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Worried about repaying EMIs for your student loan? Refinance your education loan at a lower interest rate. Read about it in detail in this blog!
Updated on: 10 Oct 2023 | Reviewed By: ankit-mehra | 6.29K | 6 min read
Taking an education loan solves a major financing problem that many students face. While a loan approval eases the tension and the stress of paying large sums of money, the repayment of the loan is the real challenge that often baffles students. Defaulting on loans is not an option as it negatively impacts the credit score. However, an easy way to reduce the financial; burden is to restructure the loan. This can be done by refinancing the education loan, that is paying the existing loan with a new loan.
Check Your Education Loan Eligibility
In simple terms, student loan refinancing is taking a new loan at a new interest rate to pay off the previous education loan. The aim of refinancing is to get a better rate of interest and different terms and conditions.
For Example, you took an education loan from a private lender in a hurry at a higher interest rate and unfavorable terms and conditions at the time of admission. To reduce the financial burden, and get a lower interest rate, you can switch to a lender that is offering better terms and conditions. Most Indian lenders, including public banks, private banks, and Non-Banking Finance Companies (NBFCs) offer education loan refinancing options.
Most students are not aware that interest rates in refinanced education loans are lower. Let’s take an example -
You took an education loan of INR 20 lakhs at 12%, which has to be paid in 9 years (including 2 years of course of study). The interest that you will pay is INR 19,68,553.
Now, if you refinance this education loan from a lender offering you a 10% interest rate upon graduation (ie, 7 years), the interest payable will effectively fall down to INR 11,39,007.
The difference is a massive INR 8,29,546.
Apart from a lower interest rate, some borrowers also refinance their secured education loan to an unsecured education loan. This frees up their property and reduces the financial burden from the family member who provided collateral.
Some other benefits of refinancing an education loan are as follows -
The best time to refinance your education loan is when you start working, due to the following reasons -
Students can opt for loan refinancing if -
The factors taken into consideration are - income, credit history, credit score, debt-to-income ratio, financial behavior, employment history, residency status.
The process to refinance an education loan is simple -
Here are a few documents that are required to transfer the student loan -
Other financial documents such as the IT Return, proof of income, and a brief statement of assets and liabilities of the parent/co-borrower.
Check Your Education Loan Eligibility
The rest of the terms and conditions of an education loan are similar to that of a regular education loan. If you are worried about the process and your eligibility, just check your loan eligibility with us.
Some key points that you should consider -
GyanDhan aims to make education loans easy and simple for students. We have partnered with several lenders in the market to make it easy for students to apply for loans. Just check your loan eligibility and fill a form on our website to initiate your hassle-free loan refinancing. We will go through your profile, your current interest rate, and the EMI you are paying to suggest to you the lender and the deal to help you save money. We will assist in loan disbursal and loan foreclosure. Get in touch with us today to make your education loan repayment affordable and reduce the financial burden.
Check Your Education Loan Eligibility
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