This the major benefit available to the borrowers only in the case of study loans. No other loan in India offers this holiday period after availing them. This holiday period is a tenure for which the borrower is not liable to repay the student loan. In the case of a personal loan, the borrower is liable to repay the loan in equated monthly instalments every month after taking the loan. Student loans have been provided with this option because it takes time for the people to complete the course and land on the dream job. The interest rate on the study loan during this period is calculated on the simple basis and added to the principal amount when you start repaying it.
Education Loan Over Personal Loan- A Big Debate
Higher education has become a necessity of people rather than choice during recent times. Not everybody will be able to afford skyrocket costs of education from the pocket. Either personal loan or education loan becomes the choice in this scenario. A personal loan can be used for any purpose and education loan is specially crafted for the purpose. Many people choose to go with the personal loan over study loan because it is easily available. Keep reading to know few dominant reasons why study loans are always better than personal loans.
Personal loans are unsecured in nature and they don’t have long repayment tenure. On the contrary, study loans have repayment period as long as 15 years which leaves you in a comfort zone while repaying the big loans. In case, you don’t get a job during the holiday period, you can always request the bank to extend your repayment tenure. However, you should remember that the interest rate you pay for the loan always increases with the extension of the loan tenure. The loan tenure of the personal loan is limited to 5 years, not beyond.
When you take an education loan, you will stand eligible to avail tax benefits on the interest paid to the lender after you start repaying the loan. This tax benefit will be available for a period of 8 years and thereafter you will not be eligible for any type of tax deduction. On the contrary, a personal loan will not give you any tax advantage either on the principal or interest of the loan amount.
Interest rate and another fee
The interest rate is the main factor that one looks at while comparing different types of loans to avail. Even in this case, student loan outweighs personal loan. The interest rate at which these education loans are available are comparatively low and same applies in the case of processing fee too.