Pursuing higher education at a reputed university often involves substantial expenses. Fortunately, students today can manage these costs by applying for an education loan. One can obtain an abroad study loan or an education loan for studies within India.
Education loans are offered by multiple banks and non-banking financial companies (NBFCs) across India. These loans are designed to cover costs associated with pursuing higher education, without placing the entire financial burden on the family upfront, and they allow students to repay the borrowed amount after completing their studies. One just has to follow a few simple steps to apply for an education loan.
Step 1: Check the Eligibility Requirements
Borrowers need to determine whether they meet the lender's eligibility criteria. Most lenders require the student to be an Indian citizen who has secured admission to a recognised college or university. In most cases, a parent, guardian, or close family member must act as the co-borrower, as their income plays an important role in the loan approval process.
Step 2: Decide Between a Secured and an Unsecured Education Loan
Education loans come in two types: secured and unsecured. A secured loan requires the borrower to pledge collateral, like a residential property or a fixed deposit. An unsecured education loan, on the other hand, does not require collateral. These loans are usually approved based on the borrower’s academic record and the student's future employment prospects.
Step 3: Compare the Available Options
Borrowers need to do their research and compare the interest rates and repayment terms offered by diverse lenders. Loan comparison can be made easy by using tools like an education loan EMI calculator. By entering the loan amount, applicable interest rate, and repayment tenure into the tool, borrowers can instantly calculate their education loan EMI amount. This allows students to compare different loan options and select a repayment plan that aligns with their anticipated future income.
Step 4: Have the Necessary Documents in Place
Getting all the required documents organised before filling out the loan application can help avoid unnecessary delays and speed up the approval process. Even though the documents required to be submitted may differ from one lender to another, applicants are generally asked to submit:
- Admission confirmation from the chosen educational institution
- Academic certificates, mark sheets, and entrance examination scores
- Property or collateral-related documents if applying for a secured loan
- Identity and address proof, including Aadhaar, PAN, passport, or other valid KYC documents
- Income proof, salary slips, income tax returns, and bank statements of the co-borrower
Step 5: Complete and Submit the Loan Application
An education loan application can be submitted either online through the lender's website or by visiting a nearby branch. After the loan application and supporting documents have been submitted, the lender reviews the application, verifies the paperwork, and assesses the co-borrower’s credit profile.
Once the education loan application is approved, the lender issues a sanction letter detailing the approved loan amount, applicable interest rate, repayment conditions, and other important terms. The sanctioned amount can be disbursed directly to the chosen educational institution or to the bank account of the borrower.
Sign in to leave a comment.