â€śWell begun is half done,â€ť goes the old saying in English. For most people student loan is the beginning of a credit profile. If it is well begun, then it opens a world of opportunities. If it is not handled well, it may well be the path to a downturn.
Tread carefully while you consider a student loan. Following are the important things to keep in mind:
Look for the cheapest loan: See which bank can offer you the lowest interest rate. Now just donâ€™t get your interest rate to decide for you, also check at the end of loan tenure how much will you be paying totally. That should be your deciding factor. Many times banks will have some hidden cost. Calculating your outgo is the best way to understand how much you are paying and for what?
Compare terms and conditions: Understand every term and condition mentioned in your loan document before you sign up. Compare it with all the banks that is offering a loan to you. Question your lender about all the charges that they have mentioned in your loan agreement. See if it can be avoided.
Have a repayment plan: When you are studying, you obviously canâ€™t repay. But many smart students make savings enough to let them sail through their student days with basic EMI to be paid during student days. Try to take up part time or freelance jobs while studying. That could help in repayment to some extent. Have a target to start repayment towards your student loan.
Foreclosure: Keep saving as you earn and repay your loan. While you save keep foreclosure of your student loan in mind. Clear your dues as soon as possible. Donâ€™t you want to buy a home and car as soon as possible? If yes, clear your student loan dues as soon possible. This gives you a lot of room for credit and would have built a long credit history and makes you â€śloan attractive.â€ť
The author is Co-Founder & Director, CreditVidya
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