Taking an educational loan
This is the beginning of the new academic year and it is time for the freshers to decide how to finance their MBA. I think one should keep the following in mind.
a) If you have enough surplus cash lying idle in a saving bank account that you do not intend to deploy elsewhere, then it is better to finance your MBA with your own money. Borrowing makes you poorer here.
b) If you have parked your money in other assets and plan to liquidate them to finance your MBA, it probably is a better idea to take a loan if the after-tax return is greater than the effective cost of the loan. Keep in mind that you will get tax benefits on the interest payments without any limit.
c) If you are taking a loan, then preferably take a fixed-rate loan. The cost may appear to be higher than a floating rate loan. But the effective cost for a fixed rate loan will be lower than that of a floating rate loan. As per a circular sent by the Finance Ministry to the chairmen of all the scheduled commercial banks, the banks cannot charge more than their PLR for loans below Rs.4 lakhs. That is why most banks offer floating rate loans. However, some banks do offer fixed rate loans. United Bank of India, for example, gives loans at 11% fixed interest rate. During the study period, they charge interest on a simple interest basis. Afterwards they use the standard compound interest formula. For details, you can visit the bank website. HSBC also offers fixed rate loans. You can visit the website to get a quote.
Visit the website of UGC to know the details of banks that provide education loans.
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a) If you have enough surplus cash lying idle in a saving bank account that you do not intend to deploy elsewhere, then it is better to finance your MBA with your own money. Borrowing makes you poorer here.
b) If you have parked your money in other assets and plan to liquidate them to finance your MBA, it probably is a better idea to take a loan if the after-tax return is greater than the effective cost of the loan. Keep in mind that you will get tax benefits on the interest payments without any limit.
c) If you are taking a loan, then preferably take a fixed-rate loan. The cost may appear to be higher than a floating rate loan. But the effective cost for a fixed rate loan will be lower than that of a floating rate loan. As per a circular sent by the Finance Ministry to the chairmen of all the scheduled commercial banks, the banks cannot charge more than their PLR for loans below Rs.4 lakhs. That is why most banks offer floating rate loans. However, some banks do offer fixed rate loans. United Bank of India, for example, gives loans at 11% fixed interest rate. During the study period, they charge interest on a simple interest basis. Afterwards they use the standard compound interest formula. For details, you can visit the bank website. HSBC also offers fixed rate loans. You can visit the website to get a quote.
Visit the website of UGC to know the details of banks that provide education loans.
Mesothelioma Lawyer Counter
posted by Pitabas Mohanty at 2:47 AM
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