ypes of Educational Loans: Too many questions and too many answers.

Simplest way is to deal

is one question at a time. Decide which course you want to enroll for then apply to the institutes,
where you might need some funding . Here is where you can invest in a loan to further your
career.
Educational loans can be termed as a type of a monetary assistance such as funding , rewards,
financing and scholarships, which when borrowed in cash, have to be returned with some added
interest. It is always advisable to borrow according to the need. www.deal4loans.com provides
information on loans to the students and also to the parents.
The repayment periods for such loans mostly depend from lender to lender as well as on the
overall amount that the student goes for. Majority of the student loans have low rate of interests
(although rates are dynamic and change periodically) and the students dont have to make a
payment for the interest till a specific time period, although there are certain exemptions to this
rule too.
Various types of Student Loans in the market

are:

Undergraduate student loans

Graduate/ professional students Graduate/ professional student loans are suitable for
students going for higher or advanced degrees at countrywide colleges.
Career education loans Career education loans are for students attending the
undergraduate career oriented programs at countrywide colleges and technical and
trading schools.

Uses/Eligibility/Repayments:

Unsecured loan are used for education-related expenses (like Tuition, previous school
fee, living expenses, books and other expenses like transportation costs).
In case you are not currently earning while studying then you may need a suitable
cosigner, like a parent, friend or any relative or eligible adult.
Some loans offer the option of repayment post graduation and other flexible repayment
terms.
College parents loans These are also unsecured loans to cover education related
expenses like Tuition, previous school fee, living expenses, books and other expenses
like transportation costs. Parents can be a co-signer for loan if the student is working
as well as studying. Moreover no collateral is needed.
Loans for Parents These are unsecured loans to meet education related expenses
like childs tuition fee, uniforms, previous school fee, living expenses, books and other
expenses namely transportation costs. This loan is for parents and other adult relatives for
their children who are attending non-public, private, religious, military elementary and
secondary schools countrywide.

http://www.deal4loans.com/loans/education-loan/types-of-educational-loans/

Different types of Loans in India

Motivation for this post is one of my clients profile. Currently in India we have different types of loans
available ranging from personal loans to marriage loans. But when to use which loan is a smart way of
managing your money . Hence first let us look at different type of loans available.

1) Home Loan-Home loan as name suggest is the loan against buying property. Every individual
currently have dreams to have their own home. To make affordable best option is home loan.
Again their are sub-categories of home loans which are as below.

Home loan for residents

Loans for repairs and extension
Land purchase loan
Top-up loans
Loan for Earnest Money Deposits (EMD)
Reverse Mortgage Loans
Loan against property

You may also find different variant of home loans other than above. But I listed basic type of
home loans.
2) Personal Loan-It is the loan granted to fulfill your expenses which ranges from buying some
expensive electronic gadgets to booking your air tickets Yes people used to use this facility
for anything they can. They forget that usually rate of interest on such loans will be higher than
other types of loans. But still to have something in advance end up them to borrower of such type
of loans. Here we may find two types of loans

Secured Loans-Where you provide some collateral as a safety against loans.

Unsecured Loans-In such type of loans borrower collateral not required.

3) Car Loan or Vehicle Loan-This is usually used to meet your financial requirement when
one is planning to have his dream car or bike. It is usually a secured loan where collateral is your
vehicle and in case of default lender may recover it by taking back your vehicle. But some
lenders offer unsecured loans where your credit score matters more.
4) Education Loan-This is actually a handy tool for parents who not planned well for their kids
higher education. For a detailed view on this visit my earlier post Know all about Education
Loan features.
5) Gold Loan-This was one of the easiest and fastest way of loan when gold rate was at its
peak. But currently lot of lenders may not feel it better collateral due to falling in gold price,
especially gold loan companies. Recently RBI banned any gold loans against gold ETFs and gold
mutual funds. Eventhough it forms easiest and fastest way of getting loan but better to look for
risks involved in it, especially when you are dealing with NBFCs.

