Financial guidance

When to apply for an education loan?

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Yocket Editorial Team
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It can be a daunting task to plan your education abroad. Especially planning ‘When should I apply for student loans?’  Let us warn you that studying abroad is not at all cheap. Deciding the right timeline for loan application can be complicated. Don’t Worry! We are here for you. We will help you in getting the right loan and the rate of interest, and also help you answer the question-”When to apply for an education loan?” And, therefore, we have listed down a few Frequently Asked Questions on “Student Loan: When to Apply”.

Table of Contents 

  1. Frequently Asked Questions about When to Apply for an Education Loan 

 

Frequently Asked Questions about When to Apply for an Education Loan 

When can you apply for student loans? The answer to this question is very much dependent on the bank you choose, and the university that you apply to. Let us unravel all the questions related to-”When should I apply for student finance?” 

Ques: When is the right time to apply for an education loan in India for study abroad - before you receive your admit or after? (For USA, Canada and other countries)

Ans: When should you apply for student loans- is one among those life questions where even google can’t guide you properly but we’ve cracked it. Most students/ parents are often faced with this situation; as to what process needs to be tackled first – the admission or the education loan? Most banks require an admit before sanctioning your education loan i.e. granting the approval letter. Also, most of the universities prefer students with assured funding. 

Many universities do not grant much time for tuition fee payment post rolling out the admits, which often leaves very little time for loan application and processing. However, with Education Loan providers like InCred, HDFC - Credila and Avanse they allow you to process and sanction the loan even before you receive an admit. 

 

Ques: What are the advantages of an Early Application? 

Ans: When there is fund assurance the chances for getting admission to your dream university increases.

  • Allows you to know your loan eligibility in advance.
  • The most preferred way to declare 'Assured Funds to Universities'
  • Loan Sanction letter has better acceptance over the solvency letter.
  • Assures no last minute issues especially during Visa/ fee payment time.

 Suggested: How to Apply for an Education Loan? 

 

Ques: Why should I apply for an education loan before receiving an admit? 

Ans: After answering the question- “When do I need to apply for student finance?” Let us answer the second most important question. At Yocket, we assist you in choosing the impeccable loan provider suited for your needs. This will enable you to pursue your dreams by making the funds easily available even before you start applying to universities. When you are well aware of the funds that you can get even before you start the university application process, you don't have to downsize their dreams!

Also, be assured that our partnered NBFC (Non Banking Financial Company) providers will offer you the sanction letter before you receive an admit. This will help you in getting a favourable response while applying for I-20s, as some universities prefer solvency along with the application form. Secondly, you will know your eligibility right away so that you can plan your finances accordingly. 

Suggested: True cost of an Education Loan

Ques: Why should I get a loan sanctioned before admission?

Ans: It’s a preferred way to declare 'Assured Funds to Universities'

  • Better acceptance of the sanction letter over the solvency letter.
  • Increase your chances of getting admission to your dream college.
  • No last minute surprises, especially during Visa time.
  • Know your loan eligibility in advance.
  • Quick and hassle free process to get a sanction letter.

 

Ques: Am I eligible to apply for an education loan before receiving an admit?

Ans: Yes. You can apply for an education loan in India for study abroad before receiving an admit from any university. You can check your eligibility on Yocket Loan Assistance. If your case is approved, you will get a conditional loan sanction letter. This helps many students get confidence that their funds can come from the sought financial sources. Students and parents feel confident to apply for better universities, without worrying about how to fund the education abroad.

Suggested:  All about financing your education abroad 

 

Ques: Who is eligible to apply for an education loan and why should one apply?

Ans: Usually, middle-income group people opt for education loans, because of: 

  • Rapidly rising costs of education.
  • Income tax benefit under section 80E of IT act.
  • Students want to take their own financial responsibilities to preserve their parents savings and build positive credit history.
  • Even affluent families are going for education loans because they don’t want to block the huge amount that can be reinvested somewhere else.

 

Ques: Is collateral needed for an education loan?

Ans: While student loan criteria in India is quite uniform, Collateral requirement depends on various factors such as: 

  • The course selected
  • The university chosen
  • Cost of completing the course
  • Scholarship received

Suggested: Education Loans Without Collateral 

 

Ques: Which bank should I choose for funding my education?

Ans: In general, all banks offer a competitive rate of interest on education loans. So the most important question after answering- When do I need to apply for student loans?, is how do you select the right bank for yourself? Well every bank has its own pros and cons. 

  • Most of the banks need something as collateral for education loans. This can be a burden on you if you are unable to provide a collateral and are just one step away from your dream university.

  • Also, banks demand a huge percentage of margin money from students, which generally revolves around 10% to 25% of the total loan amount. For many families it can be troublesome considering the high cost of education.

  • Next follows the speed at which the banks process your education loan. Sometimes there can be a delay in the process for successful sanctioning of your loan which in return can waste your valuable time. We recommend you to go for services offered from private lenders and NBFCs as their process is faster and they give quick decisions. Therefore, there is no harm in exploring options.

 

Ques: Should I go for multiple loan providers?

Ans: It is very necessary to get a low rate of interest on your loan amount as once you start repaying it, you will realise that even 1% of difference can sum up to lakhs when the repayment tenure starts. Getting an education loan that suits your profile the best along with a low rate of interest can be all confusing but it is easy with Yocket Loan Assistance. We always recommend our students to apply for at least 3 financial institutions for the best education loan. When you apply to multiple loan providers, only then can you compare the interest rates; and decide which suits you the best.

Check: Important Education Loan Terms 

 

Ques: Do education loans for premier foreign universities draw a low rate of interest?

Ans: It is indeed natural that premier foreign universities provide for better employment opportunities. Hence, lesser risk for the education loan lending institution which results in a low interest rate offering.

 

Ques: What is the eligibility criteria for an education loan?

Ans: Lending organisations decide loan eligibility on the basis of: 

  • The past academic strength of the student.
  • Future employment prospects.
  • University and course that you have applied to.
  • Co-borrower's financial standing is also considered in the evaluation process.

 

Ques: Do I need to produce a co-borrower / guarantor for an education loan?

Ans: Generally students do not have a source of income, so they take the support of a co-borrower or guarantor for their loan application. A co-borrower/ guarantor mitigates the risk for the loan provider giving you the loan.

 

Ques: Who can be a co-borrower/ guarantor?

Ans: Your parents/ siblings/ close relatives can be your co-borrower during your loan application.

 

Ques: What are the documents needed for an education loan application?

Ans: KYC documents

  • Academic documents
  • Acceptance letter 
  • Financial documents of your co-applicant (generally parents)

However, following a detailed evaluation of your case by any financial organisation might need a few more documents.

 

Ques: What is the current interest rate for education loans in India?

Ans: Education loan interest varies from case-to-case based on student profile. Generally it ranges from 9.85 per cent to 14 per cent.

The “Student Loan: When to Apply” query can be quite confusing at times, and we hope that we were able to answer all your questions related to “ When to apply for student loans”. The process can be a bit exhaustive, but getting a student loan way before getting admitted can help you in ways innumerable! You can also connect with our Yocket Loan Assistance to get all the details regarding eligibility, how to apply, documents required, etc.