Interest is the cost you pay for borrowing money calculated on the principal balance. It is expressed as a percentage of the loan paid to the lender. The interest starts to accrue after the disbursement. The top Indian bank offers a 9.5% study loan interest rate and up to ₹75 lakhs to help aspirants study in universities across 25+ countries. But getting the loan at the best rate suited for you is essential. It eases the repayment and reduces the chances of defaults. You no longer have to compromise on your lifestyle to be able to pay the EMIs on time. So, here’s how to make your loan more economical with attractive rates.
Maintain a Good Credit Score
A credit score above 700 may give you a better chance at low interest rates. This is because the lender is assured of your creditworthiness. A high score proves that you have cleared your debts and dues in a timely manner every month. This means you have the capability and seriousness to pay the loan EMIs in future. So, banks are less likely to charge a higher interest rate to compensate for the default risk factor.
Keep your credit utilisation ratio within 30% and review your credit report frequently. Get the errors rectified on time, if any. These are great ways to maintain and improve a good credit score and get a bank education loan at a favourable rate.
Keep a check on your SMS and email inbox. The top banks often provide limited period offers and special deals to specific customers. All of them combined can ensure an affordable study loan interest rate and ensure an easy-breezy loan borrowing experience. For instance, IDFC First Bank introduced a ‘Khushiyan FIRST’ scheme in 2021 for personal loans. There was a 50% waiver on processing fees. Look for similar deals on interest rates on study loans, especially during the festive months.
Ensure a Good Income
Anyone drawing a significant salary is a good candidate in the lender’s eye. This is because banks usually keep the EMIs of the loan to about 45% -60% of your monthly income. You must be able to clear it on time to avoid penalties and similar complications. If you have a proper income, make the most of this opportunity to ensure a low-cost loan. If not, try to start a side hustle like private tuition, baking or being a virtual assistant online. Ensure a standard earning per month to be able to request a better education loan interest rate.
Compare the Lenders
Explore different banks and choose the one which offers the lowest rate. But make sure you are not compromising on other perks and benefits in the process. For instance, the top bank may levy an interest rate starting at 8% which comes across as quite high. Yet it is worth it since the fees and charges are minimal, comes with a flexible repayment option, offers customised solutions for students and ensures doorstep loan assistance. So, compare and contrast all the aspects instead of solely checking the rate to pick a loan worth your money.
Putting the above tips into action before getting an education loan can help you score the desired interest rate. Make sure to offer the right documents and tick off the eligibility as well to put forward your request confidently.