We know that education is the best gift you can give your children. A good education gives you the means to create wealth. But, quality education is expensive and can cost an arm and a leg. Even a simple MBA from a reputed College/University costs a tidy sum. But, can you deny quality education to your children, just because you don’t have enough money? Why worry when education loans are easily available?
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A question still remains, whom do you approach to avail an education loan? Banks from both the public and private sector and Non-Banking Financial Companies (NBFCs), provide education loans. People first approach public sector banks, then private banks and finally NBFCs.
Confused? Don’t be. In this article, we will distinguish between banks and NBFCs, when it comes to availing education loan. We will see how these differ and which one should you approach. Read on:
Planning is very essential in every walk of life. Similarly, you should also plan before availing an education loan. Simply put, do not rush to avail an education loan. In the rush to grab that education loan, you could end up approaching institutions, that sanction loans real fast. What’s the flip side? They charge you higher rates of interest.
Even though NBFCs process loans real fast, they charge a high rate of interest.
Not just the interest rate differential, but also the process is an important parameter to decide a good financial institution to get an education loan.
Public sector banks have a lot of documentation, before sanctioning education loans. This makes processing loans a tedious process. You will also have to pledge collateral. NBFCs, on the other hand, process education loans real quick and do not ask for security/collateral against the loan.
PSBs sanction education loans based on parent’s credentials. NBFCs sanction student loans based on student’s credentials.
While the processing experience is very smooth in the case of an NBFC, interest outflow is huge. You will have to repay almost double that you borrow (loan amount). Most NBFCs accept documents online. Also, as we know, they do not need many documents which make the process hassle-free. But, what should you go for, convenience at the cost of differential interest or tedious processing with a low rate of interest?
Be Wise, Get Rich.