An education loan is a specialized plan designed for students which helps them attain secondary or higher studies abroad. This loan helps pay for the tuition, books and living expenses of the individual. This loan can be repaid later in periodic installments by the student. In the past decade or so, this had become an extremely popular tool- allowing students to independently finance their education.
Let us try to look at some points
a student must consider or improve in order to pick the right loan and secure
their finances in the right way.
Today, there are tens and hundreds of banks and financial institutions that assist students in getting student loans, to help them attain higher education in foreign countries.
The terms of different education
loans differ vastly based on where you want to go, as well as your financial
muscle. Each loan or policy has a different USP (Unique Selling Point). You
must carefully assess the advantages and disadvantages of all policies, and
ultimately choose the one which meets your needs and requirements.
When you take an education loan, more often than not, it is assumed that you do not have the capacity to pay it by yourself. Mostly, there is an agreement of an EMI (Equated Monthly Instalment) structure in which you will repay your debt. But in case things do not go to plan, and for some reason you are unable to meet your EMI requirements, banks need a guarantor who they can recover this money from.
A guarantor, who is also called a
co-signor- needs to fulfil certain criteria to be eligible to be a guarantor.
Usually, a guarantor should be a parent or a blood relative, who possesses a
high CIBIL score, has a steady income, and usually has no political
In many cases, banks or financial institutions demand you keep a collateral against your loan. The motive of this is to give security to the bank in case you default your payments, or are unable to pay the money back. An extremely popular method of fulfilling these collateral requirements is to mortgage your property.
There are a bunch of things you
should keep in mind before listing mortgaging your house as a collateral. You
should ensure that your house is a free incumbent property- free from other
debts from any other bank or financial institution, that you have an OC
(Occupation Certificate) to your property- certifying that you can stay there,
and that the property should be in the name of your immediate parents.
Knowing how your loan disbursement actually happens is vital. As a borrower, after all your documents are approved, and the loan is sanctioned, the bank paying you or your educational institute is called disbursement of loan.
It is crucial for you to know how much will the bank pay, and how much will you or your family have to pay to cover the costs. You must also find out which costs are covered among the myriad of costs like tuition, books, development and accommodation among several others. The payment method is also something you should know because it tells you if the bank will pay you or if they will directly pay the educational institute when the semester begins.
Knowing the above points and gaining information about them will prove to be beneficial to you as you embark on finding out the right loan for yourself. Some detailed examination and wealth management will ensure that you successfully mitigate your way around education loans and attain education seamlessly.
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