How to prevent your education loan from taking over your life

Over the last few decades, education has become a priority for most of the upcoming youth. Many of these individuals are aiming for education levels that go beyond the standard college degree. Some individuals have even contemplated pursuing degrees and higher educational levels abroad.

However, such educational degrees come at a price, especially if the said degree is an international one. But rather than losing out on such an opportunity, many individuals finance their education through the means of an education loan. However, lack of well-paying jobs, recession and demand for local workforce has often affected loan owners, who are looking for means to repay back the borrowed funds. After all, lack of income leads to lack of repayment. So how can you avoid a potential debt in your life while ensuring that you get an opportunity for the highest education? Here are a few steps you can follow:

Before you borrow

While the best way to avoid a potential debt is to avoid borrowing in the first place. This can be an impossible situation if you are seeking a high international educational degree with the help of education loan in India. So instead, you can ensure that you follow certain steps before you apply for the loan. They include:

Get a complete picture of your education goal: The reason why colleges and higher education might seem expensive, is the fact that half of the students graduate at the end of theterm. Most of these individuals either drop out, flunk out, or even switch their majors. Some even drop out midway because they get a job opportunity, only get stuck on the corporate ladder due to lack of a higher educational degree. To avoid this potential situation, you will need to focus on your education goal. This will help you understand what the potential financial expenditures are, in order to attain the position you want in your targeted industry

Take a year off:  Taking a year between your college and earning your masters or PHD will go a long way to assist you in planning your future. This year can be used to explore alternate career options or earn a down payment for your education loan.

After you borrow

Once you have borrowed funds through the education loan in India,  here are a few factors you can follow:

• Create a post-college budget
If you are going to borrow, you need to be aware of what you owe, how much you owe, and the time it will take to repay the funds. Calculate the monthly cost of your loan payment while you are still studying, so that you are aware of how much of a budget you will need to follow when you start earning to pay off the loan.
• Prioritise your repayment
As you start earning, it is important that you focus on prioritising your repayment. Ensure that you have sufficient funds to save, for your monthly requirements while paying off your loan at the same time. As far as possible, avoid taking on additional debts till you have paid off your loan considerably.

Factors that determine your eligibility for a home loan

When it comes to purchasing a home, there are plenty of options you can consider to finance this purchase. Amongst the several options, the home loan is one of the most popular choices. Not only are there several lenders who offer home loan in India, but they also offer it at different competitive rates.

However, each lender will have different criteria for evaluating a loan application. These criteria determines your eligibility for a loan application. Here are a few factors that almost all lenders will consider:

Disposable income: One of the most important factors that a lender will consider is your disposable income. It is derived by deducting your statutory deductions, regular expenses and existing EMI’s from your overall gross income. Overall, you home loan EMI should be within 40% of your monthly disposable income. If you individual income is low, you can always apply with a co – applicant to increase the overall gross income in order to get the loan amount you require.

Credit history: Your credit score determines your creditworthiness. Lenders consider your credit score as the means to judge your creditworthiness. A low credit score will indicate that you are a risky investment. It also indicates that you may have a current debt value that you need to pay off before applying for another debt, such as the home loan. The appropriate credit score of 750 and above is considered as a good score. However, other lenders may have different scoring patterns and a fixed yardstick for their own version of their acceptable good credit score.

Compliance with legal norms: When it comes to opting for any of the home loan in India, lenders will first verify details of the property which you are taking the loan. They provide loans to facilitate the purchase of properties that have been legally cleared by the local authorities, especially if they possess a clear and valid title. Some lenders even offer special loan packages or rates on properties that have been listed in their approved database of properties.

Occupation stability and continuity: A stable job or income source ensures a continuous and steady income. This income in turn, ensures that the borrowed funds are repaid in a timely fashion. Lenders for certain signs and factors that indicate a stable job or income source. They also consider how long you have been working with your present employer to calculate how steady you are in your employment. Switching too many jobs during your career will create a negative impression. Additionally, lenders give more preference to government employees over professional individuals in private sector companies.

Apart from the above mentioned factors, there are plenty more, that a lender will review. Keeping these factors in mind will go a long way to ensure that not only do you get the ideal loan rates in the market, but also allows you to negotiate for the best rates in the market.

Tools and tricks to pay off your loan debts faster

Amongst the different options you can consider to satisfy your financial requirements, loans have always been favourable options. Not only do you get to borrow a lot of funds, but you also get a convenient time to repay back the borrowed funds along with a small sum that conforms as the interest.

But overtime, without proper management and planning, your loan repayment will turn into a never ending loan debt. This is especially the case in long-term loans, such as home loans and business loans. Additionally, there’s a risk in the case of secured loans, where the collateral provided will be reclaimed if the borrowed funds are not paid on time.

