As the cost of pursuing higher education abroad continues to soar, it creates a significant financial strain on students due to escalating tuition fees and living expenses abroad. This financial burden often leads many aspiring students to relinquish their dreams of studying abroad. However, in response to this growing demand for funds, banks and NBFCs have introduced education loans tailored for international studies. These loans have emerged as a viable solution, offering a feasible pathway for students planning to pursue education overseas.
Undoubtedly, education loans for abroad studies have garnered widespread recognition for their benefits, not only among students but also within global communities. Nonetheless, while opting for an overseas education loan appears to be a solution, it's crucial to remain vigilant about potential roadblocks that may hinder the education loan abroad acquisition process. Although several obstacles might arise, seeking guidance from experts such as Education Loan Guru can significantly ease the process of securing a study abroad loan, ensuring a smoother and more accessible pathway for students.
The major roadblocks that students may encounter while getting an education loan for abroad studies are:
The availability of collateral can pose a significant roadblock for students seeking education loans, especially if they or their families lack assets to pledge as security. But what is collateral? The collateral refers to the assets or property that a borrower pledges as security against a loan. Banks and financial institutions frequently demand collateral in the context of education loan abroad in order to decrease their risk and guarantee the ability to recover the loan amount in the event of borrower default.
Typically, the loan quantity that can be approved is determined by the collateral's volume. The lender maintains the right to seize the collateral in order to satisfy the outstanding balance in the event that the borrower defaults on the loan. Some lenders might offer loans without collateral, but typically at higher interest rates or with stricter eligibility criteria. Lack of adequate collateral might limit the loan amount sanctioned or increase the interest rates, making it challenging for students to get hold of the necessary funds required for studying abroad.
Strict eligibility criteria for student loan for study abroad can present substantial hurdles for students seeking financial support for their studies abroad. These stringent criteria can vary among lenders and might pose challenges for students who don't meet all the specified requirements. For instance, those with average academic records or a limited credit history might find it difficult to secure a loan. Understanding the eligibility criteria and preparing accordingly can help you prepare to apply for an education loan abroad. However, to get a loan approved, it is required to adhere to eligibility criteria.
The interest rate and loan amount constitute important aspects of an education loan and can potentially evolve into roadblocks for loan approval. These variables are susceptible to fluctuations. These fluctuations can significantly impact both government and private banks, as well as non-banking financial companies (NBFCs). Moreover, the repercussions of market dynamics, especially on interest rates, directly influence Equated Monthly Installments (EMIs), affecting the borrower's repayment burden.
Understanding the potential impact of fluctuating interest rates and loan amounts is crucial for students planning to secure student loan for study abroad. Exploring options during stable market conditions, considering diverse lenders, and staying informed about market trends may aid in navigating these challenges and securing a more favourable loan arrangement.
A significant hurdle to securing an overseas education loan is a low CIBIL score. A deficient credit score can significantly hinder loan approval. Factors contributing to a low CIBIL score typically include limited financial exposure or a history of delayed payments leading to default.
A favourable credit score ensures a smoother loan application process, minimising complications and delays. Conversely, a low CIBIL score significantly diminishes the chances of loan approval for higher education, posing a considerable barrier for aspiring students.
Building and maintaining a good credit score is significant; this can be done through timely payments, responsible credit utilisation, and diversifying credit exposure. A solid credit history not only enhances the prospects of loan approval but also provides better terms and conditions, facilitating the pursuit of education abroad.
Disbursement of an overseas education loan can be challenging at times. This process entails the release of funds by the bank into either the student’s or the university’s account. The main challenge arises when banks require the student to showcase a visa before disbursing the loan amount. Conversely, visa departments might demand proof of the first year's tuition fees and a minimum of one year's living expenses to be available in either the student’s or the university’s account before granting the visa.
These conflicting requirements between the bank and the visa department can create complications, causing delays in loan disbursement. Such situations can be particularly challenging for students who need the loan amount to fulfil the financial requirements demanded by the visa department. Resolving these discrepancies and meeting both sets of criteria often involves careful coordination between the bank, the student, and the educational institution to ensure a smooth disbursement process.
The pursuit of an overseas education loan holds immense promise for students aspiring to study abroad. The increasing costs of international education and living expenses have elevated the need for financial assistance, prompting banks and financial institutions to offer tailored education loans. Despite their benefits, navigating the loan acquisition process demands awareness of potential roadblocks that could impede progress.
It is advisable to seek guidance from experts and stay informed about market trends. Knowledge of market trends can significantly alleviate obstacles, enhancing the likelihood of securing a suitable overseas education loan. If you wish to get an instant student loan online, then contact Education Loan Guru. Education Loan Guru is ready to assist students with their overseas education loans.
By Education Loan Guru
