Banks Vs Private Finance Companies
Increasing course fees force children and parents to opt for education loans. Most of the times the source from which the loan is acquired leaves parents in a tough spot. Here is a comparison between banks and private finance companies that might help parents to decide which source is more reliable.
- Banks and private companies have their yardsticks while they offer educational loans. Banks are reluctant and most of the times reject offering loans for skill development. For, e.g., courses like photography, art, filmmaking etc. are not college degree courses and yet can be expensive; private financing companies are helpful in this regard and provide loans for such courses. They provide loans for all such courses. If the student is seeking for any offbeat course inside or outside the country, he should go to private financial companies and avail a loan. The private companies not only offer loans, but sometimes also assist students in choosing the right course.
- The time taken by private companies for providing loans is much less than that of banks. Private companies approve of loans quickly while sector banks provide loans on existing customer relationship. If the student wants to pursue an education in a government or a UGC recognised college he can get the loan approved quickly by both private companies and banks.
- Both banks and private companies take collateral for education loans depending upon the course and the institute.
- Banks have a vast network of branches and are more accessible to common man. Most of the banks have their branches spread across even the remotest areas of the country. Private companies have lesser spread in small towns, villages, and cities. If the student lives in a small town or a village it may be easier for him to get access to a bank.
- Private financial companies are much better than banks when it comes to educational loans and the overall quality of services. They provide visa assistance, course counselling, and some companies also provide study materials. Whereas banks do not offer these benefits. Private companies provide customised services for students who want to seek foreign education.
- Traditional banks have competitive interest rates as compared to private banks and financial institutions. But private companies have a higher processing fee, pre-closure charges etc. Banks follow the rules set by the Reserve Bank of India and do not charge pre-closure loans. However, private companies do charge pre-closure charges based on conditions like duration, a reason for closure etc.
Both banks and private companies have their pros and cons. Private Finance Company are more flexible, whereas banks do not consider lending for offbeat courses. Private companies also provide add-on services, which is something that cannot be expected from a bank. Private companies offer loans even before the student secures an admission. Although interest rates, loan repayment charges, and late payment charges may or may not be a little higher than banks, Private finance companies can be more reliable and a better option because they provide a much wider range of services.