You need to borrow money when it’s a huge amount, though what’s ‘huge’ for one might be affordable for another, however, higher education costs aren’t that less. We are talking about higher education costs so we can say that it’s a hefty amount and often unaffordable by average families. In such cases, higher education loans are a viable option. We would also like to add that even affluent families prefer to opt for loans because of their assurance, flexible payment options, and related benefits.
Traditionally, education loans are offered by banks (public and private), financial institutions, and fin-tech companies in lieu of a certain percentage, as interest. Now, the rate of interest may vary from bank to bank or fin-tech to fin-tech but its benefits remain the same. The lenders offer two different kinds of education loans – one is with collaterals and then the other one is without collaterals.
When you borrow money from a bank, any other fin-tech company or anywhere else you need to deposit collaterals as a security. It is an assurance that you give to the concerned organizations that you will repay the borrowed amount and are identified as collaterals. For higher education loans the lending organizations ask for collaterals from your parents or guardians. They are usually property papers, documents of fixed deposits, mutual funds, life insurance policies, gold, or government securities.
What’s Great About Higher Education Loan With Collaterals?
When you submit collaterals for higher education loans it is giving away your long-created financial securities till you repay the loan. Yet people prefer to opt for it; why? It is because of the several benefits that they can get against taking higher education loans with collaterals. Let us walk you through the benefits.
Tax Benefits
Most countries offer tax relaxation under specific clauses when you opt for an education loan with collaterals. It is a lucrative offer and benefit for tax-paying guardians; you can save a good amount of money by option for an education loan with collaterals and then maybe use it to repay the loan.
Loan in Low Rate of Interest
Usually, most of the lenders charge lower rates of interest for higher education loans against collaterals. However, you must check with your bank for their policies, before you apply for one.
Minimal Processing Fee
Banks and other lending organizations are pretty lenient with processing fees; so they charge a minimum amount for processing your loan. Maybe because they want to ensure you get the maximum of the approved amount to support your higher education. However, this is an assumed reason because no specific reason is given by any organization as yet.
Access to Big Loan Amount
Huge amounts are approved for higher education loans with collaterals. The securities that you deposit assure repayment bringing down the bad debt risk for the lending organizations and thus they can release bigger amounts for your education loan.
Flexible Repayment Options
Usually, a specified period after your study is over is given by the banks and lending organizations from when you can start repaying. This allows ample time for the students to secure a job and start repaying.
Higher education loans are a strong support assuring you sufficient funds for your higher studies. When you want additional benefits, you can consider higher education loans with collaterals and start preparing for the next phase of your academic pursuit.