Education Loan Tax Benefits

8 Reasons Why You Should Consider a Personal Loan for Education

August 02, 2022 • 4850 views

The cost of education has been steadily rising over the past many years. At times, you might face a situation where your current savings are insufficient to meet higher education costs. If you’re a parent and want to ensure an education for your child, then opting for a Personal Loan may be a good option. In this guide, you will learn eight reasons why you should opt for a Personal Loan for your child’s education. Read on!

8 Reasons to Consider a Personal Loan for Education

Here are eight reasons why you should consider a Personal Loan to meet educational expenses.

1. Credit Score for Personal Loan

You don’t need a very high credit score to qualify for a Personal Loan. A credit score is accorded to each individual by CIBIL according to their creditworthiness. The higher your credit score, the easier it will be for you to receive a loan. Lenders always check your credit score before approving a loan.  The credit score for a Personal Loan just needs to be above 750.  

2. Use for Any Purpose

You can use a Personal Loan to meet any type of expenditure including living expenses, accommodation costs, and so on. In contrast, an education loan can only be used to meet your school or college fees. This is the main benefit of a Personal Loan compared to an education loan, even though there are education loan tax benefits.

3. No Need for Collateral

Personal Loans do not require the borrower to provide collateral such as property or jewellery. Since these loans are completely unsecured, the borrower does not need to worry about losing their belongings or property in case they fail to repay the loan on time. This type of loan provides relief to individuals who do not want to risk their assets if they do not have the ability to pay the loan.

4. High Loan Amount

The loan amount of a Personal Loan can be as high as Rs. 30 Lakh (might vary from lender to lender). It’s clear that such a loan amount will be enough to pay for a good education within India. You may have enough funds to meet other expenses apart from your college or school fees. This high loan amount without providing any collateral makes Personal Loan a highly attractive option for students.

5. Flexible Tenures

Depending on the lender, a Personal Loan can be repaid in nearly 60 months (or 5 years). You can choose the tenure of the loan while making your loan application. This flexible loan tenure means you can prioritise lower interest payments or monthly payments, depending on your needs. A longer tenure will mean that the overall interest that you need to pay will be higher. In contrast, a shorter tenure will mean that the monthly payments will be higher.

6. Quick Disbursal

College and school admissions do not wait for anyone. You need to deposit the relevant fees for the year within a short period of getting accepted. This is where the quick disbursal of a Personal Loan can help. The entire loan application process can be completed online. After submitting the application form, the officials will verify your details and you will receive the funds within 24 hours.

7. Cover more than the institutional expenses

A Personal Loan for education can be availed not just to fulfil institutional expenses like tuition fees and study material but to cover other costs as well, especially if you are studying abroad. As a multipurpose loan, a Personal Loan for education can cover expenses like:

  • Accommodation: A Personal Loan for education can help you cover your rent and accommodation costs in a stress-free manner.
  • Daily Living Expenses: Studying while adjusting to a new city comes with its own set of financial hurdles. A Personal Loan for education can fulfil living expenses without any hassle.
  • Medical Expenses: Medical emergencies are unexpected, and the costs involved may not be covered by a simple education loan. However, a Personal Loan can help you pay for medical expenses without affecting your education budget.

8. Minimal Documentation

Lenders understand that the loan application process must be as hassle-free for the borrower as possible. This is why they only ask for the necessary documents so that it is easier for the borrower to arrange the required documents. Since a Personal Loan is an unsecured credit, the documentation required is straightforward.

Usually, only the following documents will be required:

  • Identity proof
  • Address proof
  • Income proof
  • Employment proof

Also Read:- Education Loan - Overview, Types, and Process to Apply

Features and Benefits of a Personal Loan for Education

Here are the features and benefits of a Personal Loan for education:

  • Free from collateral, you do not have to mortgage any assets.
  • Get a higher loan amount to finance course fees, living expenses, etc.
  • Loans at lower interest rates.
  • An easy and hassle-free loan application process.

Differences Between Personal Loans and Education Loans

The following table provides the difference between a Personal Loan and an education loan:

Parameters

Personal Loan

Education Loan

Purpose

Can be used for various financial needs.

Covers academic costs such as tuition fees, accommodation, and study materials like books, laptops, etc.

Interest rates

Since these loans are usually unsecured, they have a higher interest rate.

Since these loans come in both secured and unsecured forms, they have lower interest rates.

Tax Benefits

No tax benefits are available.

Individuals can avail tax benefits.

Prepayment Penalty

There are penalty charges

No penalty charges

Loan Tenure

Shorter loan tenure

Longer loan tenure

 

How to Apply for a Personal Loan for Education

Follow the steps mentioned below to apply for a Personal Loan for educational purposes:

  • Step 1: Click on the ‘Apply Now’ button and open the application form.
  • Step 2: Fill up the required details like your name, mobile number, email ID, etc. and attach the necessary documents.
  • Step 3: After you agree with their Terms and Conditions, click on the ‘Submit’ button.

Upon successful verification, the required loan amount will be deposited into your account. 

Things to Keep in Mind While Applying for Personal Loan for Educational Purposes

Before applying for a Personal Loan for educational purposes, you must keep in mind the following points:

  1. Analyse the cost of education
  2. Compare the interest rates
  3. Choose the right repayment strategy
  4. Check the eligibility criteria of the lender
  5. Loan disbursement process
  6. Calculate the future earnings to determine the EMIs
  7. Check for any hidden charges

Also Read: What Are the Eligibility Criteria for Taking a Loan for Education?

To Conclude

A Personal Loan for education can be the best option when you consider how to fund your child’s education. You can apply for such loans through Poonawalla Fincorp, whose loans are tailor-made to be hassle-free and convenient. Since this type of loan is collateral-free, the borrower is stress-free. Even though you don’t receive the education loan tax benefit, there are several other benefits of taking a Personal Loan when compared to an education loan.

Frequently Asked Questions

  • What are the documents I have to submit to opt for a Personal Loan for higher education?

You need to submit the following documents to opt for a Personal Loan for higher education:

1. KYC documents

2. Address proof

3. Income proof

4. Employment proof

5. Financial documents

  • How much Personal Loan amount can you avail through Poonawalla Fincorp for higher education?

You can avail of Rs. 30 Lakh as a Personal Loan amount through Poonawalla Fincorp for your higher education.

  • Who is eligible to avail of the Personal Loan for education from Poonawalla Fincorp?

You must be an Indian citizen between 24 to 57 years old to avail a Personal Loan for education from Poonawalla Fincorp.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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