6) Loan against Insurance Policies-You can use your insurance investment as either collateral
or take loan from insurer itself if that policy is eligible for loan. Usually loans will be available
after 3 years of policy period. You will get loan easily on your policy from insurer. But other
method to take loan is to pledge your policy document with banks and take loan on that. LIC will
offer you loan on your policy with the interest rate of 10%, which I think competitive pricing
compare to other type of loans.
7) Loan against Bank FDs-This is one form of loan where your collateral is your bank FD
itself. Suppose you have bank FD of around Rs.10,00,000 then you are usually eligible to get
loan upto Rs.8,00,000. But interest rate will 1-2% higher than your FD rate. But still this form of
loan is also fastest and best way.
8) Loan from PPF or EPF-You can avail loan from PPF when one satisfies certain conditions.
For detailed view on the same visit my old post PPF-Loan and Withdrawal. You can avail loan
from EPF too. But you can avail loan from EPF only for special purposes like purchase of plot,
medical treatment, education or marriage of children, construction or purchase of house, repayment of home loan, renovation of home or pre-retirement. But all are not eligible to take
loans. Their are certain conditions like minimum years of completion, age or proof you need to
produce. So it seems bit lengthy procedure.
9) Loan against Shares or Mutual Funds-Few lenders offer loan against your investment value
of shares or mutual funds. But you will not get more value from this. Reason is, both the
investments (if mutual fund is of equity oriented) then fluctuation in values will be high. Hence
to protect their loan amount usually lenders offer less loan.
10) Loan from unrecognized sector-This is one of the easiest but costliest way of fulfilling
your financial dream. Usually interest rate will be in the range of 20%-30% but you can get it
immediately. Such type of loans are useful who are running out of time and not have any source
also to fund their financial requirements. But looking at this option is costly affair. Hence it is
highly advisable to avoid such funding.
Is their any thumb rule like how much percentage of income one should have loans? Yes to have
control over your financial life, it is always advisable to have EMI outgo not more than 60%, this
includes all loans one have taken. Otherwise you may be in financial mess. But taking all types
of loans for which you are eligible is also a not wise decision especially in case of personal
loans. People tend to attractive for easy offers and low EMIs but forget about the interest and
processing fee costs involved on loan. Hence understand your priorities before going for loan.
http://www.basunivesh.com/2013/05/29/different-types-of-loans-in-india-when-to-use-them/

Difference between Education Loan and

Personal Loan

There are different types of loans available. Among these the two most important loans are
personal loans and education or student loans. The post below jots down the differences between
personal & education loans.
First of all, the personal loans are multi purpose loans which imply that you can use it for any of
your needs. But in case of education loans, you can use the advance only for education purposes.
You have to state the name of the college or university to get approval for the loan.
Then, another important difference is that in case of personal loans, the repayment has to be
made from the next month. But in case of student loans, you will start to repay after you get a
job. Besides, one of the most significant differences is that the education loans, being
underwritten by government always features a lower rate of interest in comparison to personal
loans.
http://www.microfinancecongress.com/difference-between-education-loan-and-personal-loan/

Bank Loans in India

Due to the unequal distribution of wealth, India has arrived at a situation where the affluent class gets
richer and richer and the underprivileged becomes poorer. To bridge this financial gap and to satisfy
their day to day requirements, Bank plays a vital role by offering various loans to the finance seekers.
Hence every borrower should have prior knowledge on the various Bank Loans in India, which are
eligible for meeting their financial objectives.
- See more at: http://business.mapsofindia.com/banks-inindia/loans.html#sthash.QllYx3yV.KJqH9VEH.dpuf

Types of Bank Loans Offered by Banks in India

The various Loans offered by Banks in India are mentioned as under:

Personal Loans
Personal Bank Loans are the credits which a bank offers to its customer to meet his instant personal
requirements ranging from home renovation to purchasing of new laptop, a getaway with family or for
reimbursing the credit card liabilities, for buying a new car or for child's education, etc. Personal loan
simplifies the cash flow of the customer besides handling its immediate needs.

Personal Loans
Eligibility

For salaried Individuals

For Self-Employed Individuals

Minimum and
Maximum Age

21 years and 58 years respectively

25 years and 65 years respectively

Maximum Annual
Income

` 1,20,000

` 1,50,000

Minimum years in
service/ business

1 year

3 years

Loan Amount

` 50,000 to

` 15,00,000

----

` 50,000 to

` 15,00,000

Loan Tenure

1 years to 7 years

1 years to 7 years

Interest Rates

12-24%.

