With the cost of living soaring, loans now play a central role in the lives of many people, including even in financing education. These loans help anyone wishing to pursue higher education. Typically, lenders do not offer student loans only. Most lenders require a co-applicant, who is usually one of the parents, so that they have recourse in the event of default.
To take out a student loan, you must have a letter confirming admission to a course. Experts say that without confirmation, lenders would not offer an education loan. These loans typically cover tuition and accommodation, the cost of books, and in rare cases even computers. Some lenders have also set limits on the maximum loan they offer for specific courses.
In contrast, personal loans are more flexible for borrowers. Gaurav Jalan, CEO and Founder of mPokket, says: âA more practical solution would be to opt for a personal loan instead. “
These personal education loans can be used to cover all education related expenses including course fees, accommodation, travel, living expenses, course materials and even miscellaneous expenses more small ones that might arise because the lenders do not ask the reasons for the personal loan. In addition, the personal loan application process is less cumbersome, requires fewer documents and has faster disbursement times.
He further adds: âSuch unsecured personal loans do not require collateral nor do they need a co-applicant. However, the amount available for a personal loan will generally be much less than that for a student loan, and interest rates will generally be higher.
Parents, on behalf of their child or their students, can avail of personal loans at low or high cost, depending on their needs at that time. Jalan says, âPersonal loans can help ease the financial burden of education in today’s world without all the stress of applying for a student loan.
That said, experts suggest that all borrowers take note of all repayment options, loan term, and loan interest rate, whether they are applying for a personal education loan or an education loan.
Jalan adds, âThe borrower should assess all possibilities before making a final decision on a specific financing option. One should only opt for a loan if they are sure that they cannot finance these expenses out of pocket. Therefore, carefully calculate your needs and apply for a specific loan amount accordingly.