When you look to study abroad, one thing that poses a roadblock is the financing part of it. Foreign education, though highly desirable, is very expensive. Most people do not have that kind of a bank balance to pay the entire amount from their pocket. This is why students and their parents often opt for loans when pursuing foreign higher studies. In this regard, two types of loans are commonly taken – education loans and personal loans. Which one is better and why? Let’s find out.
Education loan – pros and cons
Let us begin by looking at the pros and cons of an education loan:
- Advantages:
- Tailor-made for students:
- EMI starts later:
The entire purpose of a student loan is to help the students in their pursuit to study. This is why such a loan suits the learners very well.
Most banks allow you to start the EMI scheme after you get a job. This gives you the flexibility to pay off the loan yourself and not rely on your parents.
- Disadvantages:
- Limited amount:
- Need a co-applicant:
You can only get a limited amount, which at times, proves to be insufficient when taking admission to a foreign university.
Most banks would ask for a co-applicant. If your parents are not available for any reason, this becomes a major challenge.
An education loan is a very good option, but it has its pros and cons. You need to assess both sides and see whether or not an education loan would be of use to you.
Personal loan – pros and cons
Now, let us explore the pros and cons of a personal loan:
- Advantages:
- Easy and quick to get:
- The higher amount available:
Personal loans are available instantly. Many loan providers offer these loans so if you qualify, getting the loan is never a challenge.
You can get a much higher loan amount than an education loan when you borrow via a personal loan.
- Disadvantages:
- Higher rate of interest:
- Immediate repayment:
Personal loans are unsecured loans so they have a much higher rate of interest as compared to an education loan.
You need to start the EMI schedule immediately and cannot wait till you get a job and become financially independent to pay off the loan.
Personal loans are very popular in India and they are instantly available, making them a great option for those who urgently require financing. A personal loan can also help you fill the gap between an education loan and the tuition fee you need to pay. Use your personal loan carefully as the interest rates are high.
Conclusion:
As you can clearly see from the points mentioned above, both a personal loan as well as an education loan, prove to be handy for students who wish to pursue their higher education abroad. If you are planning to go abroad soon, explore your financing option, keeping all the points mentioned above in mind and then make the correct decision that suits your financial plan.
