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Education Loan at Zero Interest Rate - Is it Possible?
Education is the base for any individual. It is that gift that ensures a person grows personally and professionally. One of the primary requirements for anyone to pursue education is money.
With the changing times, education loans have emerged as a support for many aspiring students who had to give up on their dreams due to finances. However, it comes with its own cost, in the form of loan interest. It thus becomes a normal question to ask, if I can get an education loan on zero interest.
Can I Get an Education Loan without Interest?
Unfortunately, obtaining an education loan without interest is not possible.
For those seeking zero-interest loans for students, it's important to understand that student loans operate like other credit products. Therefore, banks or lenders will apply interest charges as usual.
However, education loans offer several advantages, such as a moratorium period that extends until the completion of studies. During this period, only simple interest is levied on the loan amount. You are required to pay only the interest during this period.
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Which Bank Gives Interest Free Education Loan?
In India, most banks and NBFCs offer a variety of education loan schemes. You might be searching for an education loan at 0 interest, but no bank in India offers interest free education loans.
However, the top banks and NBFCs you can consider for taking an education loan are -
Apart from these, there are NBFCs like Propelld that provide easy education loans with minimum documentation and superfast processing. These new age lenders understand the student requirements, their aspirations and are aligned with them, thus providing hassle free education loans that cover 100% fees.
Why are Education Loans at Zero Interest Not Available?
While the idea of interest-free education loans seems appealing for students, it poses challenges for the other stakeholders. Finding a balance between affordability for students and sustainability for lenders is a crucial factor in shaping education financing products.
Lets see some of the major reasons why a zero interest education loan might not be a possibility:
Financial Liability on Lenders
Offering education loans at 0% interest would impose a significant financial burden on lending institutions. These loans incur operating costs, including administrative expenses, loan processing, and overheads. Without interest, lenders would struggle to cover these costs, potentially leading to losses or reduced availability of funds for other borrowers.
Financially Unstable for the Government
Government entities often subsidize education loans to make them affordable for students. However, providing loans at 0% interest would strain government finances, especially in countries with large student populations. It would require allocating substantial funds from the budget, impacting other responsibilities of the government.
Impact on Credit History
Education loans contribute to building credit history for borrowers. Most of these borrowers are first time borrowers as students. By repaying loans with interest, students demonstrate financial responsibility, which positively affects their credit scores.
Offering loans at 0% interest could diminish the incentive for timely repayments, potentially impacting credit histories negatively. This may hinder students' ability to access credit in the future for other purposes, such as buying a home or starting a business.
Education Loan at Low Interest in India
As we already discussed, in India, no loan comes without an interest.
However, usually, there is a moratorium period where the borrower does not have to pay any EMI. Once the period is complete, the person has to start making the payments.
It is challenging to find an education loan without interest in India, but there are several schemes and initiatives that help students get financial benefits.
There are scholarships and government schemes to reduce the financial burden of aspiring students.
Apart from these, financial institutes, non-profit organizations, and educational institutes also offer initiatives to promote affordable education.
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Advantages of Interest Free Loans in India
These low interest loans come with multiple benefits and assist youths in higher and technical education. The following are the benefits of an education loan at low interest:
- It reduces the financial burden and reduces the overall cost of the loan. It becomes more manageable for a student and offers the borrower ease.
- With lower monthly repayments, students handle their financial obligations better. It also gives them affordable responsibilities, unlike loans with interest.
- It contributes to inclusivity by offering equal opportunities for students with diverse backgrounds. It bridges the gap between different sects of the society.
- It pushes and encourages students to go for education without fearing debt accumulation. It lets them pick a professional path they wish to choose.
- Government initiatives, schemes, banks with low interest education loans, and other institutes send a positive message. They emphasize the value of education.
- They contribute to youth with better economic outcomes. It also showcases a commitment towards investing in the country's youth.
Eligibility for Interest Free Loans
Before applying for any education loan, you must learn about the eligibility and its needs.
Any citizen who is a citizen of India is eligible to apply for an education loan. Usually, the age criteria stand between 18 to 30-35 years.
The applicant must secure admission to recognized institutes in India and must provide the necessary documents for the interest free education loan loan processing.
The eligibility and needs also change in different institutes, schemes, and initiatives. It varies as per the norms and needs of the provider. Having an insight about it and making a checklist ensures smoother processing.
How to Get an Education Loan at Zero Interest in India?
