Education Loan: More money is required to pursue higher education, and in such a situation, people take an education loan. This helps in managing the expenses incurred in studies. However, most education loans have a moratorium period. During this period, the loan is not repaid. When the studies are completed, it is time to pay the installment. Education loan helps a lot in higher studies. But if you are careless in repaying the loan, then you can get into trouble. In such a situation, the question arises that the sooner you repay the loan, the better it will be.
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A lot of interest expenses are saved
If the education loan is repaid before the stipulated time, then the interest expenses are saved. The longer the loan runs, the more interest will have to be paid for that period. The remaining loan can be used to repay the education loan earlier. Due to this, the principal amount is reduced, which reduces the cost of the loan.
Free credit limit makes it easy to take another loan
The second advantage of repaying an education loan before the stipulated time is that it increases the credit. That is, your credit limit becomes free and your credit score increases. The advantage of this will be that when you apply for a home or car loan, there is a possibility of getting it easily.
Does not get tax benefit
Tax benefit is given on education loan under section 80E of the Income Tax Act. You can claim a deduction for the money spent on interest. If you repay the loan on time, then you are not able to take full advantage of the tax benefit.
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There is no benefit in repaying a low-interest education loan before the time
If the interest rate of an education loan is low, then there is no benefit in repaying the loan before the time. Instead of repaying the money before the time, you can use that money for interest. If you get more return, then it is beneficial to invest better than pay before time.