You might have thought your student loan was a great financing option when you had taken it. After all, it pays your tuition fees for three or four years, depending on your education stream. But after repaying it for a couple of years, you may find that you have another 15 years of repayment left.
The burden of loan repayment can be overwhelming when you are starting out in your career. There is a way to reduce this burden by using a personal loan to consolidate your debts. Here's how:
Pay less money
Various financial institutions provide personal loans at a very competitive interest rate. In most cases, it is much cheaper to repay a personal loan than your student loan. Also, the tenor of a student loan is typically 15-20 years, while the tenor for a personal loan is much shorter, going up to a maximum of 8 years. So, if you look at your calculator and find out how much money you are paying in total, you will not be surprised that with a personal loan, you pay less.
Consolidate your debts
It is not unusual for a student to take more than one loan. There can be a loan for graduation, another for post-graduation, yet another for further studies. You can consolidate all these loans to make one fixed payment at a fixed interest rate by taking a personal loan. One monthly payment means it becomes easier for you to plan your budget.
Release the co-signers
In a student loan, you need someone to stand as a guarantor or co-signer of the loan. You, being a student, are not deemed eligible to avail the loan on your own. You must ask one of your family members to share the liability with you. When you start earning after graduation, you may feel obliged to release the co-signer of their liabilities as soon as you can. Here’s where personal loans come in.
Personal loans are unsecured. You do not need any collateral or guarantor to avail the loan. You can use a Personal Loan eligibility calculator to know your eligibility before applying for a loan. A good credit history with a salaried job, and some basic documents are enough.
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