TomorrowMakers

It is advisable to pay off your education loan before it starts affecting your other financial goals.

Tips for a girl who wishes to repay her education loan

You’re no doubt aware that the cost of education in India is skyrocketing. One of the best ways to bear this cost is to apply for an education loan. However, after you’ve availed of an education loan, how do you repay it sooner than later?

Well, worrying isn’t going to help. Here are some tips to help you pay off your education loan faster and become debt-free:

1. Pay your EMIs on time

Sometimes making that monthly payment becomes difficult. You might incur a major expense such as a large utility bill or repair bill. However, missing an EMI not only attracts interest but also spoils your credit history. A bad credit history will force you to pay higher interest rates later in life and can even affect your chances of getting loans in future.

2. Consider working part-time

You can begin paying off your loan while you’re still a student. It is not advisable to wait until you graduate and get your dream job. A part-time job will not only help you get some work experience that will look good on your CV, it can also help generate some savings. You can use this later to pay some part of your EMIs.

3. Don’t wait for your dream job 

So, there’s an opening for a great job and you’re doing your best – applying early and getting references – to get a foot in the door. However, this might take some time and your loan EMIs will keep on piling up. So don’t wait for the perfect job to materialise. This can be demoralising and lead to problems with your education loan. Take the closest offer you get to your ideal job, and start working.

 4. Cut down on unnecessary expenditure

This may sound impossibly difficult. However, if you really think about it, a lot of your spending goes into superfluous things. For instance, renting rather than buying that fabulous party dress can save you a lot of money. So, start cutting down on these non-essential expenses today. Your sacrifices today will help you lead a worry-free life tomorrow.

5. Make a realistic repayment plan

Planning your finances is key to not having to worry about them. You know exactly how much money goes into fixed costs such as rent and EMIs. You should put aside this amount before allocating money for other expenses – eating out, groceries, phone bills etc.

6. Use the deferral period

If your loan is only payable after graduation or after a few years from the date you took it, make full use of the intervening period. You can accumulate savings and invest them to take care of the EMIs. These can not only act as your emergency fund but may also generate returns that can take care of the interest portion of the loan.

7. Keep a check on the interest rates

If interest rates are falling you may be able to ‘refinance’ your loan. In other words, you may be able to get a cheaper loan from another bank and pay off your current loan. However, before you go for this option, check if there are any pre-payment charges – this could affect the net benefit of refinancing. Many banks levy a pre-payment charge if you try to close a loan before its scheduled tenure.

Conclusion:

Being in debt with an education loan can reduce your chances of getting other loans in future – say a car loan or home loan. So think strategically and pay off your education loan as soon as possible.

You’re no doubt aware that the cost of education in India is skyrocketing. One of the best ways to bear this cost is to apply for an education loan. However, after you’ve availed of an education loan, how do you repay it sooner than later?

Well, worrying isn’t going to help. Here are some tips to help you pay off your education loan faster and become debt-free:

1. Pay your EMIs on time

Sometimes making that monthly payment becomes difficult. You might incur a major expense such as a large utility bill or repair bill. However, missing an EMI not only attracts interest but also spoils your credit history. A bad credit history will force you to pay higher interest rates later in life and can even affect your chances of getting loans in future.

2. Consider working part-time

You can begin paying off your loan while you’re still a student. It is not advisable to wait until you graduate and get your dream job. A part-time job will not only help you get some work experience that will look good on your CV, it can also help generate some savings. You can use this later to pay some part of your EMIs.

3. Don’t wait for your dream job 

So, there’s an opening for a great job and you’re doing your best – applying early and getting references – to get a foot in the door. However, this might take some time and your loan EMIs will keep on piling up. So don’t wait for the perfect job to materialise. This can be demoralising and lead to problems with your education loan. Take the closest offer you get to your ideal job, and start working.

 4. Cut down on unnecessary expenditure

This may sound impossibly difficult. However, if you really think about it, a lot of your spending goes into superfluous things. For instance, renting rather than buying that fabulous party dress can save you a lot of money. So, start cutting down on these non-essential expenses today. Your sacrifices today will help you lead a worry-free life tomorrow.

5. Make a realistic repayment plan

Planning your finances is key to not having to worry about them. You know exactly how much money goes into fixed costs such as rent and EMIs. You should put aside this amount before allocating money for other expenses – eating out, groceries, phone bills etc.

6. Use the deferral period

If your loan is only payable after graduation or after a few years from the date you took it, make full use of the intervening period. You can accumulate savings and invest them to take care of the EMIs. These can not only act as your emergency fund but may also generate returns that can take care of the interest portion of the loan.

7. Keep a check on the interest rates

If interest rates are falling you may be able to ‘refinance’ your loan. In other words, you may be able to get a cheaper loan from another bank and pay off your current loan. However, before you go for this option, check if there are any pre-payment charges – this could affect the net benefit of refinancing. Many banks levy a pre-payment charge if you try to close a loan before its scheduled tenure.

Conclusion:

Being in debt with an education loan can reduce your chances of getting other loans in future – say a car loan or home loan. So think strategically and pay off your education loan as soon as possible.