The ever-increasing expense of higher education is one of the most significant obstacles that students face on their path to achieving their goals in today’s society. It is necessary for many people to take out student loans in order to continue higher education since they otherwise risk being unable to do so due to a lack of financial resources. When it comes time to determine where the cash will come from, many students and their parents find themselves stuck between the options of an education loan and a personal loan.
Let’s compare the two on numerous criteria so that you may make an informed decision:
Amount of the loan: When you apply for a loan to pay for your education, the amount of money you receive from the lender is determined by the educational institution, the fees associated with attending that institution, and any other associated charges. When it comes to education within India, the loan amount can go as high as Rs 80 lakh, but when it comes to education outside of India, it can go as high as Rs 2 crore. When compared, the maximum loan amount for a sbi personal loan online is typically up to forty million rupees if you choose this type of loan.
Taking out a personal loan to pay for higher education costs is a good idea because there are no restrictions placed on how the money can be used in the end, and there is also an online facility to check sbi personal loan status. This will allow you to pay for additional expenses, such as the cost of external coaching or moving expenses, which your education loan lender may not include in the set of costs that they will reimburse you for. Those who need funds to cover other expenses, or if the amount required is larger than what the student is eligible for under an education loan, then he or she may choose to apply for a personal loan to fulfil the monetary requirements. This is the case for those who need funds to cover other expenses.
Interest rate: The interest rate on education loans is typically lower than the interest rate on personal loans, which can range anywhere from 9.5% to 28.0% per annum. Education loans typically have an interest rate between 7.95 and 15.2% per annum, while sbi personal loan online typically has an interest rate between 9.5% and 28.0% per annum. In addition, some financial institutions reduce the interest rate on student loans for female students by a fraction of a percentage point, typically 0.5 per cent, and if the student starts making payments during the moratorium period itself, the financial institution reduces the interest rate by an additional 1 per cent. This applies to education loans. But remember that, unlike personal loans that have an online sbi personal loan status checker facility, the same might not be available for education loans.
Moratorium period: The fact that there is a moratorium period available with education loans rather than personal loans is probably one of the most important reasons why one should choose the former over the latter. The borrower is given a moratorium period, which is a period of time in which to acquire gainful employment in order to guarantee a regular stream of income with which to repay the loan. In contrast to sbi personal loan online, which requires immediate repayment of principal and interest through the use of equal monthly instalments (EMI), education loans come with a moratorium period of up to a year after the completion date of the course.
This moratorium period may even be extended in certain circumstances, such as in the event of a medical emergency, unemployment, or for an incubation period if the student wishes to engage in a start-up venture after graduation, but this is contingent on the approval of the lender. As a result, students and their families are relieved of the stress of commencing the repayment of the loan as soon as it is disbursed, and students are assisted in securing employment prior to the beginning of the EMIs that begin following the moratorium period.
The monthly EMI is influenced by the length of time that a loan is allowed to be repaid. When the tenure is increased, the amount of the EMI will decrease, and vice versa. When it comes to student loans, the repayment period can often be as long as 15 years. When it comes to student loans, having such long tenures in combination with a reduced interest rate typically results in cheaper monthly instalment payments (EMIs). On the other hand, the monthly payments for a sbi personal loan online will be greater than those for an education loan due to the shorter loan term, which is normally up to five years, along with somewhat higher interest rates. However, keep in mind to use the online sbi personal loan status checking tool if you go ahead to apply for the personal loan.
Tax exemptions available: The education loan offers tax benefits on the interest that is repaid under section 80E, for a maximum period of 8 consecutive years starting from the year that you begin repayment or until the interest is fully repaid whichever occurs earlier. This benefit is available for the entirety of the repayment period or until the interest is fully repaid, whichever comes first. It is important to keep in mind that the primary component does not qualify for a tax deduction. In the case of personal loans, the borrower does not have access to any tax benefits of this kind. But keep in mind to not forget to remain up to date about your loan status in case of personal loan by checking sbi personal loan status online on the lender website or app.
Education loans typically require a co-applicant, such as your parent or spouse, who can act as a guarantor or provide security for the loan. In the event that the amount of the education loan is greater than Rs.4 lakh, a third-party guarantor may be required. In the event that the amount of the loan is greater than Rs.7.5 lakh, further collateral security may also be required. On the other hand, personal loans often do not require a guarantor, nor do they require collateral as a form of security in order to obtain the loan.