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There are no educational loans with an interest rate of zero per cent in the market. There are some ways that can impact the interest cost of educational loans and make them cheaper than they originally are.
Scholarship: If any scholarship application is submitted then the impact of the interest rate is lessened. Before opting for an education loan, one should thoroughly research the market with the available scholarships and the benefits that they provide to the cost of the loan.
With the help of scholarships, one can easily pay the interest part of the loan. This in turn reduces the load of the scholarship on the loan amount. One can thus reduce the burden of the hefty loan amount.
A lot of interest-free loans are scholarships that are provided by Tata Trust or KC Mahindra. These are charitable organizations.
Factors to consider when opting for an educational loan
- Eligibility Criteria
- Courses for which loan can be used
- Collateral required
- Guarantor required
- Margin amount
- Interest rate
- Loan amount
- Repayment tenure
Type of interest rates on education loans
Most of the banks have a fixed interest rate that is required for the educational loan and it remains fixed for the entire period. The other banks have a marginal cost of the lending rate that can be adjusted for the interest rate component and thus would affect the interest rate of the education loan.
Also Read: How can a Student Loan Affect Your Credit Score?