How to Repay Your Education Loan Faster in India

How to Repay Your Education Loan Faster in India: You can make use of the following tips to make sure you are able to repay your education loan as soon as possible.

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Introduction

In India, there are many options for taking out loans for higher education. You can take out a loan from the government, a bank, or a private lender. The interest rate on these loans varies, as does the repayment period. You may be given the option to repay your loan in installments or in a lump sum. The repayment period usually ranges from 5 to 7 years.

The best way to repay your education loan is to start making payments as soon as possible. By doing so, you will reduce the amount of interest that accrues on your loan and save money in the long run. You should also try to make payments that are larger than the minimum payment due. This will help you to repay your loan more quickly.

If you are having difficulty making your loan payments, you should contact your lender as soon as possible to discuss your options. They may be able to provide you with a forbearance or deferment, which will allow you to temporarily stop making payments on your loan. This can be helpful if you are experiencing financial difficulties or if you need more time to complete your degree program.

Making payments on time and in full is the best way to ensure that you will be able to repay your education loan quickly and without any problems. If you are having trouble making payments, be sure to contact your lender so that they can help you find a solution that works for both of you.

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Why You Should Repay Your Loan Faster

In India, education loans are a popular way to finance higher education. Although they offer many benefits, one of the drawbacks of education loans is the long repayment period. This can cause a lot of financial stress for the borrower.

The Interest Rates Are High

In India, the interest rates on education loans can be quite high. For instance, SBI charges an interest rate of 10.35% for education loans of up to Rs 7.5 lakhs. And for an amount greater than Rs 7.5 lakhs, the interest rate is 11.85%.

You Can Get Penalized for Late Payments

If you’re wondering why you should repay your education loan faster in India, one of the biggest reasons is that you can get penalized for late payments. According to the Reserve Bank of India (RBI), if you delay your education loan repayment by more than 90 days, you will be classified as a “defaulter”. This can have a serious impact on your credit score and make it difficult to get future loans.

In addition, late payments on education loans are subject to a penal rate of interest which is usually 2% higher than the standard rate of interest. This means that if you have an education loan with an interest rate of 12%, you will be charged 14% interest if you delay your repayments by more than 90 days.

It’s a Burden on Your Monthly Expenses

It’s a burden on your monthly expenses: The longer you take to repay your education loan, the more interest you will have to pay. This will increase your monthly EMI outgo and put a strain on your finances.

How to Repay Your Loan Faster

In India, the interest rate on education loans ranges from 7.5% to 12.75%. The repayment tenure is usually 5 to 7 years. You can repay your education loan faster by making higher EMIs or by prepaying the loan. Let’s explore these methods in detail.

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Make Bi-Weekly or Monthly Payments

If you make bi-weekly payments on your student loan, you will end up making one extra payment per year. This can help you repay your loan faster, and save you money on interest in the long run. You can also make monthly payments that are slightly higher than your regular monthly payment. This will also help you repay your loan faster, and save you money on interest.

Make Extra Payments When You Can

One way to repay your education loan faster is by making extra payments when you can. Whenever you get a bonus at work or some extra money from another source, apply it towards your outstanding loan amount. Even if you are able to pay off a small amount, it will reduce the overall interest that you have to pay and help you get rid of the loan burden faster.

Another way to repay your education loan faster is by increasing the EMI amount every year, preferably by 10%. This will help you get rid of the loan sooner as well as reduce the overall interest outgo.

You can also consider making lump sum payments towards your outstanding loan amount from time to time. This will help inreducing both, the principal outstanding as well as the interest payments.

Refinance Your Loan

Refinancing your education loan is one of the best ways to reduce your overall interest burden and repay your loan faster. By refinancing, you can get a lower interest rate on your loan, which will help you save money in the long run. You can also choose to extend the tenure of your loan, which will help you lower your monthly EMIs.

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There are many companies that offer student loan refinance in India. Some of the popular companies are Fullerton India, Bajaj Finserv, HDFC Credila, Avanse Financial Services, InCred, etc. You can compare the interest rates and other features of these lenders before applying for a refinance loan.

You can also opt for a balance transfer of your education loan. This will help you transfer the outstanding balance of your current education loan to a new lender at a lower interest rate. This will help you save money on interest and repay your loan faster.

Conclusion

Education loans in India can be availed for a variety of purposes, including tuition fees, living expenses, travel expenses, etc. Students typically have a grace period of 1-2 years after completing their studies before they are required to start repaying the loan.

There are various repayment options available for education loans in India, and the best option for you will depend on your individual circumstances. You can make lump sum payments, prepay the loan in full, or opt for a partial pre-payment. You can also choose to extend the repayment period or switch to a different repayment plan if you are facing financial difficulties.

Whatever repayment option you choose, it is important to make regular and timely repayments to avoid accumulating interest and charges on your loan. By repaying your education loan faster, you can save money in the long run and get rid of your debt sooner.

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