A majority of Indian students aspire to go for abroad studies. In the first two months of 2021, almost 72,000 students have opted for overseas education. While it opens a host of career opportunities, the affordability of most courses remains a question.
However, in such a scenario, an education loan solves this issue. With this credit option, students can realise their dream of studying abroad. However, before sanctioning the amount, lenders scrutinize several factors. Hence, if you want to avoid the possibility of an education loan application being rejected, you should know the reasons beforehand.
What are the reasons for an education loan rejection?
Some of the basic reasons why lenders reject a study loan application are-
- Poor grades
One of the most common reasons lenders often rejects an education loan application is due to the poor academic records of students. Typically, they approve the credit after assessing the grades of all examinations passed if a student is ever suspended, qualified for all entrance examinations with cut-off marks, etc.
In case any of these factors are compromised, the lender is likely to turn down the application or offer comparatively lesser funds. For better estimation, individuals can also use an education loan calculator. It also facilitates loan repayment.
- Inability to meet eligibility parameters
Besides excellent academic records and achievements, students also need to meet certain lender-specific eligibility parameters to qualify for the best education loan schemes. Although it varies with financial institutions, the following are some common requisites that students need to fulfill:
- Applicants must be residing citizens of India
- They should have confirmed admission to leading educational institutions in India or abroad
iii. The age should range between 18 to 35 years
- Must pass all the previous examinations with excellent marks
- Should have applied for the credit with a co-applicant or guarantor.
However, individuals who fail to meet the eligibility can alternatively opt for an education loan against property. It accompanies lenient eligibility parameters.
- University or course not listed
Typically, lenders approve an education loan only for a list of educational institutions in India and abroad. In case the course you opted for is not listed to the lender, you cannot qualify for this credit. For instance, Indian institutions need to be affiliated to UGC/AICTE/Govt, etc.
On the other hand, the list of institutions is different for education loan for abroad studies.
These are some of the most crucial factors you need to consider to prevent the rejection of education loans. Besides, individuals can also collateralize their assets to opt for an education loan against property. This credit option offers a substantial loan amount at competitive interest rates. Moreover, the parents can avail of this credit by meeting simple eligibility.
Hence, parents should know why is a loan against property a better way to finance a child’s education.
What are the advantages of education loan against property?
- Covers most expenses
Unlike a collateral-free education loan, a LAP accompanies a high-value fund. It allows students or their parents to finance almost entire tuition fees, admission fees, and living expenses abroad.
Since it does not have any restrictions on end-use, individuals need to know how to use loan against property to make the most of this fund.
- Affordable interest rate
An education loan against property is a secured credit, and therefore the lenders levy a competitive interest rate. It guarantees affordable monthly instalments and lower borrowing costs. However, to get the best deal, individuals should compare the rates with different lenders.
- Simple repayment options
A loan against property comes with a long tenor of up to 20 years. Hence, the borrowers can plan their repayment accordingly. They can also use a loan against property EMI calculator to adjust the tenor and EMI payable.
Selected financial institutions also extend pre-approved offers that simplify and expedite loan processing. Besides a loan against property, these are also available on secured credit like home loans. Check your pre-approved offer by entering your name and contact number.
These are some factors that lead to education loan rejection. However, in such cases also individuals can avail funds through an education loan against property.