12-24%.

Mode of Repayment

Post-dated cheques or Standing orders Post-dated cheques or Standing orders

to debit from personal A/c
to debit from personal A/c

Home Loans
To buy a dream home is the dream of every person. Home Loan has helped in changing every Indian's
dream into reality. However, the every increasing property rates and escalating rates of interest
sometimes act as an obstacle. Therefore, before opting for a home loan it is advisable to check every
prospect of the product.
Home Loans
Eligibility

For salaried Individuals

For Self-Employed Individuals

Minimum and Maximum Age

21 years and 65 years

respectively

21 years and 70 years

respectively

Maximum Annual Income

` 1,00,000

` 1,50,000

Minimum years in service/

business

1 year

3 years

Loan Amount

` 2,00,000 to

` 2,00,00,000

----

` 2,00,000 to

` 2,00,00,000

Loan Tenure

5 years to 20 years

5 years to 20 years

Interest Rates

9-16%

9-16%

Tax Benefits on Home Loans: Any person who opts for home loan is entitled for tax benefits under
Income Tax Act, 1961 on principal and the interest amount in the form of deductions from the
chargeable earnings.
Bank Loans against Property
Property Loan or Loan against property is a kind of loan which is allowed by the bank on the condition of
keeping the customer's current assets as a security with them. These loans are very useful when other
resources of financing get exhausted.
It is significant to recognize that a loan against property is not similar to mortgage. While loan against
property is obtained from the bank by allocating customer's current assets as a security against the
credit, a mortgage is an instrument for purchasing an asset. On the basis of the current market
situations, the paid up cost of the asset and other aspects, the cost of the credit against asset can range
anywhere from 40% to 60% of the asset costs.
Loans against Property
Eligibility

For salaried Individuals

For Self-Employed Individuals

Minimum and Maximum Age

21 years and 60 years

respectively

21 years and 65 years

respectively

Maximum Annual Income

` 1,20,000

` 1,50,000

Minimum years in service/

business

1 year

3 years

Loan Amount

` 2,00,000 to

` 1,50,00,000

----

` 2,00,000 to

` 1,50,00,000

Loan Tenure

1 years to 15 years

1 years to 15 years

Loan to cost ratio

60% of residential cost

50% of commercial cost

60% of residential cost

50% of commercial cost

Tax Rebate

NIL

NIL

Business Loans
Before starting a business , the entrepreneur should be mentally and financially prepared to encounter
the fiscal setbacks during the process. To bail the companies out from the fiscal crunch, several banks in
India offers business Loans both for meeting urgent official growth and expenses. Other details of
Business Loans offered by Banks in India are:
Business Loans
Car Loans
Every individual want to own a car. Hence, the need for car loans emerges at some point or the other.
While selecting a car loan it is always wise to scrutinize the various options accessible in the market
besides analyzing its fiscal suitability.
Car Loans
Eligibility

For salaried Individuals

For Self-Employed Individuals

Minimum and Maximum Age 21 years and 60 years respectively

21 years and 65 years respectively

Maximum Annual Income

` 60,000

` 1,00,000

Loan Amount

` 1,00,000 (new) and ` 50,000 (old) to ` 20,00,000

----

` 1,00,000 (new) and ` 50,000 (old) to ` 20,00,000

Loan Tenure

1 years to 7 years

1 years to 7 years

Loan to cost ratio

85-90% of car cost

85-90% of car cost

Education Loans
Education Loans offered by various banks in India provide much required assistance to fund your
child's education when all other resources of finance get exhausted. Education Loans are offered by
almost every Indian bank thus providing ample opportunity to students to undergo higher education
both in India and abroad.
Education Loans
Eligibility

