An educational or student loan is a loan or debt borrowed by many students to pursue their post-secondary studies or related higher studies expenses. However, planning and repaying the student loan can be challenging when debited for a significant amount.
The repayment plan starts even before purchasing an educational loan but planning after taking a loan can push the individual to more financial constraints.
The child education plan for students in UAE generally would offer between Dh10,000 and Dh150,000. These amounts are provided to the creditor depending on the eligibility of the parents or students. Similarly, the received amount should be paid back within 48 to 60 months.
In the UAE, Dh37,500 to Dh80,000 is spent on undergraduate programs per year only for tuition fees. Around Dh55,000 to Dh95,000 is paid for a post-graduate program, depending on the various institutions. So, it is essential to look into the key factors before choosing a student loan. Hence, let us walk through the different aspects of an educational loan.
Repayment option:
Before taking an educational loan, the foremost factor that one should consider is the repayment option. The repayment option in UAE can be done either while you are in school or after completing your post-graduation.
But you may wonder why you need to repay your loan faster? For this, let us consider the situation where you borrow Dh75,000 at a rate of 9% for five years. So, the interest that you have to pay will be Dh18,000. But if you choose the tenure for four years, your interest rate may reduce to Dh14,000, which means you can save up to Dh4000. So, it is ideal to choose the plan with a lesser plan term.
Similarly, the repayment options for faster educational loan clearance are to start to pay your interest early. You can begin to pay them while you are in the school itself. However, many lenders offer different repayment options depending on the graduate and post-graduate options. Hence, it is ideal to choose the best option which works for you.
Repayment terms:
Every loan has to be repaid within a specific duration. However, paying back the loan faster can save you less total cost but high monthly installments. But choosing the repayment terms for a longer or extended period will give you fewer monthly payments with a high overall cost.
One of the best ways to pay back your education loan is to choose the lesser repayment term. It has to be noted that EMI can be higher but don’t cut short the tenure so much you can pay your monthly payments.
Interest rate:
Thirdly, choose the interest rate for your educational loan wisely. There are two types of interest rates offered by the lenders, which are fixed and variable. The fixed interest rate stays constant throughout the life while the variable changes as per the market conditions.
You have to choose either the fixed or variable interest rates depending on your overall payment needs.
Hence, these are the factors to be considered before choosing an education loan. Thus, approach Life Insurance Bazaar to get the appropriate plan which meets all your requirements.
