The expense of financing your education can be high. In some cases, if the education is more advanced and exclusive, you may not even have the corpus. Student loans act as a buddy in these situations! A student loan can be obtained in India from the early stages of nursing school to higher degrees. They are adaptable and widely accessible. Yet, there are a number of fees associated with student loans that one should be aware of.
You should be aware of the implicit expenses associated with an education loan if you plan to apply for one soon. Below are the details of these extra costs:
- Processing fees for loans: The bank will charge a nominal fee to process your loan. This fee typically ranges from 1% to 2% of the sanctioned amount.
- Prepayment fees: Banks used to impose prepay fees if you wanted to pay off your student loan before the agreed-upon term. However, no banks would impose a pre-payment penalty in accordance with the RBI's notification.
- Late payment: Any sort of loan or credit card may charge you late payment fees, which are the most frequent. Additionally keep in mind that repeated late payments can lower your CIBIL score, increasing the likelihood that you may be denied credit in the future. So make sure to always make your EMI payment on time.
- Interest type conversion: You will be required to pay a small fee if you choose to switch from a fixed to a floating interest rate loan, or vice versa. Even though you are gaining money in this situation, the bank still loses money when a borrower's interest is changed.
- Loan cancellation: Banks will impose a minor cancellation fee that is calculated as a percentage of the total sanctioned amount if you decide to cancel your education loan for any reason. This fee should ideally be less than 2%, but any applicable tax will make things even worse.
