Muslimcreed – If you’re in the market for an education loan, you may have noticed that not all loans are created equal. When it comes to Islamic banking practices, there are some unique features that set their education loans apart from those offered by conventional banks, which makes the right choice even more important than it would be otherwise. Here are five reasons why going with an Islamic bank education loan can benefit you and your educational future.
1) You can get a lower interest rate
The best reason for getting an Islamic bank education loan is the lower interest rate. This is because Islamic banks use riba (interest) which is prohibited in Islam. The other advantage of this type of loan is that if you are unable to pay your monthly installments, you can defer or renew the installment plan with no extra charge. A few other advantages include a longer repayment period and flexibility for one-time early payments.
#1: Get a lower interest rate
#2: Defer or renew the installment plan with no extra charge
#3: A longer repayment period
#4: Flexibility for one-time early payments
#5: Islamic banks are more flexible and accommodating #6: Interest-free installments may be offset by a higher down payment
2) You won’t have to pay any fees
– No interest rate: Islamic banks are not allowed to charge any interest rates for loans. This is a huge advantage for someone who is looking at getting an education loan because the amount of money that you will owe will be the same as what you borrowed.
– Low monthly payment: The monthly payment on your Islamic bank education loan will be low, which makes it easier for you to make the payments even if you are working with a lower income. You won’t have to worry about what might happen if your income goes down or how it would affect your payments because there won’t be any fees associated with this type of loan.
– You won’t have high interest rates on your loans: The annual interest rates for Islamic bank education loan are fixed, and because of that, you can easily calculate what your total cost of borrowing will be. This will help you plan how long it will take to pay back your loans, which is a big benefit when you’re paying them off. If you don’t like math or want some help with it, there are plenty of online tools that can do these calculations for you.
3) The repayment terms are more flexible
-Islamic bank education loans offer more flexible repayment terms than conventional loans. -Typically, the Islamic bank education loan is repaid over a longer period of time and does not have set monthly payments. -It has been observed that many borrowers are able to avoid paying interest by making voluntary additional repayments beyond the regular payments. -This is due to the fact that Islamic banks do not charge interest on loans like conventional banks do. And if they do charge it, it is called profit sharing which means they will only charge up to 2% of the total loan amount per year and no more than 5% in any one given year.
4) You can get a larger loan amount
An Islamic bank education loan could get you a larger loan amount and a lower interest rate than a regular education loan.
We are all aware that education cost a lot of money. Not only do you need to take care of your tuition fees and boarding/lodging, there is also other expenses such as clothing, transportation, books and so on. So it’s necessary to have a large amount of money when you enroll in college or university. But sometimes, you may get rejected by ordinary banks because you lack collateral. Then how can you cope with the huge expense? The solution would be obtaining an Islamic bank education loan, which has no collateral needed but it’s available at low interest rate.
5) The application process is easier
The application process for Islamic Bank education loan is easier than applying for a conventional bank education loan. It’s not necessary to submit any documents in hard copy and you don’t need any collateral. All you need is your online account with the bank and the application form. The application form can be downloaded from the website or taken from one of our branches. You will only have to provide some basic information about yourself and your educational establishment, as well as details about the course you wish to pursue, how much funding you require and how long it will take before you are able to start repayment after completion of studies.