offers Education Loan at an attractive interest rate and flexible repayment tenure of up to 15 years.

Frequently Asked Questions

1. Who can apply for an Education Loan?

Students pursuing undergraduate, postgraduate, or professional courses can apply. A co-applicant (usually a parent or guardian) is typically required.

2. What is a moratorium period?

It’s a grace period during which you don’t need to make loan repayments. It usually lasts until the course is completed and the borrower secures a job.

3. Is it possible to apply for an Education Loan online?

Yes, Poonawalla Fincorp offer a fully digital application process with instant disbursal upon successful verification.