Do You have any questions related to studying abroad for an education loan in India?
Are you wondering how to get an educational loan without collateral?
Today we are going to talk about everything related to education loans in India.
As we all know an education loan is an important part of the study abroad journey and usually students tend to worry a lot about this part of their process so our purpose of this blog is to help you make an informed decision and reduce your stress and confusion so that you can easily plan your study journey.
Let’s clear it, basically there are 3 institutions in India: 1) Banks 2) NBFCs (which are the non-banking financial Company) like HDFC credible 3) Foreign lenders like Leap Finance.
So now let’s clarify some basic query that comes to your mind for Leap Finance.
Now the question will come to your mind Who is eligible for an education loan?
Right so let’s clear it
Education loan eligibility criteria:
So, in India, all different banks have their own different criteria here are some basic things that you have to check.
- You must be a Citizen of India.
- The age limit should be between 16 to 35 age, some banks do not have any upper age limit.
- You must have secured admission in any graduate or post-graduate or doctoral level program of study.
- You must need to have a co-applicant and collateral security.
So now the question comes to your mind, who is a co-applicant?
Ok, so a co-applicant is someone who acts as a guarantor on behalf of you, this can be your parents, siblings, Spouse, or any close relative. Banks will usually ask for income proof or information about your co-applicants financial ability and assets to approve your educational loans.
Now we can discuss Collateral and Non-collateral Security.
So Collateral is basically a type of form for security purposes that the banks take to give you an educational loan. You have to attach this Security along with your loan application, this can be in any form like FD life insurance and unmovable assets like a house or something else.
The two most prominent kinds of education loans are:
- Education loans with collateral, are also known as a secured loans.
- Education loans without collateral (non-collateral loan).
Most banks in India require Collateral security to assign a loan application over 7.5 lakhs, while non-collateral loans or unsecured loans do not require you to attach security, but loans acquired without a collateral loan come with higher interest rates.
So now let’s see what is Interest rates?
It is basically the amount charged by the banks or lenders for lending you money/Loan is calculated as a percentage of the principle which in this case is the amount of loan you are taking. This interest amount is also known as study loan EMI. The interest rates vary depending upon the total amount of loan taken from bank to bank ranging from 9 % to 15 %. For example, SBI offers a loan up to RS.7.5 lakh on a rate of interest of 10.25% per annum and above 7.5 lakhs at an interest rate of 10.50%. When you are taking an educational loan interest rates is the most important deciding factor.
Most education loans cover basic course fees including admission or tuition fees which are paid to the education institute along with expenses such as accommodation, travel, library, etc. some bank loans also provide money for the purchase of books, pieces of equipment, computer or laptops one must be super sure about the coverage of the education loan they are applying.
Let’s discuss Repayment.
The loan repayment period in terms of education loan will start from 6 to 12 months after you have completed your course and secured a job
A lot of students think that they have to pay back the loan immediately after their studies?
So, no you will get some time before you can start repaying your loan. This time period is called the moratorium period.
The moratorium period is a time during a loan term when you are not asked to pay any repayment feature it is introduced so that students can start repaying the loan only after they start earning, however, the moratorium period in many cases is not interest-free.
The repayment period also varies from bank to bank in the case of education loans for studying abroad the repayment period is at times as long as 15 years giving the student enough time and scope to repay the bank in slow and smaller installments.
Now the last question you all may thought.
Is taking an educational loan a good option?
Finally, after discussing all the information about education loans the most important question arrives in every student’s mind: Is taking an education loan a good option?
As more and more people are opting for studying abroad, education loan is becoming popular and banks are trying to attract applicants by offering different options applicants can also avail of tax benefits under section 80E of the Income Tax Act on interest paid towards education loans. However, like any other loan, an education loan turns risky when an individual is unable to pay the loan will turn in a bad loan hence it is important for you to evaluate all aspects before applying for an educational loan to study abroad.
It is very important for students to analyze their job prospects in the country they are studying or the job market back home.
One should be clear about their repayment ability and have a repayment plan in place before their moratorium period begins.
So that’s all about education loans.
I hope you found this content helpful and If you have any queries You can contact us for queries freely. Thanks!!!
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