Managing student loans every month can feel like a lot. Remembering due dates, checking how much interest is piling up, and making sure you’ve got enough in your account—it’s a real task.
That’s where autopay comes in. It’s a simple feature many loan companies offer that automatically takes money from your account each month to pay your loan. But should everyone use it? Let’s look at four reasons why it could be helpful—and four reasons why you might want to skip it.
One of the biggest benefits of setting your student loans to autopay is the interest rate discount. Many loan providers, both private and government-backed, give a 0.25% to 0.50% discount if you enroll in autopay.
While that might seem like a small number, it can make a big difference over time. For example, a ₹25 lakh loan with a 5% interest rate over 10 years could save you around ₹36,500 in total interest if you get a 0.25% rate reduction. That’s money you could use for something else, and it adds up more if your loan amount is higher or if your repayment time increases.
Another advantage of autopay is that it helps avoid late fees. If you miss a payment, it can hurt your credit score and cost you extra money. A low credit score can make it harder to get loans or even affect job opportunities.
With autopay, your payment goes out on time every month, so you don’t have to worry about forgetting the due date. It’s a set-it-and-forget-it way to protect your financial record.
It also brings ease and peace of mind. Whether you’re working long hours, studying full-time, or managing a busy household, autopay takes one task off your to-do list. You’ll know your payment is going out each month without having to log in or set reminders.
Lastly, autopay makes budgeting a little easier. Since the same amount is taken out at the same time every month, you can plan your other expenses around it. You’ll always know how much of your income is going toward your loan, making it easier to manage your money month to month.
But even though autopay sounds great, it may not work for everyone. If your income changes a lot, like if you do freelance work or gig jobs, it could be risky.
When your bank balance isn’t the same every month, there’s a chance you might not have enough money on the payment date. This could lead to overdraft fees or a rejected payment, which adds more financial stress.
Another downside is the possibility of overdraft fees. Since the loan servicer takes the money on the same day every month, you need to make sure there’s enough in your account. If you forget or run low, the bank might charge a fee for overdrawing your account. That’s money wasted on a simple mistake.
Autopay also makes it easy to lose track of your loan details. When payments happen in the background, you might not check your loan statements regularly.
That means you could miss mistakes, like if the servicer doesn’t apply a discount you earned or if a payment isn’t credited properly. You might also miss the chance to pay more than your regular amount to get rid of the loan faster.
Lastly, autopay limits flexibility. Life can be unpredictable, and sometimes you may want to skip a payment during an emergency or pay extra when you have a little extra income. But with autopay, you’ll need to make changes manually, and that can be tricky.
If you’re on a deferment or forbearance plan, you’ll also need to pause autopay manually, or you might get charged even when you’re not supposed to be paying.
So, what’s the final word? If your income is stable and you want to save on interest, avoid missed payments, and stick to a budget, autopay is a smart move.
But if your income changes a lot or you need more control over your payments, sticking to manual payments might give you the flexibility you need.