Are you interested in refinancing your existing credit health with the support of a loan? But still is confused that for which category you should opt for. Choosing a perfect loan sometimes become a very nerve-wracking task and makes you to go through a lot of research and development. If you too are sailing in the same boat where you are confused to whether go for an educational loan or a personal loan, here is a complete comparison that can help you to get a better insight of what suits your pocket. The description and the remarks used in the write up are solely based, keeping in mind the Indian Economy. Here is the top justification that might help you to take a fruitful decision.
Most Common Aspects To Be Noticed
Before proceeding, you must be aware of the common aspects of both the loans. They are comparable in their structures and can give you a complete outlook on how it can help you to balance your credit health while opting for any of it.
Kind Of Expenses
If you are opting for a personal loan, you can use the credit amount for any of the use such as car loan, mortgage, home repair, student loan or any possible event. This wide variety of using it in any manner makes it an admirable choice to use the loan for any purpose. Hence, adding the maximum flexibility of using the amount. On the other side, in case of private student loan, if you borrow the money, according to the law, that money could be used only and only for the education or education related expenses. It can be used to purchase a laptop too. Hence, in case of student loan, you should be defined with the purpose of using it and you are not offered with the flexibility to use it.
Disbursement Of Funds
Another important aspect of both the loans is dependent upon the disbursement of the funds altogether. In case of a personal loan, the amount of the money gets disbursed into the borrower’s account and he can use the money freely. However, in contrast to a personal loan, the amount of loan in case of education loan is disbursed to the school’s financial aid office. This financial aid can, however, be used in the case of any previous amount payment. In case the student has left the institute but still, he has to pay to the institute, he can also opt for an education loan. The only difference is that the money will be only transferred to the services of existing debt to pay off the amount.
Know The Interest Rate
Yes, indeed an important thing to take into account while going for a loan. You should know the rate of interest on both the loans. Generally, it is seen that in case of education loan, the rate of interest is comparatively low as compared to the personal loan. This makes it quite significant and wise to opt for education loan if you need the money for the support of the education. Otherwise, if you need money for a different purpose, you can go for a personal loan. But before proceeding, be sure and informed about the rate of interest that you have to pay.
Another important point that needs to be discussed before going for a loan is to know about the nature of EMIs. EMIs are generally the monthly instalment of the amount that you have taken that gets combined with the rate of interest. You must be aware of the maximum tenure of the EMIs that you have to pay and if foreclosure of the amount is possible or not. In case of a personal loan, the most important drawback is that the EMIs start immediately as soon as the amount is disbursed to your account. Whereas, in case of education loan, the EMIs are started after a locking period depending upon the institute from where you have taken the loan.
If you calculate both education as well as personal loan, you will find that out of the two, a personal loan is more expensive as compared to the education loan. The interest rate in case of personal loan is comparatively high and you have to keep paying until the amount with an added rate of interest is given back to the bank whereas in case of education loan, the rate of interest is comparatively low and you can repay the amount if you got a job.
Hence, drawing the conclusion, we know that both education and personal loan offers you the fund you require for your use. The only thing you have to decide while taking decision is that you should be more careful to know how and where to use the amount.