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This article will compare both educational loan & loan against property options to help you choose the right one for your higher studies in India or overseas.<br>
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Which Is Better – Educational Loan Or Loan Against Property?
It is becoming increasingly expensive to pursue your further education, both in India and abroad. So much so that, many aspirants need to take out loans to cover their education-related expenses. In this regard, there are 2 common options that you could opt for. They are – an educational loan and a loan against property. Some students often find themselves confused between these 2 finance solutions. Keeping this in mind, the following article will compare both options to help you choose the right one for your needs.
Amount of financing One of the first aspects we will compare these two loan is the amount of financing they offer. You want to a loan that will cover all your costs without any hiccups. Keeping this in mind, are of the opinion that educational loans are a better suited option. This is because most lenders, especially non-banking companies, will not have any limit on the loan amount. They will cover all your expenses, not matter how high they are, as long as you show merit as a student and borrower.On the other hand, with a loan against property, the loan amount provided is generally basis the value of your property. Therefore, the lower the property value, the lower the extent of finance.
Collateral To get a loan against property, you need to have a plot of land, a residential property or a commercial property to offer-up. However, this can be a roadblock for those who live on rent and do not have any property to back the loan.With an educational loan, you are rarely required to offer any collateral. Most lenders offer collateral-free finance solutions, ensuring that borrowers without land or other assets can also access the finances they need.
Tax benefits Education loan tax benefits can help you save a lot of money. You can reduce your taxable income by a sum equal to the total interest you pay in a year. The best part is that there is no limit on the deductions – whatever you pay as annual interest can be used to claim equal deductions on your taxable income. This can help you save a significant amount of money over the tenure of your loan. However, there are no such tax benefits with a loan against property. This is one area where the education loan has a huge edge over the loan against property.
Interest rates A loan against property is usually made available to you at rates ranging from 8 to 13 percent. On the other hand, with an educational loan, you can expect rates ranging from 10 to 16 percent. So this regard, a loan against property can be more affordable; the simple reason being because it is a secured loan. If you offer collateral to secure your education loan, you should be able to lower your interest rates as well. Hope this article has been helpful for you. Good luck and all the best, study hard!