The only way to avoid such a situation is to pay off your loan debts fast. Given below are a few tricks and tools such as the loan calculator in India you can use to aid you in this process:

Refinance your loan: High-interest rates and long tenures often make it difficult for a loan owner to repay the loan on time. However, refinancing the loan will help reduce the time spent to repay the loan as well as the original loan rates to a more favourable one. Plenty of lenders does offer to refinance loans at affordable rates. However, this is applicable only to certain loans. You will need to conduct appropriate research before you apply for a loan refinance. Additionally, you will also need to know how much of refinancing will suit your needs. Using the appropriate loan calculator you can easily calculate the appropriate amount.

Use any windfalls to pay off your loans: During some time in the year, you will come into extra funds through your body, holiday, annual bonus or even festive bonuses. At such a stage, you may get the urge to spend it on something exciting for you or your family. At such a stage, it is important that you resist the urge. Instead take the profit and convert it into a payment to pay off your loan debt. This will provide you with relief in your repayment. Additionally, you will be able to save more to pay off the loan faster.

Use the loan calculator to make a repayment plan
A strong repayment plan is one of the most important steps when it comes to repaying any loan debt. You must first plan a flexible baseline to your payments to know how much you will be able to pay per month within a given repayment tenure. You can do this by using the loan calculator.  You can use the different loan calculator in India for the appropriate loan you have applied for. You can even use a general loan calculator to calculate multiple loans.

Personal Loan: How to ensure an easy personal loan management

Financial requirements will come and go in your life. However, at times, it will exceed the amount you earn. At such a time, you can always turn to a personal loan to get the required funds you would want.

But like other loans, this loan must be carefully considered, as well as planned. An unplanned loan will lead to high loan rates, late repayments and eventually a high debt that you may not manage. The best way to manage your loan is to prearrange it. Here are a few factors you can consider when it comes to ensure an easy loan management.

Assess yourself: The first step you will need to take is self – assessment. A true assessment of your assets, liabilities and current financial responsibilities will provide you with the awareness that reflects your true affordability. Use the personal loan EMI calculator to get an idea of how much you can afford. If your current requirements exceed over 45% of your income after deductions, then you must rethink your loan application.

Have a thorough research on lenders:  By now you have come across various advertisements that indicate how easy it is to get a personal loan. However, in this case, it is more easier to get influenced that by getting a good personal loan. To avoid such a potential situation, you must compare the different lenders on various aggregator websites before you narrow down your choices. Use all possible mediums to compare their offerings before making your choice.

Check your CIBIL score: This is a step that most loan applicants tend to skip before the application process. Your CIBIL score is an important factor as lenders use it as a means to decide your credit worthiness. If your score is below 750, your application will either get rejected, or you may not get the loan rates that you want. It is ideal to check your score at least 6 months before your loan application so that you can get an idea whether to you need to improve your score or continue with your application.

Awareness and negotiation: By this stage, you would have adequately prepared for your application, while zeroing on your lender. Now is the time to approach your lender for the funds. You will be presented with the loan offer and terms and conditions. However, make sure that you are thoroughly ware of the important components such as the interest rates, payment options, various charges and penalties. If you must ask questions during the final negotiations, go ahead and do so. In case you have a high CIBIL score, you can even sweeten the deal by negotiating for better rates. You can even use the personal loan EMI calculator to get an idea of what loan rates you can afford and negotiate for.

Credit card: Benefits that will help save you cash

Many individuals are only aware of using the credit card, to borrow funds from the lender and repay it later. At the same time, you would be required to repay back the borrowed funds, along with an added interest rate.

However, while these credit cards can only be used to withdraw funds for any financial purpose, they can also be used to save cash in the long run. Given below are a few factors you can take into consideration to save your funds, if you are applying for any of credit cards in India:

Life insurance: When you apply for certain credit cards for certain usages say travelling, you are liable to get free insurance. Some of these cards also provide you with special coverage, such as hijacking. This form of life insurance works as a benefit on your credit card, providing you protection in case an unfortunate event occurs when you are travelling by air.

Protection against fraud: Online frauds have become one of the biggest and rising concerns of individuals who want to use credit cards in India. However, to compensate this risk, plenty of the credit card lenders are now providing protection against online frauds. These cards have different policies to safeguard your online transaction as long as you comply to their terms and conditions. Some cards will protect your from any fraudulent transactions even before you are aware of their occurrence or report the loss of a the card. However, you will be still required to take the necessary steps to report the loss or misuse of the card.

Low foreign transaction charges: Individuals have always assumed that using a credit card on an international trip is an expensive affair. However, certain credit cards do offer the best forex rate, if you only get a card with low foreign transaction charges. With the right rates, you can get a credit card charge of 3.5 % transaction, with premier credit card charges of 2% on foreign transactions. You can even use these premier cards to purchase other products from foreign websites to save funds in the long run.

