Higher amount of tuition fees is witnessed everywhere in the world. Whether you go Europe or in US, High tuition fees are obliged. But you do not drop your plans to study abroad because of this hurdle. They say to one problem there are many solutions and for this problem, bank loan is one of the solutions. Many banks offer you loans depending upon your need. Of course they command you to put security for further smoothness in the transaction. Applying for loans now-a-days is not difficult, it’s just you must be aware of correct steps and process for it.
We strongly recommend do not drop your plan to apply for loan even if you have secured scholarship. We know you have made a lot of efforts to bag it but certainly scholarship allotted to you will cover only some part of your education. You do not want to find yourself in a place where you lack money for essential things while studying in abroad. So even if you have scholarship it is a good idea to apply for loan. It is always better to prepared for rainy days; you cannot predict the exact situation while you are leaving your home land far behind.
Education loan not only covers your tuition fees but also includes cost of stationary, health insurance, travel and living expenses. It will look after all your study related expenses. The bank has mostly seen depositing the amount directly into the university’s account. You must check details for everything before you apply for loan in a certain bank.
Do not worry! We are here to spell out everything you will need to take care of while applying for Education loan.
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As soon as you receive your acceptance letter from your university, start applying for the education loan. The bank will surely ask for the acceptance letter during the process so it’s better to keep the acceptance letter along with you. You will be required to do some research before you choose your bank. The interest rate, EMIs, tenure of the loan is the things to check while searching your bank for loan.
Here are some names of the banks which provide you loan at a good deal.
- State Bank of India offers up to Rs 30 lakhs with an annual interest rate of 13.75% for amounts between Rs 4 – 7.5 lakhs and 11.75% for amounts above Rs 7.5 lakhs.
- Axis Bank offers up to Rs 20 lakhs and its rate of interest per annum ranges from 13.75% to 15.75%
- Indian Overseas Bank offers up to Rs 40 lakhs and charges an annual interest rate of 15%.
- Canara Bank offers up to Rs 20 lakhs with a rate of interest per annum of 12% for loans between Rs 4 and 7.5 lakhs and 9.5% for loans greater than Rs 7.5 lakhs.
- ICICI Bank offers up to Rs 20 lakhs and has an annual interest rate of 15%.
- Bank of Baroda offers loans of up to Rs 20 lakhs with a rate of interest per annum of 12% for loans above Rs 4 lakhs.
- Credila (of the HDFC Bank Company) offers up to Rs 20 lakhs and its rate of interest per annum is 13.5%.
We recommend not focusing on just one bank but applying to multiple banks for loan. So even if your loan gets rejected in one bank you have another option with you. This will not create hustle in the process. The banks charge interest from 11% to 14%; some also state in their contract that they are flexible of increasing or decreasing the interest rate. Make sure you have read all these instructions while applying for loans. Read all the clauses.
After you have collected data of all the banks, next thing you do is checking eligibility criteria. All the banks carry a list of certain universities and courses. If your university or your course does not fall under this list than your loan is likely to get rejected. Usually all the long term courses are eligible for loan while very few short term courses are eligible. So check the eligibility criteria of the bank and apply. Manager of the bank or other bank personnel can help you finding the criteria. Some bank also posts these details on their bank’s websites.
Next thing that is taken to be seriously is co-signer. A co-signer is nothing but the person who signs the loan along with you. He takes the responsibility of paying the loan in the condition when you fail to do it. It is certainly an important task of finding a co-signer. The co-signer becomes your guarantor and counting on him bank agrees to grant you loan. The co-signer mostly is your parents but other than them anyone who is willing to sign the loan and fits perfectly in the criteria prescribed by the bank can be your co-singer. Choose your co-signer wisely.
Some of the facts you should know while applying for loan:
- Completing your KYC or (Know Your Customer) is an important part of the loan-process. This will help the loan-provider feel assured that the student has the ability to repay and that documents provided are accurate.
- For student loans about Rs 7.5 lakhs, you will generally have to offer the bank an LIC policy or a few documents of immovable property in your name.
- Your loan will have a moratorium period or holiday period, only after which you will be required to start with your EMIs. This period could last up to the duration of the course or up to the time period till you find employment and varies from bank to bank.
- You will have to provide the bank, margin money for student loans exceeding Rs 4 lakhs which is usually 15% of the loan amount.
- Be prepared for a slightly lower loan amount at the time of disbursement, as it may be affected by the exchange rate at the time of disbursement.
The final stage in the process will be getting in touch with the bank personnel and checklist of the documents for the process. If your bank has a tie up with the university you are applying to then this will help fasten your process. You can ask your university to send the list of bank they are tied up with. This can make your process simpler.
The documents required during the application process of loan will be address proof, identity proof, acceptance letter from university; your passport can be useful in every stage; signature proof is also must in this process. Documents from your co-signer such as their pay scale, their identity proof and address proof, their signature proof are equally required and verified by the bank authority.
The bank takes their verification process seriously and any forging in the document or in any process can result in rejection of your loan. Some bank even does a criminal record check; so this is normal and nothing to worry about.
So now you have some information from us that might prove helpful and enough to start application process from your side. For more details and questions, you can post it on our website.