Top 4 Education Loan Schemes in India

Quality education usually comes at a high cost. Fortunately, meritorious students don’t have to give up on their dreams due to the lack of finances as long as we have excellent student loan schemes in India.

The following are the top 4 education loan schemes that you can check out:

  1. United Bank of India Student Loan

United Bank of Indian offers student loans for those who want to pursue higher studies in India or abroad. The requirements for education loan are that you must have Indian nationality and must have passed the qualifying exam for the institute you wish to enroll in.

You can get an education loan up to Rs. 10 lakh for Indian institutes and Rs. 20 lakhs for institutes located abroad. The interest rates are as follows:

  • MCLR-Y+2.20% i.e. 10.95% for loans up to. 7.5 lakhs
  • MCLR-Y+2.15% i.e. 10.90% for loans above Rs. 7.5 lakhs

You can also enjoy a 1% concession during the moratorium period contingent on you servicing the interest monthly and regularly during that period.

  1. Punjab National Bank i.e. PNB’s Saraswati

PNB offers student loan in the form of PNB Saraswati product for approved courses like CA, CFA, etc. Just like other loans, to apply for Saraswati you must be Indian national and have cleared the qualification examination to a higher education course you are interested in. The maximum loan tenure allowed is 15 years.

The following are the interest rates for the PNB Saraswati education loan:

  • MCLR-Y+1.10% i.e. 9.25% for loans irrespective of the amount where 100% tangible collateral security is provided
  • MCLR-Y+0.60% i.e. 8.75% for loans for education from premium foreign universities or the ones covered under the PNB Udaan Loan (up to Rs. 7.50 lakh)
  • MCLR-Y+0.10% i.e. 8.25% for other types of education loans
  1. State Bank of India’s Student Loan

SBI offers a variety of education loans at attractive interest rates. You can, in fact, get even better rates if your free CIBIL score rating turns out to be excellent.

SBI offers education loans up to Rs. 10 lakhs for higher education in Indian institutes and up to Rs. 30 lakhs for institutes located overseas.

One of the benefits of SBI student loan over others is that you don’t have to pay a processing fee.

The following are the current interest rates:

  • 00% for loans up to Rs. 7.5 lakhs
  • 75% for loans above Rs. 7.5 lakhs

Note: Girl students get 0.50% concession on the interest rate

  1. Cent Vidyarthi

If you have already secured a seat in a good college and have an attractive free CIBIL score rating, then the Cent Vidyarthi student loan could be the right product for you.

Cent Vidyarthi scheme is offered by the Central Bank of India under which you can get an education loan up to Rs. 10 lakhs for studying in India and up to Rs. 20 lakhs for studying overseas. However, if you secure the loan with 100% collateral then you can get an even bigger loan.

Cent Vidyarthi Loan repayment begins after 12 months post the completion of your studies or 6 months after getting a job.

The following are the interest rates for the Cent Vidyarthi scheme:

  • MCLR+2% if you are a male student
  • MCLR+1.50% if you are a female student

You can get a 1% interest concession during your study period if you service the interest on time.

How to get good Interest Rates?

Student loans can often be challenging when it comes to repayment. Thus, it helps to get the best interest rate possible.

The following are some of the best tips that can help you in securing the most attractive interest rates:

  • Check your credit report. If your CIBIL score is average, then you can improve it to get a better interest rate.
  • If your academic performance has been quite good, then also you can try to negotiate with your bank to get a better rate.
  • Most banks offer interest rate concession to those students who are punctual with their interest service during their study period. So, you can enjoy a better rate in this way as well.

Always remember to check your credit report before applying for any type of loan. If your report is not satisfactory then not only you won’t get a good interest rate, it’s possible to lose the very chance of getting the loan itself.

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Till Debt Do Us Part: Credit Tips for Newlyweds to be taken

You have great plans for your life, same goes with your married life as well. Those days are gone where the girl used to look for a dream boy who would come in a horse to ask for her hand for marriage or vice versa for a guy. In today’s world marriage is complicated and it is really important to understand your spouse’s financial status and also understand their spending and saving patterns. This is the reason why these young people seek their parent’s permission to understand their partner better before they get married.

Let’s take that you got married and you both are working class, you make financial budgets for every month and also make investment strategies and allocate responsibilities for who pays what bills. You will find difficult to comply such budgets, especially when you were financially independent and used to take such decisions on your own when you were single.

As a couple it is really important to exercise this activity for a healthy relationship and also to help improve cibil score of each other, so that in future you are planning to get house of a car you do not face any issues with speedy approvals.

The following tips will help you to make your financial life great when you are newly married,

Know both your credibility

It is important to understand both your financial status, opt for a credit bureau report initially and see how the scores look and try working out together to upraise the cibil score. if your partner has an existing debt or interest which is supposed to be paid, pay it off so that you do not face any inconvenience while opting for a fresh line of credit.

If there is no cibil score of your partner that is your partner has never opted for a loan in their entire  life, try getting a loan without cibil check and start making your way to a good and healthy credit score.

If there are some lines of credit left which you need to repay, make sure you have all the repayment dates in your mind, so that you do not skip any monthly installments which would lead to a bad cibil score.

