Studying abroad is a dream for many, but financing it can be a challenge. Applying for an education loan is a common solution, yet securing approval may feel overwhelming. This guide will help you navigate the process by improving your chances of loan approval.
A Good Credit Score Remains Key When Seeking a Loan
One of the key requisites for the approval of any loan does include good credit scores such as in the case of applying for an education loan. Other than earnings, lenders will also take crucial consideration of past financial activities and credit ratings. A score of above 700 most likely increases the chances of one securing a loan. To maintain or increase your credit score:
- Keep up with payments on current debts and bills.
- Avoid constant use of credit cards, especially those that are used to their limits often.
- Check your credit history and make sure there are no incorrect entries.
A good credit score enhances the chances of approval and can help you obtain loans at lower interest rates.
Select the Appropriate Course and Institution
Education is not only important, but you must select the right course and university as they determine a large percentage of approval for the loan. Therefore, education loans are less risky to lenders when strong students enroll for education courses in reputable institutions, as graduates can easily secure jobs to repay the loans. Suggestions on how to enhance chances:
- Enrol in a Program that falls under the STEM umbrella, homing better Returns on Investment.
- Attend Colleges that are either highly ranked in their field or recognized by industry players.
- Comprehend if your financial institution has agreements with the institution to accelerate the procedure.
Taking a course in an area with good employment opportunities ensures loan approval as well as future success
Put up Proper Documentation
Documentation is one of the most essential processes in approving loans. A lot of the time, people’s loans are denied because of some missing or incorrectly completed documents. Gather all the documents that are necessary for your application, including:
- University admission letter.
- Course Outline and Completion Certificates.
- Employment and income of the co-borrower & Tax returns.
- Collateral documents for the loan, if any.
Good documentation of your loan history enhances your credibility as a borrower and quickens loan approval.
Know Loan Types: Secured and Unsecured
Knowing the differences between secured and unsecured money types is very critical because it determines which one will suit you best:
- Secured loans: These loans involve bringing in an asset, such as a piece of property or fixed deposits, to obtain a lower interest rate loan.
- Unsecured loans: These are loans that do not require any collateral and come with higher interest rates.
Depending on your financial position and the type of loan you’re seeking, it is best to choose the loan that best suits your needs.
Evaluate Lenders for More Advantageous Concerns
When it comes to lenders, all are not created the same. Some might have better interest rates, lower fees, or flexible repayment plans. Do not accept the first loan offer that comes your way. Rather, check out different lenders based on the below:
- Interest rates (fixed versus floating).
- Processing fees and any additional hidden fees.
- Repayment terms, especially moratorium terms.
Evaluating borrowers ensures that you get the most favorable terms that can be provided for the loan.
Make Use of Property for Secure Loan Default
Offering collateral will cut down interest rates as well as increase your chances of getting your loan approved. The repayment and payment period on secured loans is often favorable because the risk on the lenders is low. Consider the following:
- Property document ownership should be easily accessible.
- The collateral amount should be at least equal to or greater than the loan amount.
- Having a co-applicant with a good profile enhances the chances even more.
If you have certain and valuable collateral, a secured loan is available at lower prevailing rates and a higher amount.
Conclusion
It is important to understand that taking an international education loan for studying abroad is a great step toward fulfilling your academic goal. To do so, one needs to have a good credit rating, document assessment, and the type of loan to be applied for.
At Eduloans, we make the process easier for you. From documentation to loan options, our team offers personalized guidance for securing the best loan terms. Ready to finance your future? Contact Eduloan today and take the first step toward achieving your study abroad goals.
FAQs
What is the usual interest rate for education loans?
Interest rates vary widely within the market depending on the lender and loan type. On a secured basis, groups earn around 7.5 percent, while others without security take an average of 12-13 percent.
Is it possible to get an education loan without a co-applicant?
Most HFCs require the loan co-applicant for unsecured loans. However, some unsecured non-banking finance companies (NBFCs) do give loans without any such requirement, but the interest is normally high in such instances.
How much time will we have to wait for the loan to get approved?
The usual time for loan approval is between 7 days and 30 days, depending on the lender’s verification and the type of loan.
Is it possible for you to repay your loan to the bank earlier than the scheduled period?
Yes, early loan repayment is permissible in most lending institutions, but you should be aware of any clauses regarding prepayment penalties, if any.
What are the circumstances that will occur when I do not pay back my education loan?
Not being able to pay back a loan according to the stipulated terms can result in default, which can affect your credit score, cause you to be sued, and, in secured loan cases, result in the loss of the assets pledged as collateral.