There are many reasons why the interest rate on education loans is so high as compared to a car or property loan. But, don’t worry, there are some privileges through which you can save a part of your hard earned money. But, before that, here are some calculations to keep in mind to get a better idea of the bigger picture.
Know If You Are Eligible For Taking The Loan
You should be a resident of India.
You should have secured an admission at a reputed institution for a particular type of professional degree or diploma.
You should have got the admission through a valid entrance exam or a merit based process.
A Loan Taking Scenario
Suppose you are taking an education loan for your higher studies abroad. Now, a bank in India, at maximum, will allow you a loan of Rs 30 lakh as the loan amount for studies abroad and Rs 10 lakh for within India. The interest rate on this can range between 9.50% p.a to 13% p.a.
If you take an education loan of Rs 30 lakh at the interest rate of 11.75% p.a., over the duration of 10 years, then, at the end of the term, you would have paid a whopping amount of around Rs 51 lakh i.e an equated monthly installment(EMI) of Rs 42.6K, altogether taking the total interest to Rs 21 lakh.