Worried if you

Worried if you need to have an asset for collateral security or not?

The cost of higher education in India and abroad costs most of the savings our parents have done for us. But the once who cannot afford to study in such expensive institutes drop out of their colleges and do small jobs killing their dreams to earn a living. People do not opt for loan from banks or NBFCs as they are afraid of the after-effects if they are unable to pay the loan.

Some of them are aware that loan is not a debt but an investment for the future. And that investing or opting for a loan can help them fulfill their dreams. No Collateral Security is needed for loans below 4 lakhs. Banks give loans up to 7.5 lakhs without collateral security. They sometimes ask for a third-party guarantee to be on the safer side.

Aspects of loan:

For education in abroad about 20-30 lakhs are needed. And not all the students who apply for a loan for studying abroad have collateral security. For such students, there are NBFC loan providers who give loan with any collateral security. (Collateral security is the asset against a loan. If the loan is not been paid then the bank or the company you have taken the loan for has the authority to take away that asset)

Points to keep in mind before applying for education loan:

1. Keep all the documents ready for verification. There are several documents such as 10th, 12th mark sheet, graduation mark sheets, etc.
2. To apply for a loan, you should know the amount you wish to borrow. Some several banks and NBFCs provide loans without Collateral Security but it will be a slightly higher rate. As compared to the education loan that is taken with collateral.
3. Your parents are the co-applicant and you are the applicant. The banks usually ask for salary slips and income tax returns (ITR) of the co-applicant. They need to know they you will be able to pay the loan amount or not.
4. Each bank has its rate of interest that it charges. The duration of the loan also differs. know all the details of the source you choose to borrow money from.
5. One should have secured admission into a college/ university that should be recognized by the NAAC/ NBA to be able to get the principal amount of fees.
6. The letter of authority from the college needs to be shown to the bank (or loan provider).
7. Every student gets the time of the one-year moratorium period to repay the loan amount after the course is over. Most people start replying as soon as they start earning. But that one year is given for relaxation before one starts the repayment.
8. About 15 years are given to repay the loan amount but it is beneficial to complete the repayment in 8 years. As the tax-saving benefit is only available for the first 8 years.

Their tips will help you choose the right loan provider. Education has a lot to do with the whole life. Make the best out of the loan money to be able to live comfortably.