Growing up in India, many people dream of studying abroad. It is not that we do not have good educational institutes in India, but institutes abroad rank among the top colleges in the world. Moreover, we grow up listening about Ivy League institutes, Oxford and Cambridge among others. We listen to tales of eminent personalities, both past and present that have studied over there. Therefore, the allure for studying abroad is strong. However, as you may know, education is expensive even in India, so you can imagine the cost of studying abroad. While you can avail education loan for studying outside India, you should know some important aspects. Despite the high education loan interest rate generally associated to studying abroad, the interest rate is not as high as it used. One of the main reasons for this is the fact that over the past decade, there a lot more applicants to foreign universities from India. It has led to a stiff competition among lenders including banks and NBFCs to offer attractive loans.
However, despite the reduced education loan interest rate, there are still numerous things that you should know, and pay close attention to. The reason is that education loan for studying abroad presents a greater risk to the lenders. While an education loan alone presents a huge risk, education loan for studying outside India introduces many more uncertainties. This leads banks to scrutinize every aspect associated with the loan even more, and the education loan interest rate is higher than loan for studying in India. So, what are the factors that you will need to consider?
Factors that Affect Education Loan for Studying Abroad
- Applicant’s choice of institute
- Applicant’s and Co-applicant’s annual income
- Applicant’s and Co-applicant’s assets and financial statement
- Amount of Loan
- Tenure of the loan
- Applicant’s and Co-applicant’s credit score and history.
Choice of Institute
The choice of institute is crucial to the education loan. The reason for that is lenders are more inclined to provide loans faster and comparatively lower interest rates when the institutes are good. Since the institute in question would not be in India, there is an element of uncertainty with respect to its accreditation.
Annual Income, Assets and Financial Statements
The income, assets and financial statements of the applicant and parents or guardians is important to the bank. It helps them in understanding the extent to which the applicant can afford the repayment if there are any issues. If the three factors above seem satisfactory to the bank, then they can even provide loan at a lower interest rate.
Amount of Loan
The amount of loan is one of the most crucial aspects in education loan. Lenders decided whether they need collateral or not on the basis of the amount of loan. Generally, if the loan is below INR 4 lakhs, then you will not need a guarantor or collateral. If the loan exceeds INR 4 lakhs but is below 7.5 lakhs, then you may need a guarantor to cosign the loan. However, most of the times, if the amount is above INR 7.5 lakhs then the lender will require collateral. The collateral ensures the security of the lenders amount. Having collateral allows lenders to even reduce the education loan interest rate.
Tenure of the Loan
Generally, the tenure of education loan is 15 years. However, some lenders may increase or decrease the tenure of the loan depending on their policies. You too can reduce or increase the tenure of the loan after negotiating the same with the lender. However, bear in mind that any change in tenure of the loan will result into a change in the interest rate of the loan.
Credit Score and History
Like with any other loan, the credit score and history of the applicant is very important to lenders. If either is bad or lower than appropriate, the lenders will levy a higher interest rate on the loan.
Now that you know what factors you should consider before applying for an education loan for studying abroad, let’s check out the process of doing so:
Education Loan Process for Studying Abroad
The application process for an education loan for studying abroad is very similar to that of education loan in India. The application process is:
- Research about the lenders and loans
- Check eligibility requirements
- Select the lender
- Select loan amount and tenure
- Documentation process regarding collateral or guarantor if any
Personal Loans for Education up to INR 2 Lakhs
Studying aboard is a huge expense, but it is necessary. So, if you are applying for an education loan for studying aboard, you know that you will need to borrow a large sum of money. Additionally, you may need to provide collateral, not to mention the interest rate. In such a scenario, you may find yourself in a situation where you cannot borrow more money from the lender. But, you require it for ancillary things such as travel arrangements, etc. But, do not fret, if you ever find yourself in such a situation, all you need to do in download the PaySense mobile app. You can avail instant loans up to INR 2 lakhs to deal with aspects not covered under the education loan. So, what are you waiting for, download the PaySense app now!
Apply for Loans of upto ₹5 Lakhs easily using your phone or laptop, and pay back on low EMIs