Is Personal Loan an Ideal Option to Pay Off Your Education Loan?
An education loan is a credit facility that enables students to pursue further education without letting the financial aspect become a barrier in your academic dreams. After all, it pays your tuition fees for 3 or 4 years, depending on the course you have applied for.
But the main problem starts when one has to make the loan repayment because at the start of the career, the financial crisis is bound to happen. Moreover, some students start making the repayment of their education loans with the start of their professional career. And for some students paying for monthly discretionary expenditures along with loan EMIs (equated monthly installments) can be financially stressful. Usually, the monthly income is comparatively low in the beginning of the career which makes it difficult for students to manage their personal finances along with the repayment of the loan. Hence, the burden of loan repayment can be quite stressful when you have just started your professional career. But thankfully, you can get rid of such a stressful situation by taking a personal loan to pay off your education loan. Here’s how:
1. Decrement in Loan Repayment Amount
It is a well-known fact that many leading banks and financial institutions in the UAE offer personal loan at an attractive rate of interest which make it quite affordable in the comparison of paying off your education loan.
In addition to this, the tenure period of education loan is usually 15 to 20 years while the tenure period of personal loan is much shorter, going a maximum of 5 years. So, if you calculate the due amount in your respective education loan and equate it with the personal loan, there will be a significant difference in the loan repayment amount. All in all, you will pay less amount with a personal loan because of the low-interest rate and shorter tenure period.
2. Debt Consolidation
It is not a very unusual thing for a student to opt for more than one loan during their education especially if one has taken admission in any foreign university as the living cost is very high over there.
While they can opt for one loan to pay off the expenditures during the course, the other loan can be for the tuition fees for graduation or post-graduation. Well, making repayment of more than one loan will not only be tedious but also it can be very risky for your credit score as chances are high that you might miss paying the loan repayment on time which will eventually take a significant toll on your credit rating.
In such circumstances, you can avoid getting stuck in the multiple repayment cycles. You can just opt for a personal loan in order to consolidate all of these loans to make one fixed payment at a fixed rate of interest. Moreover, a single loan repayment also helps you to plan your monthly budget easily and more conveniently.
3. Free the Co-signers
In an education loan, there is a need of having a co-signer or guarantor for availing the loan. You, being just a student is not considered eligible to procure student loan on your own. It is generally one of the members of the family who shares the liability. However, once the student starts earning money and he/she has a steady source of income, they can release the co-signer by taking a personal loan. Yes, you read that right.
If you feel necessary to free the guarantor or co-signer of their debt burden, you can just opt for a personal loan in order to free the co-signer from all the obligations. Personal loans are unsecured in nature and you don’t need any guarantor or collateral to procure it.
The Bottom Line
As discussed above, there are many key factors for availing a personal loan in order to pay off your education loan. And all the aforementioned factors depicts that a personal loan for the repayment of student debt is indeed an ideal way to get rid of debt. Not only it will make it easier for you to make the loan repayment at a low-interest rate but also it reduces your financial burden.