Do not close any preexisting line of credit

Many newly married couples make this mistake, immediately after getting married they understand each other’s spending habits and if one of them is a spendthrift, the other partner will ask to close a credit card or two. Closing a credit card won’t help you to control your spending habits or help you save money but instead it will make an adverse effect on your credit score. Yes, if you close a line of credit, the credit score takes a huge dip which will cause you a lot of problems in future when you are deciding to buy a house or a vehicle.

Always keep your credit card accounts open and instead ask your spouse to control their expenses and do make small transactions on the credit cards to avoid annual fees. This way you will be able to pull off a great cibil score with fewer hassles.

Only apply for a loan when needed

There are some marriages where both the partners are spendthrifts. In this kind of a relationship both spend their money without having any second thoughts and when their heads are sunk under high debts they realize their mistakes and apply for a loan to clear their debts and this pattern continues. Always remember apply for a loan only if you need one. Do not take a loan just for casual sake and end up being in financial crises. Understand your needs and try few traditional options like borrowing from parents, relatives and if nothing is working out go for a loan.

A new marriage demands a lot of things, love, loyalty, integrity and also financial stability. Spend your money well and save a lot because getting married is a huge and your partner will expect a spouse who has financial knowledge and integrity who would lead to a brighter future.

What to do when you cant repay your home loan?

As the real estate prices are soaring high, it is becoming difficult to buy a residential property by making a full down payment. A home loan is a blessing for a middle class Indian family as it helps them buy a dream abode without arranging for the entire amount upfront.  The loan tenure usually extends for a period of 15 to 20 years making EMIs affordable. But many unforeseen circumstances can make it difficult for a person to honour this long term commitment. A loss of a job, medical reasons, accidents, underestimation of future expenses are just a few reasons that can make it difficult to make the EMI payments on time. What if you miss some home loan EMIs? What impact will it have on your credit profile? How should you handle this situation? Read on to find all solutions.

Repercussions of not paying the EMIs

The first missed EMI doesn’t involve any serious action by the bank apart from a penalty charge that is added to the next EMI. The bank waits till the second monthly cycle to see if it is repeated default. If the second EMI is also missed, then the bank sends a reminder to the borrower to pay the amount. If the third consecutive EMI is also missed and the borrower doesn’t respond, the bank will send a legal notice to the borrower. It will mark the loan as an NPA and enforce “The Securitization and reconstruction of financial assets and Enforcement of Security Interest act’2002” ( SARFAESI)” to take possession of the property. In another 2 months the bank can initiate the foreclosure procedure wherein it auctions the house to recover the outstanding loaned amount. However no bank likes to get involved in this cumbersome process. The bank will always be open for negotiations and try to offer you a solution to settle things without a foreclosure. For this you need to approach the bank in a timely manner. You have a sufficient time of six months before your house is put on auction.

Impact on credit score

Payment history accounts for 30% of your credit score. Every month the missed payment information gets recorded on the CIBIL report and dinges your score by a few points. When you miss three consecutive EMIs, and the bank writes off the loan as an NPA, your name gets recorded in the loan’s defaulter list. This severely hampers your CIBIL score, and reduces your chances of getting approved for any kind of loan in future until you work to improve your credit score. If you do get approved, you will have to pay a high home loan interest rate on your borrowings.

Plan of Action

  1. In case you are unable to pay the EMI due to a sudden medical problem or a job loss, then the first thing is to approach the bank and explain your inability to meet the current EMIs. Take relevant documents to prove that the problem is temporary and you will get over it soon and service your home loan EMIs in the usual way. Also take proofs to show that you’ve always been diligent in meeting your obligations and your intentions are good. If the bank finds your reason valid and gets convinced that your situation will improve after a few months it will grant you a moratorium period of 3-6 months.
  2. If you have taken insurance, check whether it covers for loss of job or major illnesses. If such is the case the insurance company may take care of the EMIs for three months.

 

  1. If an increase in the rate of interest has increased your EMI amount or there is a strain on your finances due to some other reason, you can request for a restructuring of the loan. The tenure of the loan will be extended so that your EMI amount reduces.

 

  1. If you are facing regular cash flow problems, but have sufficient amounts in investments like FDs, equity, mutual funds, then you may think of liquidating your investments to service the EMIs and avoid the risk of losing your home.

 

  1. If you think there is no viable option left, but to dispose the property, you may discuss it out with the bank officials. Ask them if you can arrange the sale of the house yourself and use the sales proceeds to repay the whole amount. This will ensure that you get the best deal possible. It may leave you with some amount even after paying the bank’s liability.

 

Bottomline

Home loan is a long term liability and the EMIs take up a large chunk of one’s income. If it is not managed properly it can become a huge financial burden. It is always a good practice to have a contingency fund of 4-6 months of the EMI to tide over emergency situations. An insurance that covers for loss of job and illness is also a good way to prepare for crisis situation. If you are still not able to make repayments on time, follow the strategies above to avoid the risk of losing your home. Remember a dialogue with the bank will always help you find a feasible solution.