Getting an education loan can help you finance your studies. So, it is good to have an idea about education loans. So, here are a few things you need to think about before applying for loans:
1. Analyze Your Education Loan Appetite
Before you apply for a student loan, you should be aware of your current financial situation. Before you take up an educational loan, understand your debt load after graduation. Analyze your course and job opportunities to be sure if you will have enough cash flow in the future to repay your loan in time and preserve a good credit score.
2.Loan Repayment Between Your Course Completion and Job
After you have finished your course, you will begin making payments toward the cost of the course. The amount that is repaid and the schedule for doing so are both determined by the total amount that was borrowed and its interest. Repayments of your study loan can be made in a lump sum or instalments after your course.
3. Documentation Necessary For The Loan
In order to submit a loan application, you will be required to provide the following documents:
- ID proof (a copy of your passport or driver’s license)
- Income proof of your parents or guardian
- Transcripts and other certificates
- College/course enrolment letters
- Address proof (either an electricity bill or bank statement)
4. Credit Score For An Education Loa
Your credit score is a quantitative indicator of your perceived creditworthiness. It is generated from data in your credit report, including things like your instalment history, spending and current debts, among other things. Your lender will assess this data in order to decide whether or not you qualify for a loan from them.
Higher credit scores mean cheaper loan rates and vice versa. It is recommended to aim for a solid CIBIL score above 750, so this process goes smoothly.
5. You Need a Co-applicant to Get An Education Loan
A co-applicant is also called a guarantor because it’s their job to protect your loan and make sure it gets paid back in full. Your parents or guardians are your co-applicants in an education loan. Therefore, you will be required to give their income documents while applying for an education loan.
6. The Co-applicant Salary is a Determining Factor To Avail Loan
The bank will examine the co-applicants salary when deciding how much loan to grant you and may require a particular threshold before approving your financial aid application. This depends on the employee or wage earned. In addition to this, banks also consider investments or side jobs of you and your co-applicants. Hence, including all of your investments is a smart choice to easily get a study loan.
7. EMIs for Your Education Loan Repayment
EMI stands for Equated Monthly Installment. It is the amount you pay every month on your education loan, calculated by dividing the loan amount by the number of months in which you have to repay it.
So, if you wish to pursue your dream of education, an education loan can be a big help for young career-oriented people. If you are applying for an education loan, too, the above list is a sticky note you must stick to!