Imagine that you have got through a great college and it will secure your future. But the tuition fee is sky-high. Knowing well that your father is already overburdened at work, you do not want to ask so much from his savings as you don’t want him to tap into his retirement fund. So, what do you do? You decide to take up a loan that would finance your course. Now, here is the catch—should you go for a student loan or a personal loan?
Can Personal Loans be used for student debt?
If you are wondering whether you can use personal loan for paying off your tuition fee, get acquainted with what this loan is meant for in the first place. Personal loans are unsecured loans that you can use whichever way you like—for paying off student debt, renovation of house, for funding a holiday or helping consolidate your credit card debt.
Why use personal loan instead?
When you are looking for a quick loan repayment, turn to personal loan instead of student loan. The perks of personal loan in repaying your student loan are as follows:
- Pay less
Some of the financial institutions have low personal loan interest rates. This reduces the burden ofrepaying the loan to a large extent. It is more economical when compared to a student loan.
- Shorter payoff time
The payoff tenor of personal loan is a quarter of what it is in case of a student loan (15-20 years). This, along with lower rate of interest, lessens the interest burden.
- Personal loan for debt consolidation
In case you opt for more than one student loan—one for your graduation and another for your masters—consolidate all the loans into one by availing a personal loan. Also, by doing so you are paying off all the student debt at a relatively fixed interest rate. Thus, you call it a debt consolidation loan.
- Release your co-signers
No one else stands responsible for your debt. This is how your personal loan works—even when you take it up for financing your education. Personal loan lets you release your co-signers. You no longer require a guarantor for your debt. This is not the case in student’s loan. There, you need a co-signer.
- Dischargeable in bankruptcy
Your personal loan is dischargeable in bankruptcy. You do not keep anything as a mortgage. This gives it an edge over a student loan.
- Quick approval
You usually get a personal loan approved very quickly. For instance, Bajaj Finserv’s personal loan approved within 24 hours.
Personal Loan Eligibility
You are eligible for a personal loan if you are:
- Within 23 to 58 years
- An Indian citizen
- A salaried individual, working in an MNC, public or private organisation
The Long and Short of it
Let not the burden of paying a loan be so overbearing that you cease to enjoy your career in its prime. A personal loan relieves you of this burden by offering a low rate of interest and letting you pay off within a shorter period of time.