Types of Loans for Students
There are primarily two types of education loans available for Indian students who wish to study abroad:
- Secured Education Loan: A secured education loan requires the borrower to pledge collateral such as property, fixed deposits, or insurance policies as security for the loan. This type of loan generally has a lower interest rate compared to an unsecured loan, and the loan amount offered depends on the value of the collateral.
- Unsecured Education Loan: An unsecured education loan is not backed by any collateral and is offered based on the borrower’s creditworthiness, academic record, and future earning potential. This type of loan generally has a higher interest rate compared to a secured loan, and the loan amount offered is usually lower than a secured loan.
Apart from these two types, there are also specific loans available for certain types of courses, such as MBA loans, engineering loans, and medical loans. Some banks also offer loans with special features such as moratorium period, where the borrower can start repayment after a certain period of time, and flexible repayment options.
It’s important to research and compare different loan options and terms, and choose the one that best suits your needs and financial situation.
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