Tips for Taking out an education loan
If you want to make an overseas education possible, you might need to start by taking up an education loan. These loans are specifically targeted towards students that don’t have enough money to continue their studies. And these loans are supposed to be paid after graduation or when the student gets the job.
Thus, the students get the opportunity to put their focus on their studies completely. Your mind will feel comfortable knowing the school fees are being paid. Thus, you’d get enough time to hang out with friends in the new country and study for the exams as well. The students usually find it difficult to make the most of their university life. But this loan can make things possible for you.
How much are the interest rates?
The purpose of education loans is to make things easier for students. Therefore, the interest rates for education loans are lower than personal loans. The borrower must understand the difference between the effective interest rate and regular interest rate before they apply for the loan.
The interest rate for the education loan is a specific percentage of the money you are borrowing. In case of regular interest rate, the borrower is supposed to pay S$500 on the S$10,000 loan if the interest rate is 5%. But the effective interest rate is a little bit different.
Effective interest rate is designed for loans where the borrower is supposed to pay off the loan over a longer period. It means the effective interest rate is higher than the regular interest rate.
How long is the repayment period?
Usually, the repayment schedule for education loan is extended over a specific number of years. The borrower can choose the repayment period length based on their preferences. Your monthly payments and effective interest will be determined according to the length of your repayment period.
The monthly installments for a longer repayment period are smaller. However, the interest you’re going to pay will be higher.