Education loans are a go to financial aid option for students requiring monetary support to study abroad. The demand for pursuing higher education in a foreign country is rising tremendously. This has led to a high number of Indian students taking overseas education loans to fulfill their cost of education. An education loan for abroad studies can be of two types, secured and unsecured education loans. While secured education loans demand you to pledge your assets against the loan amount taken, unsecured education loans relieve you from the burden of giving a loan security.
So, even a lack of collateral security cannot come your way to study abroad. Unsecured education loans have become an increasingly popular option for students aspiring to pursue higher education abroad. If you are planning to take an unsecured or collateral free education loan for abroad studies, then this article is for you. Keep reading to find out the fundamentals of this loan type and much more information that will help you during your loan application process.
Common Parameters that are Considered for Unsecured Education Loans
When applying for an unsecured education loan, various factors come into play during the assessment process. Some of them are given below.
- Age of the Loan Applicant: Since the loan is unsecured in nature, the age of the loan applicant should not be more than 28 years in exceptional cases financial institutions accept 30 years age bar as well.
- Credit Score and History: A strong credit score and a clean credit history significantly influence loan approval and the interest rates offered. Your CIBIL score should be above 700.
- Course and Institution: The reputation of the institution and the chosen course greatly impact the lender’s decision as it emphasises the potential employability and future income prospects. So, to seek an unsecured loan you must have an offer letter from a top-ranked university.
- Financial Stability: Lenders evaluate the financial stability of the loan applicant or their co-applicant to gauge repayment capacity.
- Loan Amount: The amount sanctioned is often correlated with the cost of education, ensuring that it covers tuition fees, living expenses, and other essential costs.
- Good Academic Profile: Another parameter that goes beyond the banking sector is the academic history of the loan applicant. A loan applicant with a first-class degree, a minimum number of backlogs and no academic gap will be considered for unsecured loans.
After knowing the common parameters that banks and financial institutions consider, let’s proceed to discuss the documents required for loan applications.
Document Checklist for Unsecured Education Loan Application
To ensure a smooth application process, compiling these necessary documents will be needed for your education loan for abroad studies.
- Identity Verification: Valid identification documents such as a passport, Aadhaar card, or driver’s license.
- Admission Letter: Proof of acceptance from the educational institution.
- Academic Records: Certificates, and mark sheets from previous education levels.
- Financial Documents: Income tax returns, bank statements, and salary slips of the loan applicant or co-applicant to establish financial stability.
- Loan Application Form: Completing the application form accurately and comprehensively is vital.
· Now that you know the basics of an unsecured education loan application, let’s take you through the process of the loan application.
Simplified Unsecured Education Loan Application Procedure
The application process for an unsecured education loan involves several stages, they include.
- Research and Comparison: Thoroughly research various banks, financial institutions, and lenders. Then compare their eligibility criteria, interest rates, quantum of finance, margin money, and repayment options to choose the most suitable lender.
- Application Submission: Fill out the loan application form diligently. Attach all the required documents and pay the required loan processing fee. Go through the loan application and submit it.
- Loan Approval Process: The lender will assess the loan application and cross-verify the provided information. This process will take around 2-5 working days.
- Sanction Letter and Agreement: If your loan is approved then your lender will inform you and a formal sanction letter will be issued. This letter will have all the details of the terms and conditions. Once signed and returned, the loan disbursement process initiates.
- Loan Disbursement: The education loan is disbursed directly to the educational institution for tuition fees. Regarding the living expenses, the applicant will have to create a local bank account in the study destination and the required money will be transferred there.
Thus, in five simple steps, you have applied for and received your education loan.
Now that you are equipped with the essentials of securing an unsecured education loan, you can commence your application process with the right financial lender. To ease the process of self-application, we recommend you to visit the leading education loan advisor near you. If visiting the office isn’t possible then you can take their online services. They usually provide free online counselling for study abroad loan so you can get the expert’s opinion without going out.
So, take that leap forward, bridge the financial gap, get your documents ready and create the future that you have always dreamed about!
