To get into your dream college, university, or even to study abroad, it needs hefty fees. Many students aspire for higher education either abroad or in top colleges in their own country. Still, despite being good at studies, some poor children cannot take admissions in such colleges or universities. Have you ever thought about why it is so? This is because of the very high fee demand of the colleges for admission.
So, to prevent these scenarios, banks grant education loan for the needy and potential students to get their admission to the best college, for which they have worked day and night. Due to this facility, every student who wants to pursue either a management course or any other course can study wherever they want. So, if you too want to take this opportunity, you must first understand its policies and overviews.
Eligibility Criteria
Banks, whether public or private, have their specific terms set for working. If you want to apply for education loans, you should go through the eligibility criteria for students. First of all, you must be an Indian citizen. And second, earlier or recently, you must have taken admission in any of the authorized colleges.
Moreover, if you are just a student and do not have any specific job, your parents or even a sibling can be registered as your co-applicant. Co-applicant is necessary because if you fail to repay the loan, they will be asked to reimburse those debts. Generally, banks do not ask for collateral if the loan is of up to four lakhs, but higher than this amount, collateral is compulsory.
Understand The Interest Rates
Every bank allows different education loan interest rate in India, depending on the loan amount. Therefore, before deciding on one place, know all available loan options, and then evaluate and compare them. Most banks provide loans of up to four lakhs at an interest rate of 12 to 15 percent. If you demand a loan for a higher amount, i.e., more than four lakhs, then the bank may offer you the loan at lower interest rates. But you will have to bring one guardian, who can be either parents or siblings.
Know The Repayment Tenure
Similar to the interest rates, various banks offer repayment tenure differently. There are several options available, and thus, you should first know their repayment tenure along with interest rates for a particular loan amount. And then confirm your decision based on repayment tenure. Banks mostly allow three years of the term to repay your debt for up to four lakh. But for a higher amount, it may extend the repayment period from 6 to 7 years.
Choose The Term Wisely
For the repayment option, students must apply for a longer tenure loan so that they are not forced to pay the heavy EMIs. A longer duration loan will lessen the burden of paying debts on students, and also, till that time, students will be able to earn their own money. Though it will be the beginning of the career, and with that earning will be less, thus longer tenure loans will require less EMI to pay. Therefore, choose wisely the term of 10 to 12 years of repayment so that you do not fall in defaulter lists.
Maintain Your Credit Score
While giving education loans to students, the bank generally considers the credit scores of the student. They check if there is any outstanding loan in the name of the applicant or even on the co-applicant before they sanction an education loan. So, if you have taken any loan earlier, make sure that you have built your credit score properly, and at present, you are not under the burden of any existing debt.
Look For Special Schemes
Some banks have special provisions for students. Some banks offer special discounts on interest rates to female students. Do ask the bank officials for any subsidies that you might be getting due to the educational institution you are enrolling yourself.
Read All Documents Carefully
After finalizing the loan amount and interest, do look for any special conditions that are attached to it. Understand all the terms and conditions like the cycle of EMI and your mortgage and then make a decision.
These are some of the things that you need to keep in mind while applying for a student loan for yourself.