Educational Loan Or Loan Against Property

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Which Is Better Educational Loan Or Loan
Against Property?
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• 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.

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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.

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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.

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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.

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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!

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