Obtaining a higher degree from a reputed institution is essential to your professional career. For many students, it is equivalent to getting their higher education abroad. With the rising cost of quality education, it has become slightly difficult for students to enrol in universities abroad due to sky-high expenses. Various surveys have been conducted that clearly indicate the rising cost of education both in India and at international universities. Students and their parents both find it difficult to manage the expenses incurred in studying abroad. Due to being unable to fund their education, students have to drop this opportunity.
Arranging large funds for abroad education loans is the best available solution. Every year, thousands of aspirants apply for education loans abroad, but only a few of them get their funding from financial institutions. Most of the students have to face rejection for several reasons, and they are not even aware of the reason behind the rejection of their loan application. But there is no need to worry; we have enlisted some important guidelines for students to consider before applying for the education loan. These guidelines will help students avoid confusion about the dos and don’ts required in the application process:
Below, we have enlisted important clauses that may lead to the rejection of your loan application. By keeping them in mind, you can reduce the chances of rejection and increase the opportunity to get your funding without any hassle.
Loan providers consider academic performance an important factor on which loan approval or rejection depends. Aspirants who have performed well in their academics and have a meritorious record have higher chances of getting their loan approved. However, students who have scored below average or have 5 to 6 consistent backlogs have low chances of getting their loan application approved.
Even academic gaps are not considered acceptable by the lenders.
Incomplete and fake documents are not acceptable when it comes to foreign education loans. Students are required to submit the original documents only when applying for an overseas education loan. Any fake or duplicate document will immediately lead to the cancellation of your application. Moreover, submitting an incomplete application can also lead to rejection. To get assistance with the application procedure for a student loan to study abroad, contact the Education Loan Guru.
Maintaining a good CIBIL score is essential for loan approval. In the case of unsecured loans, private lenders like NBFCs consider the CIBIL score of the applicant and their co-applicant. It is a necessary condition for approval of their education loan application. Any past defaults on due payments, credit card bills, or late payment of ongoing loans will negatively affect your CIBIL score. Candidates who have a good CIBIL score that ranges between 690 and 720 are considered worthy of granting the loan in comparison to applicants who have a low CIBIL score, which impacts their creditworthiness for the loan.
Unsecured loans are great options for students who don’t have any collateral to mortgage. However, the co-applicant and their income are two of the most important factors that will help you get the loan from lenders. To acquire an education loan abroad from financial institutions, the co-applicant is important. Also, in the case of unsecured loans, their earnings will become an important factor. Thus, we cannot ignore the fact that a financial co-applicant is necessary for loan approval, especially for unsecured loans.
The university and course chosen for studies play an important role in getting the foreign education loan approved by the financial institutions. Students who have secured admission to a globally reputed university and a course that has great job potential have high chances of getting their loan approved. STEM courses, which include studies related to science, technology, engineering, and management, are preferred courses by banks, and they easily grant loans for such courses. Students who have taken humanities and other non-technical courses are advised to apply for collateral-based overseas loans. However, in case they don’t have collateral, there is no need to worry; they can apply for loans from an NBFC.
If the applicant is already debt-ridden, they may have difficulty getting another loan in the future. Clearing off your past dues is important to maintain a good CIBIL score; any default or late payment cases may lead to the cancellation of your loan application. The bank has the right to cancel your loan application at any time if they find out about your past liabilities. Lenders always check the CIBIL profile of the applicant before approving the loan application; they consider it an important factor in granting the approval.
Students are required to present the admission offer letter received from the applying university to the bank for loan approval. The bank can cancel their loan application if the applicant fails to present the offer letter from the university.
Financial institutions have laid down certain conditions for eligibility for applicants. Applicants need to check whether they meet the eligibility criteria or not; if they fail to meet the eligibility criteria, they will not be eligible to apply for an education loan.
There are two types of education loans: collateral and non-collateral. Applicants with collateral are recommended to apply for the collateral-based education loan from public sector banks. They must ensure they have all the valid and complete collateral documents to avoid any reason for loan rejection. Those who don’t have collateral can opt for unsecured loans, but make sure you have a financial co-applicant and a good CIBIL score to avoid rejection in the application process.
The repayment capacity of the borrower is an important factor in deciding whether the applicant is eligible for a loan or not. Besides any other factor, the lender considers it the most important as it will make their funding successful or unsuccessful. Non-payment of dues and the inability to meet income criteria are the main factors that may lead to the rejection of a student loan to study abroad.
The applicant often makes this mistake by applying to multiple lenders. Before applying for an education loan abroad, calculate your expenses, like tuition fees and living costs. You can make an informed decision once you get an estimate of the amount you will require as a loan. See how you want to apply for a loan, with or without collateral. Compare the interest rates and other factors to decide about the lenders.
These were some of the major reasons behind the rejection of a loan application. By keeping the guidelines in mind, you can avoid mistakes and make corrections in time. Now that you know what the dos and don'ts are that have to be followed while applying for an overseas education loan, you can increase your chances of loan approval.
For more help, connect with Education Loan Guru, "Your One-Stop Solution for All Queries Related to Overseas Education Loans."
By Education Loan Guru
