Education is perhaps the most important investment you can make for your future. Whether you are pursuing higher studies in India or abroad, taking an online professional certification course, or paying for a family member’s education, quality education is often accompanied by significant financial burdens. While scholarships and standard education loans are common ways to help pay for education costs, there is another option gaining traction – a personal loan for education.
Many individuals are now utilising personal loans to fill the gap in education funding – and for good reason. The convenience of a personal loan due to quick disbursement, limited documentation, and applying for a personal loan online makes it an easy and feasible option.
Here’s a closer look at why you should consider a personal loan for educational purposes.
- Quick Access to Funds
In comparison with education loans, which often include tedious processes and verifications, personal loans are much quicker to get. Most banks and NBFCs, Non-Banking Financial Companies, offer quick disbursal of the loan – often as fast as within 24 to 48 hours of approval.
This quick disbursal is beneficial in case you have last-minute expenses like tuition fees, visa expenses, or accommodation costs. The ability to apply for a personal loan online is helpful, and the whole process can be done using a cell phone or a laptop without visiting a bank branch.
- No Collateral Required
One of the biggest hurdles in getting a traditional education loan is the collateral requirement. Many banks ask for property or other assets as security, especially for higher amounts or overseas education.
A personal loan for education is not secured meaning you do not have to put up any assets. This is especially beneficial to students or working professionals who may not have a valuable asset to put up as collateral. It also reduces the risk and paperwork involved.
- Flexible Usage of Funds
Education loans usually come with restrictions regarding the use of the loan proceeds; restricted to tuition, books and in some cases, accommodation. While they say that, the cost of education is much more! For example, you may have additional expenses such as travel expenses, laptops, food, project expenses or even health insurance if you’re studying abroad.
A personal loan offers complete flexibility. Once the funds are disbursed, you can use them however you deem necessary — giving you more financial control and freedom throughout your academic journey.
- Simple Application Process
Digitisation makes applying for a personal loan online easier than ever before! Most banks and lending platforms offer an online process that allows you to check eligibility, upload documents, and monitor the status of your loan application without having to set foot outside your home.
Because it is very light on documentation, e.g., proof of income, identification and proof of address, even working professionals or parents’ applying on behalf of their child for education can get approved quickly.
- Competitive Interest Rates
In recent years, interest rates on personal loans have become more competitive, especially for borrowers with a good credit score and steady income. Although personal loan interest rates are slightly higher than conventional education loan interest rates, the convenience, flexibility, ease and online application process generally justified the difference in rate more for many borrowers.
Furthermore, you may be able to negotiate even better rates with the lender or select from a range of loan products that will work best within your budget and repayment ability.
- Easy Repayment Options
Personal loans typically have flexibility in loan terms and can range from 12, 24, 36, 48, up to 60+ months. You can select a repayment period that is comfortable for you, given your level of income, or an expected rise in income. If you are a working professional returning to school, you can begin repaying immediately. Another option, if the loan is for a child or dependent, the parent can begin repaying, and the dependent can complete their studies as planned.
A few lenders will offer the possibility of loan prepayment at any time, either a part repayment or full repayment, without charging heavy penalties. This option allows you to pay less interest overall.
- Ideal for Short-Term or Skill-Based Courses
Standard education loans are typically designed for long degree programs. However, with the emergence of online programs, certifications based on skills, and shorter professional courses, borrowers are looking for money to fund smaller, more specific educational programs. This is where a Personal loan for education is ideal — you can go for a smaller amount of money for a short period of time. This makes it much more viable.
- Credit Score Building Opportunity
If you are new to loans as a young professional or student, managing a personal loan in an appropriate manner can help you build your credit history. Payments you make on time will positively impact your credit score, and thus help you qualify for credit in the future (whether for a car, house or additional courses later on).
Applying online gives you access to many offers at once with the ability to compare and choose the best loan option available to you, so that your loan is not a hefty weight.
Final Thoughts
It is no longer considered unorthodox to use a personal loan for education — personal loans are a practical option for investing in your future, as they provide flexibility and eliminate the time constraints of applying for a traditional loan. Whether you’re preparing for graduate or post-graduate studies, expanding your personal qualifications and obtaining some additional skills, or helping someone close to you improve their qualifications and work towards their aspirations, a personal loan can help you make that decision better.
With the ability to pursue a personal loan online, access to faster funds, and flexible repayment terms, personal loans are creating avenues to enjoy and achieve education like never before.