An MBA degree from a top university abroad can be highly rewarding. However, pursuing an MBA abroad can also be extremely expensive. From the course fee to living expenses, the total expenses involved in getting an MBA degree from top universities could burn a hole in your pocket. In such cases, most students rely on student loans. However, there are some things to consider before taking an educational loan.
Through the course of this article, we’ll tell you the 5 questions you need to ask before taking a graduate student loan so that you can make an informed decision. So, keep reading!
What to Know Before Getting a Student Loan?
If you are planning to take a student loan, it is important that you analyse all the aspects involved in getting the loan. The policies and procedures for granting the loan amount vary from bank to bank. Hence, before taking a decision, contact the banks, note down important points such as the interest rate, repayment period etc., and then take a decision by carefully analyzing all the factors. Now, if you are wondering what to know before applying for a student loan, here are some questions you should ask before you finalize a loan.
- What is APR?
You may be aware of your loan’s interest rate, when you plan to apply for one. However, it is important to consider that the total amount you have to repay also includes fees charged by the bank from which you lend the money from. Hence, you must calculate the Annual percentage rate (APR) before taking the loan from any bank. APR is the yearly interest rate charged for the loan sum you borrowed. Apart from this, check for the other bank charges such as, pre-closure charges, late payment fines,etc.
- How long will my grace period be?
Loans have grace periods. At this time, you can choose not to make any repayment. While this may seem to be a blessing, you should not forget that even if you can choose to skip the EMI at this period, the interest will be charged. While some banks offer grace periods, others might ask you to start repayments even before completing your degree. Hence, before taking a decision, get clarity on this aspect.
- What is the eligibility criteria for getting a loan?
Before providing a loan, most banks ensure that you have good employment prospects once you graduate. This is to make sure that you repay the loan. For this, the banks consider the course and the university you are planning to study. The courses you choose must have accreditations as well as high rates of job placement to get a loan.
- Should there be a third-party guarantor?
In India, you’ll get an education loan starting from 1 lakh to even 30-50 lakhs. However, there are some factors that you must know. If you are planning to take a loan of up to 4 lakh, the banks may not ask you to provide any collateral. But, for loans above 4 lakhs, banks might ask for a collateral or third-party guarantee. Almost all banks ask for a guarantor or a co-applicant for educational loans. This is to ensure that even if you are unable to repay the loan, the guarantor will be able to take care of it.
- What all is covered under the loan?
When pursuing a course, the total expenses are not limited only to the tuition fee; it includes other expenses such as transportation, other living expenses, etc. Hence, before applying for a loan, it would be wise to list all your possible expenses and the total cost. Then based on this, connect with the banks and check what exactly the loan covers. If possible, choose a loan that covers most of these expenses.
So, before planning to take educational loans, you should consider all the afore-mentioned factors including the repayment period, interest, etc. This will help you manage your educational loan and repay it on time without much burden.