Once you are done with your GRE, TOEFL and application process, you need to start thinking about the finances and how will you sponsor your education in any foreign country. It is definitely not possible to study without applying for a loan unless you are born with a silver spoon.
There are various things you need to consider before applying for loan. Any bank will not right away approve your loan application. They will check your background - whether you are capable enough to repay the loan amount. They will check your/parents savings and annual income. Sometimes banks/loan granting agencies even take GRE score under consideration before approving your loan.
Certain banks have criteria that you must have XX amount as your gross annual income and only then can you apply for a loan or you must score above XYZ in GRE and only then you are eligible for a loan.
There are two types of loans which banks and NBFCs ( Non-Banking Financial Company) offer students.
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Secured Education Loan
A secured loan is basically the best way you get a loan of a larger sum. A bank will obviously not lend you a large chunk of money unless you have some mortgage with them. Mortgage can be of various type. House, land, jewellery, property, stocks, bonds, car etc. can act as mortgage. Bank will keep your assets until the entire loan amount is paid.
Most students opt for secured loans because the interest rates of secured loan are less compared to unsecured loan, also the amount required for educational loan is usually large at least for middle class families and acquiring a large sum is easy through secured loan as the banks are also at ease in providing loan because you have a collateral bond with them.
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Unsecured Education Loan
Whereas you need a collateral in a secured loan, those who do not have enough assets to mortgage can go for an unsecured loan. Unsecured loans have high interest rates because you are taking the loan at the risk of the bank. It is basically credit card system wherein money is given as a credit without any security. There is no guarantee whether you will be able to repay the money back as you have no asset or a collateral with the bank. Banks reject unsecured loan application if they find you incapable of returning the money based on your previous transactions. Banks check your profile and risk attached to the project for which you are applying for unsecured loan.
Documents required for processing of an education loan application
- Letter of admission
- Completely filled in Loan Application Form
- 2 passport size photographs
- PAN Card of the student and Parent/ Guardian
- AADHAR Card of the student and parent/ Guardian
- Proof of identity (driving license/passport/any photo identity)
- Proof of residence (driving license/passport/electricity bill/Telephone bill)
- Statement of cost of study
- Student/Co-borrower/ guarantor’s bank account statement for last 6 months
- IT return/ IT assessment order, of last 2 years of Parent/ Guardian/ other co-borrower
- Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
- Proof of income (i.e. salary slips/ Form 16) Parent/ Guardian/ other co-borrower.
- Your GRE AND TOEFL/IELTS score report.
Loan application process is no cake walk. It requires proper planning. Choosing a right bank to fund your education is extremely important. You need to consult the right people before coming to a final decision. Yocket loan assistance simplifies this process for you by connecting you to the right loan providers based on your profile.
