5 Tips to Secure an Education Loan for Studying Abroad

Pursuing education abroad is a dream for many students, but the financial aspect can often seem overwhelming. Education loans are a practical solution that can help turn this dream into reality. Here are five essential tips to help you secure an education loan for studying abroad.

1. Understand Your Loan Options

Before applying for an education loan, it is crucial to research the available options. Broadly, there are two types of loans:

• Secured Loans: These require collateral, such as property, fixed deposits, or other assets.

• Unsecured Loans: These do not require collateral but often come with higher interest rates.

Compare different banks and financial institutions to understand their offerings.

2. Check Your Eligibility Criteria

Lenders have specific eligibility criteria for education loans. These typically include:

• Academic performance: Consistently good grades and admission to a recognized university.

• Course eligibility: Professional or technical courses that provide high employability.

• Co-applicant requirement: A parent or guardian with a stable income may need to co-sign the loan.

• Chosen University: Higher ranked universities command a lower interest rate and vice versa.

3. Prepare Essential Documentation

Commonly required documents include:

• Filled bank application form to get a study loan for abroad studies.

• Photographs: Passport-size photographs of the applicant and the co-applicant.

• Photo ID of the applicant and the co-applicant. It can be a PAN card, driving license, Voter ID card, Aadhar Card, or Passport.

• Residence proof: Resident proof of the applicant and the co-applicant

• Academic documents like mark sheets, and certificates, including scorecards of standardized tests like GRE, GMAT, TOEFL, IELTS, etc. whichever is applicable.

• Admission letter shared by the university or college.

• Last six months' bank statements of the co-applicant

• Income proof of the co-applicant (A foreign education loan can be obtained depending on a number of variables, including the financial situation, location, and assets of your co-applicant).

• In the case of collateral (immovable property) such as flat, home, or non-agriculture land, you need any of them (Present Property title deed, Building approved plan, NOC for a mortgage from a builder or society). Banks may ask all of them.

4. Review Your Repayment Plan

The duration for which education loans are taken is long. Before signing, read the repayment terms:

• Know how the EMI (Equated Monthly Installments) structure works, along with the repayment period.

• Does the lender provide a grace period for repayment after course completion?

• Check if the lender offers an option for prepayment or foreclosure option, which helps to reduce the burden of paying excess interest.

• Use online EMI calculators to know your monthly payment amounts and simply plan your finances around it effectively.

5. Expert Guidance

Navigating through the terms and conditions of lenders can be tricky. You might want to consider professional advice by:

• Study abroad consultants: They may help you understand which lenders have good terms for international students. If you want a hassle free loan process, contact us at TFM, where we can help you find the best colleges and universities abroad and also provide loan and visa assistance. Book your free session right now!

• Financial advisors: They help facilitate understanding of financial consequences and find the most suitable loan. Plus associates or alumni have already taken out loans for undergrads or overseas and would provide great tips.

Frequently Asked questions (FAQs)

Q1. What is EMI and How is it calculated?

Ans. EMI stands for Equated Monthly Installments. This installment consists of both principle and interest components. Your EMI would be calculated depending on the tenure you choose, to repay your loan. The EMI would be higher if you choose a shorter duration to repay your loan and vice versa. A shorter repayment period however reduces your interest cost over the term of the loan. 

Q2. Can I get a loan if my CIBIL score is bad?

Ans. With a lower CIBIL score, there might be some challenges such as higher rate of interest, lack of availability of non-collateral loan, etc. Get in touch with us to understand what you can do in such circumstances.

Q3. What does an education consultant do?

Ans. An education consultant, also called a higher education consultant, assists students and their parents in planning for college and financial aid. They offer services ranging from profile evaluation to loan and scholarship assistance. An education consultant's job is to understand the student's profile and provide him with the best possible advice, keeping the student's goals in mind.