Panchpande is not the only one to have been confronted with such an ordeal. Several people cannot loans for education abroad traditional lenders because they do not meet the strict eligibility criteria. In 2013 there weren’t too many alternatives, but things are different now. A number of non-bank financial corporations (NBFCs) are much more flexible when it comes to eligibility criteria.
However, generally charge a higher interest rate on student loans than banks. Mr Barve, an independent financial advisor based in Mumbai, said: “For most banks, the interest rate on educational loans is 10.25-11%. For NBFCs, the interest rate range is 11-13% depending on candidate profile, eligibility and other criteria which may vary from case to case. Prices can even go up to 15% for some candidates. ”
If you agree with the higher costs, NBFC can certainly make studying abroad easier for you. We explain the criteria that NFBCs easily apply.
Most banks are more than happy to lend money for study abroad when you want to study medicine, engineering, or management. After all, your career prospects and chances of getting a well-paying job are higher with these degrees compared to a degree, say, in liberal arts. When it comes to unconventional courses, such as music, dance, arts, beauty or part-time, correspondence or online programs, it is easier to get bad credit loans from NBFCs.
Prashant B., Senior Student Loan, Incred Finance, a new-age technology and data science-based financial services platform, said: “Entities like us provide education loans for all kinds of programs – undergraduate, graduate, doctoral, and even certifications and diplomas are eligible. As long as these courses or institutes have required approvals, clearances or accreditation from the relevant bodies, obtaining a loan from NBFC is easier for non-traditional courses. ”
Institution you choose
If you’ve been successful in gaining admission to a top-notch college or university abroad, the banks will likely give you a student loan. In fact, many lenders maintain a pre-approved list of educational institutions.
However, getting into the best universities is not always possible. Additionally, some specialty courses may be available only at unconventional universities or colleges that are not very popular. Fortunately, NBFCs are also willing to offer loans for students taking a course at lesser-known or unconventional colleges or universities.
Amount of the loan
The bank may not have a problem with your chosen course or institute, but they usually have a cap on how much they can lend.
When it comes to studying abroad, a few lakhs are not always enough. But in many cases the banks are unwilling to give a huge amount in the form of a loan. For example, Kotak Mahindra Bank Ltd provides a conditional loan of up to ₹20 lakh for education abroad. But lenders such as the State Bank of India offer a minimum of ₹20 lakh up to as much as ₹1.50 crore. NBFCs generally offer more than banks. Although Avanse Financial Services does not have a fixed upper limit, Incred Finance grants a loan up to ₹1.5 crore.
Amit Gainda, CEO of Avanse Financial Services Ltd, a new era NBFC focused on education, said: “Each request is reviewed on a case-by-case basis. Although we follow policies, we have more flexibility built into the offers as we provide personalized loans. We seek to structure the study abroad loan to meet the necessary needs and the cost of education. Therefore, there is no upper limit to the amount. ”
Most banks and NBFCs cover most of the day-to-day expenses, but margin money or the down payment you need to make up front can be a problem for banks. Some banks ask for margin money up to 15% of the loan amount. Organizing this amount can become difficult, especially if the loan amount is large. The NBFCs also have an advantage on this point. Most of them do not ask for any margin and cover the full cost of education.
The most important eligibility criteria are to provide a guarantee and to have a co-applicant. While a guarantee is the guarantee against which the loan is granted, having a co-applicant is like having a guarantor who can pay the contributions in the event of default. Panchpande did not meet these two criteria. Collateral requirements may differ slightly from bank to bank.
For a study abroad loan of ₹7.5 lakh and above, most banks would usually ask for a guarantee. Jorty Chacko, Executive Director, IDBI Bank Ltd, said: “The parent company must be a joint borrower on the loan account. It is not possible to obtain a loan without a co-applicant. Regarding collateral, for the above loans ₹7.5 lakh, the parent must be a joint borrower. We need a tangible collateral guarantee, as well as the allocation of the student’s future income for the payment of installments. ”
NBFCs are also asking for collateral, but they are considering waiving the requirement altogether, if a few other criteria such as course, college, job prospects, and co-borrower’s creditworthiness are strong.
Most of the experts we spoke to said that students often move to another city after completing their studies for a job, and having a co-applicant in India makes it easier for lenders to find the candidate for the loan. foreign. “It’s a business after all and we need a local person to be a co-applicant, to mitigate our risk,” said Mr. Prashant of Incred.
Things to remember
Banks as well as NBFCs are increasingly cautious about sanctioning huge amounts of loans. Remember that all student loan applications are now routed to banks through the Vidya Lakshmi portal, a government initiative to provide students with a one-stop electronic platform for scholarships and educational loans for students. studies in India and abroad.
If you are someone who has no collateral or a co-borrower, make sure you get into a reputable school and a course that offers good employment prospects. Some banks allow you to take out a maximum loan of ₹7.5 lakh, in accordance with their policy, without any collateral or third party warranties.
As for Panchpande, he is currently working on his doctoral thesis and hopes to obtain his doctorate at the University of Edinburgh, thanks to the Common Wealth scholarship he had in 2015.