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Understanding the Terms and Conditions of Education Loans 

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Table of contents

Overview
Top 10 Education Loan Terms and Conditions
Conclusion:
Education loans for studying abroad are a free way to fulfil your dream of broadening the horizon of seeking knowledge in international education. Opting for an education loan eases deciding on a college, the application to get through, and the loan disbursal. In this blog, let us know more about education loan terms and conditions that may help you look for the best study loan for abroad studies.

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Top 10 Education Loan Terms and Conditions

While applying for a study course abroad, it is crucial to be aware of the education loan terms and conditions, to be informed of the criteria to ease your financial burden. Here are some important factors to keep in mind:

1. Interest Rates

Check for interest rates offered by different lending bodies and opt for the one that suits you the best or which is lower than other lenders. Within this aspect, there is a term known as variable interest rate. This is where the interest rate fluctuates throughout the loan term with a floating rate of interest with some lenders.

2. Processing fee

Once you go through the education loan qualification process with your lender, ensure to check for the percentage of processing or admin fee related to the loan process. Ensure the fees do not become an added sum to your predetermined loan amount.

3. Repayment duration and terms

For the education loan terms and conditions, the repayment terms are another aspect to be fully aware of. Conduct thorough research on the repayment period and the fixed monthly amount that will be deducted after your moratorium period. Care must be taken to check for preclosure terms, and the penalty levied for the same.

4. Collateral

Collateral is an asset that is pledged alternatively to availing a study abroad loan.  It can be tangible property in the form of government bonds or fixed deposits. 

In India, if you feel the burden to pursue higher studies with self-financing, then a secured education loan is the best option. Here, you can pledge your assets as a guarantee for repayment of the loan. In cases where your family and financial status is strong, you have the option to go for an unsecured education loan, with the sole responsibility of paying the loan amount meticulously.  

5. Moratorium period

Also known as a grace period; a moratorium period is the time frame the lender gives a student to commence the loan payment. This leeway is given to ensure all education loan terms and conditions are followed by the student in that period, so that the student gets a chance to lookout for a job that supports the repayment.

6. Co-signer

A family or friend who willingly opts to become your guarantor for the education loan amount taken by you as a student. Having a co-signer usually helps in availing a loan without collateral, but at the risk of the co-signer.

7. Nationality

A student must be a citizen of the country you’re applying for the loan from.

8. Academic scores

Having strong, qualifying academic scores, with minimum education loan qualification set by the lender is a crucial point to keep in mind.

9. Acceptance from the Institution

Having a confirmed admission letter or email from a recognized university abroad helps to process the loan application quicker, is a mandatory requirement.

10.Including a co-applicant

A co-applicant presents predominantly, usually a parent or guardian with a regular and stable income, is required.

Education Loan Terms and Conditions Loan Criteria for Documentation

education loan terms
The specific documents required for application of an education loan qualification for studying abroad may vary from lender to lender. Some common documents are mentioned below:
  • Duly filled application form
  • Student application form accepted by the abroad university or education institute
  • Student KYC documents like proof of identity and address
  • Academic documents such as mark sheets from board, 12th and degree
  • Co-applicant KYC and income proof of employment such as salary slips, income tax returns confirmation receipts etc.
  • Loan amount justification: Documents outlining the estimated education expenses (tuition fees, living expenses, etc.)

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Conclusion: 

By understanding the education loan terms and conditions, you can gain the information and the confidence to pursue your academic and future aspirations on the international stage. By gauging the nuances of different types, features, and benefits of these loans, you can make an informed decision about opting to finance your education abroad for higher studies.

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