sprüche und wünsche

Education Loan or Personal Loan. Which is better?

One of the biggest obstacles blocking students from accomplishing their goals today is the escalating cost of higher education. You can finish your higher education without allowing a lack of money to stop you by using both personal loans and school loans. However, while choosing the funding source, borrowers usually struggle to decide between personal and education loans. Let’s carefully explore both personal loan and education loan choices to see which is ideal for you based  on your requirements:

Sum borrowed

Lenders base their decision to approve a loan for education on the institution, the cost of tuition, and other course-related expenses. In India, loans are available up to Rs 80 lakh, whereas loans for education abroad are available up to Rs 2 crore. Contrarily, the maximum amount for personal loans is frequently Rs 40 lakh. You can utilise a personal loan to pay for additional expenses that your school loan’s lender might not be able to cover, such as moving costs, the cost of outside coaching, etc. because a personal loan has no constraints on its intended use.

Interest rate

The annual interest rates on student loans range from 7.95% to 15.2%, which are comparatively low. A few lenders give an additional 0.5% discount to female students. If students start their loan payments during the moratorium period, they may also be eligible for an additional 1% reduction. The interest expenses associated with a personal loan, however, could be higher and range from 9.5% to 28% each year. Visit a financial online marketplace to compare the interest rates offered for the two sorts of loans. Choose the alternative that best satisfies your demands.

Interdiction period

In India, education loans have a moratorium period of up to 12 months from the day when the course is completed. In contrast to personal loans, which start making payments on the debt right away via EMI. This gives borrowers enough time to find employment and create a reliable income so they can repay the loan.

The moratorium period may be extended further, subject to lender approval, in specific circumstances, such as when a student plans to start a business after graduation or in times of unemployment or health issues.


Loan duration

As the tenure time increases, the EMI amount lowers and vice versa. An education loan has a maximum 15-year loan duration. Lower monthly payments are frequently obtained by combining a long-term with a low-interest rate. On the other hand, because of the shorter loan period and relatively higher interest rates, personal loans with a maximum loan length of 5 years have higher EMIs.


Available tax exemptions

For up to 8 consecutive years commencing in the year that loan repayment. Student loans are eligible for tax benefits under section 80E.  You should be aware that the principal component is not tax deductible. Tax benefits are not available to personal loan borrowers.


Collateral or Guarantor

For example, a co-applicant for an education loan is normally expected to be a parent or spouse. A personal loan can be obtained without a guarantor or any type of security as collateral.


Education loan is a better choice for borrowers than personal loans because of their lower interest rates, longer terms, moratorium periods, and tax advantages. If you are unable to obtain an education loan due to a lack of a co-borrower, guarantor, and adequate collateral. Or if need a larger loan amount than you are qualified for, think about taking out a personal loan.

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