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Things to Know Before Applying for a Student Loan

At times, you or your parents might really find it taxing to finance your education expenses. Well, you need not worry about financing your higher education in Singapore as several banks across Singapore offer student loans.

Considerations for a Student Loan

You can choose the amount you need to borrow and repay it over a tenure that suits you. But there are various other things like interest rates and other fees and charges that you need to consider before taking up a loan. You can do so by comparing the student loan products offered by different banks. Ideally, you would be looking for a loan that puts the least pressure on your pockets while providing the required financing for your education.

Are You Eligible for the Student Loan?

Student loans can be usually applied by people who are 17 years of age or above. You might need to have a guarantor to apply for these loans as often these loans come with income requirements. You might not be able to meet these requirements as a student. A guarantor must step in here to facilitate the application process. The guarantor must be 21 years of age or above.

The income requirement usually ranges anywhere between S$12,000 to S$30,000. Besides, studying overseas can turn out to be an expensive affair than usual. So, you will need a guarantor to not only assure banks of safe repayment but also to get your loan amount easily approved.

What is the Interest Rate Charged

Another crucial consideration is the rate of interest charged on your student loan. As there are different student loan products offered by different banks in Singapore, the interest rate charged might differ from one loan product to another, and from one bank to the other. So, you must ideally check the rates of interest offered across different loan products before you reach a decision. Generally, these loans are characterised by lower rates of interest, however, with a little bit of research, you might be able to find the perfect student loan with the lowest interest rate offered.

What is the Tenure of Repayment

The repayment tenure also helps you reach a decision on the student loan that would best suit you. You can also choose to repay earlier depending on the bank. The repayment tenure can stretch from 8 years to 20 years depending on the student loan and the offering bank. So, choose a loan which you can repay within the applicable repayment tenure so as to avoid any unnecessary charges.

Type of Loan - Flat Rate or Monthly Rest

This is another primary consideration to make before you choose a loan. There are two primary student loan types - flat rate and the monthly rest. In case of flat rate student loan, the entire repayment amount is calculated for a fixed tenure and you have to pay equal and fixed monthly repayments. However, in case of monthly rest student loan, the interest is calculated on the reduced balances every month. So, before you settle on the loan, decide on which would best suit your needs.

Are There Any Additional Charges Involved?

Besides the interest charges, the student loans are also characterised by other fees such as prepayment fee, processing fee, and late payment fee. You must ideally make a detailed list of fees and charges associated with each student loan. This will give you a clearer picture of how expensive the loan might turn out to be during its course. Besides, this will help you segregate and choose the student loan with the least charges.

Final Words

There are several aspects you must ideally check when applying for a student loan. The considerations listed above will help you tread in the right direction when it comes to choosing the right student loan. However, you must make your own list of aspects that will help you settle on the right student loan. You must study the loan market thoroughly, comparing different loan products across all the banks in Singapore before you decide to apply for one.

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