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How to Cover You Child’s School and Coaching Expenses

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School education is getting more and more costly now days. The amount of school fees has increased severely in past few years. Apart from school education coaching center also plays an important role in securing a seat in reputed institution. The expenses of good coaching center are very high and this means a good investment is required to give your child best education. If you are in some kind of financial crisis and think that your child’s education may suffer then there’s easy solution for this.

There are some banks that are providing education loan to fund student’s school and coaching expenses

School Fees Loans

Bank of Baroda (BoB) and Central Bank of India (CBI) are two major banks that offer loans by the names of—Baroda Vidya and Cent School—to fund school fees.

BOB offers loan to students from nursery to high secondary

CBI offers loan for students from viii to x standard and technical courses approved by AICTE.

Amount of Loan Offered:

The Bank of Baroda offers maximum loan amount is Rs. 4 lakh,

Central Bank of India offers a loan up to Rs. 30,000 per year.

However, the loan amount is restricted to a maximum of six months’ gross salary of the parent.

Interest rates:

BoB offers a interest rate of 11% per annum. There is a 1% concession for girl students.

CBI offers education loan at rate of 13% per annum.

Expenses covered by Loans: Both these loans cover school and hostel fees, including expenses like books and uniform, and all other requirements. BoB also covers the expense of a laptop or a personal computer, wherever required. CBI, on the other hand, covers purchase of bicycle and moped if your child commutes to school every day.

Security: There is no such security money required to take loan from BOB. In case is loan is taken to buy a laptop or a personal computer, the same item will be on the name of the bank until the loan is repaid. CBI does not ask for any security, but you need to pay 10% margin money in accordance to pro rata disbursements made on pro rata basis.

Repayment of Loan:

CBI loan is to be repaid within 10 months or before due date of repayment of fees for next academic session. If there are special expenses, the tenor can go up to 20 months.

BoB loan is to be repaid in each year’s amount in 12 equated monthly installments (EMIs). However, the first EMI is due 12 months after the first disbursement of each year’s loan component.

Coaching fees Loan

Coaching classes are need of hour to get admission in reputed institutions. The fees of the classes are on a higher side and some times it becomes difficult to manage both school and coaching fees together. To solve this problem of yours Corporation Bank recently launched a loan for parents to fund their children’s coaching class fees. Students who want to enroll for coaching classes for entrance exams of professional courses such as CAT, CET, IIT-JEE, AIEEE, GATE, CA/CS/ICWA and UPSC in reputed registered coaching institutes that have been around for three years can avail this loan.

Central Bank of India offers similar kind of loans for coaching fees by the name of Cent-Comp Exam.

Eligibility Criteria:

To apply for this loan from Corporation Bank borrower has to be parent or the spouse or the parent-in-law of the student.

To apply for this loan from CBI, the borrower is the parent or the guardian jointly with the student if he/she is above 18 years of age.

Amount of Loan Offered:

The Bank of Baroda offers maximum loan amount is Rs. 2 lakh and the margin amount 10%. Minimum amount is Rs. 50,000 and the processing fee is 0.05% subject to a minimum of Rs. 500.

The Central Bank of India charges a processing fee of Rs. 200.

Interest rate:

Corporation Bank charges a floating interest rate of 13.15% per annum and the loan in  to be repaid in EMIs in two to three years.

CBI offers a floating rate of 14% per annum The CBI gives a moratorium period of three months, which means the EMIs start after this period. If you plan to prepay the loan, you won’t be charged any fee.

Security:

If you have a salary account with Corporation Bank, you don’t need to keep collateral. However, you will need to look for a loan guarantor. If you don’t have a salary account, you need to provide collateral, usually in the form of a National Savings Certificate, life insurance policy, fixed deposits and the like. You won’t need a guarantor for the loan. Producing a liquid security such as a life insurance policy, bank fixed deposit or government securities, whose face value covers 50% of the loan amount will fetch you a concession of 0.50% in the interest rate if you go to CBI.

How is it beneficial than personal loan

Unless you get a personal loan at competitive rates, this loan makes sense. For instance, in case of CBI, a personal loan will cost you the same, but if you opt for this loan and produce a security, then you can get a 0.50% concession in the interest rate. Similarly, if you have a Corporation Bank salary account then, opting for this loan will give you a better deal as compared with a personal loan, which will come at a higher price tag of 15-16% per annum.


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