Now that we know that a 0% interest rate education loan is not possible, let’s see how we can get a cost efficient education loan with a low interest rate.
- Credit Score: A high credit score is essential when you look for an education loan. It speaks of your creditworthiness and helps you have an upper hand. Often, it also helps you secure low interest rates on loans.
- Secured Loans: Go for reputed institutes and opt for a secured education loan. It offers security for both parties and contributes to cost-effectiveness.
- Educational Institutes: Get through and secure a position in reputed and renowned institutions. It gives you leverage and offers you better loan options and opportunities.
- Subsidies and Schemes: The government and institutions always design schemes, scholarships and initiatives for girl students and various other categories of students. Remain vigilant about these schemes, and you will bag the best.
- Plan Well: Paying a higher margin while picking up a loan is safer. It reduces the doubts and gives a better mindmap of your loan payment with time.
- Prioritize Loan Payment: Once the payment period starts, always keep your loan payment first. Education loans require timely EMI payment to exempt you from extra interest amounts.
- Avoid Taking Moratorium: Although most lenders provide a moratorium period that is EMI holiday, we would suggest paying the loan as much as possible during that time also. This would avoid the accumulation of interest.
- Pay Extra Whenever Possible: Save and grab every opportunity to pay extra. Thus reducing the tenure and interest accumulation on your borrowed amount.
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How to Repay Your Education Loan
It's not about how to pay your loan, it's how to pay your loan to make it work like a zero interest education loan. If not exactly, we can follow strategies that reduce the interest accumulation on our loan amount.
Understanding loan terms
Always be clear about what your loan terms and conditions say. Read the agreement, including the interest, repayment period, moratorium, etc. It is best to ask the lender if you do not understand.
Make a budget
Even if you have a moratorium period, creating a budget helps. It helps you rule out future liabilities by creating a habit and helping you create an expense pattern. It makes you efficient with money.
Prioritize loan payment
Once the payment period starts, always keep your loan payment first. Education loan without interest require timely EMI payment to exempt you from extra interest amounts.
Emergency cash fund
When you create a budget, always keep some money handy as a crisis fund. It helps you have a saving and protects you if something unforeseen and unfortunate happens. Reserves are a must-have!
Explore different plans
Always ask your lender about different repayment options when looking for an education loan. It helps you have a better perspective of the plans available and lets you choose among them.
Automate payments
It is one of the best ways and answers when seeking solutions on how to pay education loan without interest. It lets your bank make automated deductions on the EMI amount and keeps you safe from interest.
Pay higher when you can
Once you start to pay off your loan, grab every chance to pay higher than the EMI. It helps you get off the loan as soon as possible. It is best to pay it off when you are capable of it.
Communicate
If you are having trouble with the payment, do not wait. Let the lender know about the issues you are going through. With a good history of EMI payment, some may offer temporary forbearance options.
Refinance your loan
Recheck on the possibility of refinancing your interest free education loan at lower rates. Look for the opportunity, as it can make your monthly payments more manageable and smooth.
Check for employer assistance
Several employers help you ward off your education loan. Such programs come to your assistance in loan repayment. It keeps your mind off debt and functions more efficiently.
Check for tax deductions
Although there is no tax deduction on the principal amount, if you are paying off the EMI of the loan on time, you can expect a deduction of the interest. It, therefore, lets you only pay the amount you borrow.
Avoid defaults
The best advice on how to pay education loan without interest comes with always paying the EMIs on time. Defaulting can have severe consequences, including credit score damage.
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To make your education journey easier with no financial hindrances, NBFCs like Propelld provide easy education loans.
Propelld is a leading education financing company in India. We understand the challenges students face in securing funding for their education, and we're here to bridge the gap.
What Sets Propelld Apart?
No Collateral Loans
We believe education is an investment in your future, not a burden. That's why we offer loans without requiring any collateral.
No Co Applicant Required
Get your education financed without depending on any co applicant.
Faster Approvals
Get approved for a loan in as little as 7 days, almost 10 times faster than banks.
Minimal documentation
Our hassle-free process requires minimum documentation, saving you time and effort.
Complete Online Process
Apply for and manage your loan entirely online, from the comfort of your home.
Tailored Loan Options
We offer flexible loan amounts and repayment plans to suit your individual needs.
Wide Range of Education Financing
We support students across various education segments, from school and college to coaching and skill-up courses.
Don't let financial limitations hold you back from achieving your educational goals. Visit Propelld today to explore our loan options and take the first step towards your brighter future!
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