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Are you one of those who is studying abroad on student Loan? Yes. I am sure there will be many like you whose parents must have taken a student loan from the bank to be able to send their children abroad to study. Education loan is the only option parents could think of during times of financial crisis and when they want to send their students abroad at any cost. Education loan does give you the relief that you can now fund your student studies and the time when your child is studying you don’t have to worry about anything. The real tension starts when you have to payback. Loan payback is also a difficult one and in the given period you have to repay the burden off.
The worst will happen if you are not able to repay the loan. Paying back the bank loan is essential. If you have secured the loan against any collateral security or against your home, in case you do not repay your home will be gone so start preparing from the start to repay the loan before it turn into a nightmare.
Mostly people secure loans only on the condition if they think they will be able to repay. Banks also give loans to meritorious students only as they know they will have the capacity to repay the loan. Securing loans is not an easy task. You avail loan after a long, cumbersome process where every detail is examined from the bank side, documentations and then finally you get a loan. Banks do not give a loan to every student. An average student may not avail a loan because he might not be able to pay back. The assumption is if the child is intelligent, he/she will work hard and get a job and will repay. An average student might not be able to clear studies and avail a good job. Although one year time is given as a grace period to pay back the loan. But one year isn’t a long period for one who has to pay back a hefty amount.
Therefore, before obtaining the loan think carefully about the repayment. Read and learn the repayment policies carefully and then only decide about obtaining the loan. Compare the terms of two to three banks and then obtain from the bank whose terms suit you the most.
Availing is a cumbersome process, paying back is more tedious. So be warned about the future.
Ways to pay off Loan
The data of Reserve Bank of India shows the outstanding educational loan has increased from 2003 to 2012 from 2,986 crores to 48,400 crores respectively. In 2015, half of the loans were taken in South India, Tamil Nadu, and Kerala in lead
How old is your loan: in which year did you obtain the loan and how many years have passed since you have taken the loan. If you took the loan before 2010, it falls under Prime Lending Rates and you can change it to base rate through talks with banks as it will cost you fewer interest rates.
♦ More EMIs: Modify your EMIs. Request banks to increase your EMI and this will result in fewer EMIs and faster repayment. Less money will go in interest and more in principal repayment
♦ Repayment: Think of repaying it as soon as possible. If your loan remains unpaid for a longer duration, you have to give more interest. Repay the loan first with the bonus or funds available to you
♦ Refinancing: You have the option for a loan transfer at a cheaper rate. This option allows the borrower to obtain better interest rates. The first loan is paid off, second is given at a better - revised rate.
♦ Negotiate: Negotiate with banks for better interest rates. Where RBI is reducing repo rate and lending rate, banks can also offer better interest rates to their first-time clients.
♦ Crowdfunding: Do you have any business idea? Yes. Go ahead and execute it with proper planning. You can repay your loan with the profits earned from it. The best way to become an entrepreneur and pay off loan
♦ Lifestyle: Live in an unconditional way. Change your lifestyle in times of emergencies. Cut costs where needed. Simple life hacks, carpooling, cutting costs on eating, travel expenses etc.
♦ Take up work: Take up some additional job on weekends. This will supplement your finances and you will be able to make few extra bucks. Hard work pays off
♦ Rent: Rent takes up the fixed amount every month. Try to stay with family, or not so inexpensive hotels and in rooms on sharing basis to cut rent costs.
♦ Sharing economy: This is a new concept. Earlier you use to share your space and stuff. Now you provide services to the third person for money.
The obtaining of education loan is increasing in India due to the increasing importance of education but repayment is affected because less of job opportunities that give you huge salaries to repay the loan and help you save. So the above ways help you repay loan in a creative way