Which is the Better Option – Student Loan or Personal Loan for Higher Studies?
These days a student can fulfill their dreams with hard work and sacrifice. Students not only have the pressure to excel academically, but also have to manage their finances. Many students find their own way to manage living costs while they are studying but they could make the wrong decision.
If they get into difficulty, most students apply for a personal loan to finance their studies and expenses. Before applying for any loan, it’s important to consider your financial options prior to finalizing the best one for you. There are certain qualifications for personal funding that must be fulfilled first.
Personal Loan vs Student Loan
If you are in a dilemma and don’t know which direction you should go to get funds for educational purposes, you can apply for a personal or student loan. Here is the list of parameters that can help you make a better decision.
- Loan Amount. The loan amount will vary according to your financial situation and what you want the loan to cover. An education loan depends upon course fees and costs. A personal loan will not only pay the course fees but will also cover additional expenses, such as travel or relocation costs. Depending on these aspects, it is better to apply personal loans for military members if you are from a military background.
- Interest Rates. The interest rates of unsecured loans are higher in comparison to education loans. It is better to go through reviews on online sites and make a comparison between personal and education loans.
- Loan Tenure. Choose the tenure of the loan as per your repayment ability. Make sure that the rate of interest you will pay has a low EMI. The maximum tenure of a personal loan approval is five years. If the interest rates go up, the EMI costs will also surge.
- Tax Exemption. An individual is going to benefit when they apply for an education loan because there will be tax benefits as soon as you start repaying the loan. There are no such benefits offered on a personal loan.
- Collateral. Most education loans look for a guarantor, who can be a parent or a spouse. There is no such requirement for an unsecured personal loan. If you have applied for a loan under a secured personal loan category, the documents on which you sign gives the bank the authority to seize assets to retrieve any losses. It is better to apply for a personal loan under military funding programs exclusively offered to veterans. The lending companies ask you to maintain a good credit score to show that there has been no procrastination in making the payments. Fill in the online form and maintain your CIBIL score to get approval in the minimum time.
What to do for Instant Approval of a Personal Loan?
- The first and foremost thing one must work on is a healthy credit score. Keep on going through the credit scores by checking them online and make the necessary improvements where they are needed.
- Make sure that you haven’t taken out a personal loan in the last six months. It doesn’t depict a very healthy picture of your finances.
- Keep the debt burden low. Doing this will let lenders know that you can repay the loan you are applying for.
- Keep secured and unsecured loans balanced since they have a bearing on your credit score.
- Don’t take too many credit cards and use only a couple that suit your needs. Pay the credit card payments on or before the due date to avoid any penalties.
- Don’t mortgage assets because it is a personal loan and it requires no collateral as a guarantee. The loan is disbursed without keeping any assets.
How to keep Loans from Hurting your Credit?
Whether it is a personal loan or unsecured loan, it is better to make the payments before the due date to avoid late fees. If you are struggling financially to make the timely payments, call your service provider to find out options that are available. Student loan providers offer income-based repayment plans to individuals. Taking advantage of such options won’t negatively affect your credit report. Being a veteran, you can get a personal loan under the military and families program.
If you don’t receive an education loan from lenders or financial institutions, go for a personal loan. The main purpose of taking any loan is to help complete your education, and get a well-paying job. You can ask questions and look for various options before finalizing a lender. If you are a veteran and want to give the best education to your child, you can go for personal loans for military members.
Go through the qualification for personal funding before applying for a loan. Choose the lender wisely as it is a matter of your child’s future. Don’t trust any lender blindly and be regular with your payments to help you overcome your debts easily, and you can apply for the loans again at the time of need. Both loans can help you build your credit while you are paying for school. By calculating how long the terms cost after some time you will be able to decide which type of loan will be best for you. Don’t let finances come in between the future of your child and help them achieve their dreams in the best possible way.
Also, Read: Good and Bad Reasons for Taking a Personal Loan
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