Free access to lounges across selected airports: The airport lounges may seem like an expensive affair, when adding its charges to your credit card. With almost Rs. 1200 as a basic rate, you definitely would not want to add this charge on your card. But with the right credit card, you can easily get a free access to airport lounges, with an annual cost. As compared to daily expenditures, this will go a long way to reduce your expenditures.

Loan on credit card: Most of the credit card lenders are providing a loan against credit cards. However, the loan rates will depend on your credit worthiness based on your credit limit and your card usage. If you maintain a clean credit history with an excellent repayment history, you can easily get a loan rate that suits your need.

Are personal loans your choice for financial assistance?

When it comes to fulfilling any financial requirement, you can always opt for a loan. But in this case, it is crucial that you opt for the right choice of loan. For example, when opting for financial assistance for one’s business, the business loan will be the ideal choice. Similarly, you can also opt for a car loan to purchase a car or a bike loan for a bike.

But for other miscellaneous requirements, the personal loan is one choice, with the alternative being the loan against property. This personal loan in India has become one of the most popular choices for many individuals. But like any other loan, in order to get the best personal loan you will need to understand that risks that come with the loan. They include:

High interest rates: While the personal loans do have a lower interest rate as compared to banking cards, they still comprise of the highest interest rates amongst the loans. This is due to the fact that the loan comes under the category of unsecured loans. While those with an excellent credit score can get a loan with the lowest possible rate, those with an average score would still a rate over 11%. It would compound quickly and significantly add to the amount that would pay back.

Higher debt: Some individuals use this personal loan in India for purposes under good intentions, such as paying off a higher debt like a high interest credit card. However, in such instances, you rarely get to pay down the debt, and end up with a higher credit card balance, alongside a loan. You must opt for a loan, if you have a fixed concrete repayment plan where you can safely and comfortably make payments out of your debt.

Access your assets: Since personal loans come under the category of unsecured loans, many applicants believe that they can get away from repaying the loan. However, contrary to that belief, if there is a delay in repayment or even, your lender will look for other means to repay back your loan. This will include the income you have or the assets your have under your name. Unsecured loans may not be connected to your home, but you still need to guarantee that you will repay the debt personally.

Personal loans may provide a convenient and quick option for people anytime they need cash to handle any unexpected payments or emergencies. Without the need to pay any collateral, many borrowed would easily get the amount they require in a matter of hours or weeks. However, while it can be expedient for applicants who would want to use the money wisely, it can quickly turn into a dangerous option of high debt balances and crushing interest rates. Therefore, if you want best personal loan you need to be take out the absolute amount that will minimize your risk of falling into a debt trap.

Are you aware of these factors that can affect your loan application?

At a time when you have an urgent and large financial requirement, the loan will prove to be the ideal option to satisfy this requirement. No doubt, when you are applying for the loan, you will consider factors such as the principal amount, interest rate and the repayment tenure. There are other factors that you need to consider, such as the down payment, collateral, EMIs and even the eligibility criteria.

All these factors in total, will have an important role to play when determining the ideal loan that will suit your financial requirement. Given below are a few important factors you need to consider when applying for your loan:

Eligibility criteria:
While there are plenty of different types of loans available in the market, each of these loans come with different features, add – ons and risk levels. When applying for any of these loans, as a borrower, as a rule you will be required to repay the borrowed funds and interest, within the given period. But from a lender’s point of view, there will always be a risk of the borrower defaulting. In order to combat this risk and reduce the chances of defaulting occurring, lenders often include an eligibility criteria when applying for a loan. If you satisfy the eligibility criteria, you will be automatically eligible to get the best loan rates.

EMI calculator
When you apply for a loan, you focus on your financial requirement. However, in the end, you will still be required to repay back the borrowed funds along with the interest rate, within the given tenure, through EMI’s. But planning the right EMI is a crucial step, as it allows you to have sufficient funds for other daily expenditures or emergency financial requirements. By using the EMI calculator, you will be required to calculate the EMI that will help repay back the funds as well provide you with sufficient financial corpus for other requirements. 

Collateral
Unlike other loans, a borrower will need to provide a collateral when opting for a secured loan. Depending on the value of the collateral, other influential factors such as the interest rate and the principal amount will be determined. Normally, when you apply for a loan to purchase a particular entity, such as a home or a car, these objects themselves are used as collateral. However, you can add additional collateral to get a loan amount that will suit your financial needs.

Down payment
As a part of the secured loan application process, you will need to provide a small amount of the value of collateral being purchased. This amount can be anywhere between 20 to 30% of the loan amount. The higher the down payment, the more favorable will be the loan rates. You can even use the EMI calculator to calculate the EMI and the down payment you can afford.

While there are plenty of other factors that can affect your loan, these are the important ones you need to consider. You can always approach your lender to know more.