In today's highly competitive world, higher education has become a requirement. Almost every Indian kid now aspires to receive an education from one of the world's best universities. However, with the cost of school at an all-time high, obtaining outside funding is the only option to get through college without destroying your funds.
There are two financing choices available to help you get out of this jam. It's a battle between a student loan and a personal loan. Which one do you think you should pick? Let's have a look.
Period of Moratorium
The term "Moratorium" refers to a time during which the borrower is temporarily free from repaying the debt. It effectively gives college students a break, compensating for the gap between finishing their degree and finding work. This term normally lasts from the moment the loan is disbursed to about 6-12 months after the degree is completed, and it is solely available to Education Loan borrowers. Lenders compute interest on a basic interest basis throughout this time.
Personal loans, on the other hand, begin monthly payments immediately once the loan is disbursed. There is usually no time off, which can be a difficult load to bear as a student.
Tax advantages
When it comes to education loans, you can subtract the interest and reclaim the money. Borrowers can claim a tax deduction for the amount equivalent to the total interest payable under Section 80E of the Indian Tax Act (ITA). Borrowers of Education Loans are the only ones who may enjoy this pleasure. Personal finance, on the other hand, does not offer any tax benefits.
The Rate of Interest
The interest rate differential between a Personal Loan and an Education Loan is significant. When opposed to loans for personal purposes, education loans often offer lower interest rates. In addition, depending on the lender, the Processing Fees for Education Loans are significantly lower.
Disbursement of Loans
Following the approval of your application, your Personal Loan will be credited straight to your account. In the case of Education Loans, however, the loan amount is directly credited to the educational institution's account. You can claim the remaining money, if any, to pay auxiliary expenditures once the institution has collected the unpaid fee.
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