Education, especially foreign education, is expensive. But an education loan can make it possible. However, one must consider several factors to avoid a loan rejection.
Know The Eligibility Criteria
“Student loan approval depends on various factors like the student’s academic background, the type of course and university, the presence of a co-borrower or guarantor, their job profile, and the credit histories of both the applicant and co-applicants,” says Prashant A. Bhonsle, founder, Kuhoo Edufintech, a student financing platform. Hence, checking and ensuring you meet all the eligibility criteria is vital.
Apply With A Co-Borrower
Applying with a co-borrower can help secure better loan terms and a larger loan amount, but it adds financial responsibility for the co-borrower. Without a co-borrower, the loan might be costlier or harder to obtain, and the obligation to repay it will lie solely on the borrower. A co-borrower with a good credit history will likely increase the chances of a loan approval. “For loans to study in India, this is a requirement by almost all lenders. There can be more than one co-borrower for a student loan,” says Bhonsle.
Get Your Documents In Place
“Required documents for student loan applications typically include academic records, know-your-customer (KYC) documents for both the applicant and co-applicant, financial documents of the co-applicant, completed application forms, photographs, work experience certificates, and salary stubs (if applicable),” says Nilanjan Chattoraj, head - credit and product - education loans, InCred Finance, a non-banking financial company (NBFC). Hence, it is important to get your documents in place in advance and ensure that you do not miss out on anything.
Figure Out The Collateral
Collateral requirements depend upon the course the student is going for, the loan amount needed, and the financial profile of the co-applicant. If your loan amount is Rs 7.5 lakh and above, you will have to provide collateral. “Collateral may be required based on the loan amount and the financial strength of the borrower,” says Chattoraj. So, if your loan amount is higher than Rs 7.5 lakh, identify proper collateral and get the required documents in place and goals. Private banks and non-banking financial institutions (NBFCs) may offer collateral-free loans for higher amounts, especially for premier institutions. They may also provide more flexible repayment terms that suit the student’s financial needs.
So, due diligence is critical to ensuring your education loan is approved as you embark on a new and exciting learning journey.