For Students

Minimum and Maximum

Age

16 years and 26 years respectively

Expenses covered

course and examination fee, refundable deposits, procurement of books,

travel expenses

Loan Amount for studies in

India

Upto ` 10,00,000

Loan Amount for studies

abroad

Upto ` 20,00,000

Repayment Period

5-7 years

- See more at: http://business.mapsofindia.com/banks-in-india/loans.html#sthash.QllYx3yV.dpuf

http://business.mapsofindia.com/banks-in-india/loans.html

Education Loan: Advantages and Disadvantages

With the mounting fee structure of educational institutions it has become really difficult for students,
belonging to average pool of society, to enroll themselves for higher studies due to cash crunch.
However, if obstacle is cash, an education loan is at rescue.
Education loans are loans offered to students to enable them to meet the costs of a professional
program viz. MBA. The loans not only cover the cost of the tuition fee but also almost all the expenses
involved in the pursuit of higher education. Education loans are getting increasingly popular among
public due to extensive marketing of benefits of this loan by authorized financial bodies. Such popularity
of these loans is also an outcome of students expectations to fetch high salaries at the end of their
professional training and likely to be in a position to repay these loans comfortably over a period.
The image may seem rosy at the very onset; however, the stark realities may mar the impact. Student
loans undeniably have varied advantages, but in many cases, the borrowers may end up being caught in
a bigger trap than what they had imagined. This is because the advantages of loan are always
highlighted in a very large manner but the disadvantages are often swept under the carpet. Team
CoolAvenues attempts to delve a layer deeper and bring some advantages as well as disadvantages of
education loans to the table.
Advantages of education loan
A dignified education can change the entire life of a person, leading him towards a successful life and
financial independence. Education loan enables you to meet the financial demands of a reputed MBA
program or any such professional course. The best part of these loans is that once you complete your
objective and achieve financial freedom, you can pay back them easily. Hence, the commitment involved
with such loans is very reasonable and appealing.
Financial institutions have made an education loan an easygoing task for the applicants. One can apply
for the loan by visiting the bank in person or through website of the bank. Majority of the banks provide
online application forms and detailed relevant information for applicants convenience.
Student loans are great alternatives as compared to conventional loans. They not only offer lucrative
interest rates but also have easier terms and conditions. Majority of the nationalized banks generally do
not ask for any security and charge no margins for a loan amount up to Rs. 4 Lacs.
Another key benefit of these loans is the deferment of re-payments. The borrower is not required to
repay the loans while studying as the re-payment process commences after completion of the said
course and attaining a job within a stipulated span of time. Student loans also show considerable
flexibility towards loaner in terms of repayment schedule.
The best advantage of education loan is that it not only satisfies the financial need to proceed with
higher education but helps in saving income tax also while repayment. Tax benefits on education loan
end up reducing overall cost of the loan.

Disadvantages of education loan

Education loans are definitely a boon for students aspiring for higher studies and aid them financially
but in most cases, the choice is driven by the aggressive and forceful marketing strategies done by banks
offering these loans. More than aiding a student, the stake of the financial institutions lies in, increasing
the profitability of their business. They stand out as a prudent product for the banks to sell and achieve
margins.
Students get trapped in the web of unsuitable education loans due to lack of proper knowledge and
understanding about the loan procedures and banks terms and conditions. In many cases, bank
disclosures for securities (viz. mortgages, guarantee) are not adequate or presented in a very complex
manner for applicants to understand, given their limited understanding of credit market. Due to such
complexity, applicants are not fully acquainted with the schemes and risks involved in availing the credit.
Hence, when re-payment process starts, borrowers have to deal with unexpected problems which leave
them helpless.
Its very important for borrowers to analyze the long run suitability of the loan beforehand so that debt
does not lead to an unmanageable situation. In case a candidate is not able to repay the loan as per
schedule due to some unavoidable situations, he has to suffer great hassles owing to the banks
mounting pressure for repayments.
Majority of the banks are unable to provide proper assistance to the borrowers who are facing a tough
time during repayments. Loaners are not ensured any rights and remedies by the banks if caught in
unaffordable loans. Loans may go into default very soon after missed payment.
Generally in the beginning banks, do not inform adequately about workout and cancellation procedures
and later start putting late fee, and other charges for delayed payments, further increasing the overall
cost of loan. Although most of the banks try to co-operate and show considerable flexibility in terms of
payment schedule, they usually turn out to be inflexible in granting long- term repayment relief for
borrowers.
Undoubtedly, today, when higher education is costlier than ever, education loans are the most
welcomed antidote by aspiring candidates. Certainly, these loans are the best answer to financial
shortage for a successful career if chosen wisely; else, they become a burden and lead the borrower to a
disastrous situation.