Education Loan

education-loan

Singapore is one of the expensive countries in the world where education cost has soared up to a great extent. This has become a nightmare for some of the Singaporeans / Permanent Residents here.

Consequently, they can take up help to cover this huge amount of expenses. This help comes in the form of education loan. In the below content, we are going to explain the key points of an education loan so that students can carry out their schooling smoothly.

What is an Education Loan?

An education loan is aimed at helping the students to pay for tuition, books, and living costs. Typically, an education loan differs from other types of loan. The reason for this is that an education loan consists of a higher interest rate and deferred repayment schedule.

Who should Apply for an Education Loan?

An education loan is suitable for people of all income groups. Even the financially stable families may apply for this loan as the education cost in Singapore is rising rapidly, year on year.

Things to Consider before taking an Education Loan

Before taking an education loan, it will better if you consider the following things –

  • To take this loan, the applicant must be 21 years or older. Besides, there is a minimum income requirement of $12,000 to $30,000 and this amount depends on the bank or moneylenders in Singapore. Some banks require a lesser income requirement whereas some will want a higher amount. However, if your parents sponsor, you might get the loan easily.
  • Interest rate of an education loan is divided into two categories. They are –
    A) Flat Rate: In a flat rate loan, the bank or moneylender will calculate the full sum of interest payment at the beginning of the loan and incorporate it into your monthly repayment.
    B) Monthly Rest Rate: In this type of loan, the interest varies from month to month and the calculated amount is added on to the monthly fixed principal amount hence deriving at a different repayment amount every month.
  • An education loan includes a wide variety of loan tenure. Some education loans will have loan tenure of only one year whereas some will have a ten-year term.
  • Surprisingly, an education loan includes a prepayment penalty. You will be subjected to this penalty only if you try to pay off the loan earlier than your contracted loan tenure. Usually, people want to pay back the loan early to save money on interest payments. For this reason, the banks or moneylenders avoid this situation by including a prepayment clause in the loan agreement.
  • A few fees are included in an education loan agreement. One of it will be the payment of 2% processing fee on the loan amount, which will be deducted from the first disbursement. Also, in case you back out after signing the letter of offer, you will need to pay a cancellation fee. All these fees differ depending on the lender.

All in all, the education loan is useful for the students because it helps them to realize their dreams on furthering their studies. Flexibilities in these loans will allow you to deal with the financial burden of education costs!

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