Considering the ever-increasing competition and soaring inflation, many challenges arise for students who aspire to study abroad. Earlier, parents used to liquidate their assets to fund the study expenses. However, in the present times, parents prefer to take an education loan.
Students aspiring to study abroad can either take a secured overseas education loan or an unsecured overseas education loan. Taking an overseas education loan is a fantastic way to fund higher education independently. Apart from financial security, there are numerous other advantages of taking an education loan. Some of the leading benefits include financial benefits like a tax rebate under Section 80 E of the Income Tax Act 1961, a wide range of study expenses covered, a moratorium period, easy repayment norms, building the credit history, and loan interest concession for eligible profiles.
These loan benefits can be availed by applicants after they take their student loans for studying abroad successfully.
If you are planning to take an overseas education loan to fulfil your academic aspiration, then you must know some of the common challenges that occur during loan processing. If these challenges are not solved, it might lead to loan rejection.
So, to help you be prepared for your student loan application journey, here’s an article stating common challenges & their solutions. Keep reading to know more and avoid loan rejection.
The first and most important metric that every financial institution will check is the CIBIL scores of the loan applicant and co-applicant. Since the CIBIL score is a summary of the credit history, low CIBIL scores indicate defaulting on previous loan payments. CIBIL score issue is one of the major challenges that a loan applicant faces. So, let’s look for a solution to overcome this challenge.
A low CIBIL score is a result of the delay in EMI payments and credit card bills. To improve the CIBIL score you will have to take a new loan and pay the EMIs regularly. After 3 months of regular loan repayments, the CIBIL score will start improving.
In overseas education loans, the financial profile of the co-applicant is considered by the financial institutions, especially when it is an unsecured overseas education loan. For payment of interest during the moratorium period, the co-applicant is supposed to make the payments. Thus, if the income of the co-applicant is low, the applicant might face rejection of the loan application.
If your Co-applicant has a low income, you can choose to add another financial co-applicant. Another solution to this problem is that there are many financial institutions like NBFCs and International lenders who provide loan sanctions based on the student’s profile and GRE/GMAT scores. You can opt for such loan providers.
Every time you apply for a loan, an inquiry will be made to check your credit score. This inquiry will be reflected in your CIBIL report. Multiple loan enquiries will affect your profile negatively and perceive you as a credit-hungry person.
To avoid this situation that might lead to loan rejection, you should comprehensively research and compare your options for loan providers. Avoid applying for multiple loans simultaneously.
Another parameter that is considered for education loan sanction is the loan applicant’s previous academic performance. An applicant with high academic performance will have a better chance of getting an education loan. Whereas an applicant with an average or below-average performance will face challenges in loan disbursement.
If you are planning to study abroad, ensure that you are improving your academic performance. Many financial institutions overlook the academic performance of the loan applicant and consider backlogs as well. So, make sure that you approach the right loan provider to avoid loan rejection.
One of the most common challenges that arise is insufficient documentation. Being an essential part of overseas education loan processing, missing or inadequate documentation can lead to loan rejection.
The documentation requirement varies from lender to lender. Moreover, secured education loans have relatively more document requirements as collateral security is pledged. So, to avoid any documentation issues, get a document checklist from your financial lender and make sure that you adhere to this list.
These are some of the most common challenges that overseas education loan applicants face. With these recommended solutions, we are hopeful that you will be able to overcome the challenges.
Furthermore, let’s discuss how ELAN Overseas Education Loans can help you avoid loan rejections and have a seamless application experience.
Considering that you are now aware of the common challenges pertaining to your overseas education loans, ensure that you follow these solutions to overcome the challenges.
To gain more insight into the loan process for collateral-based or collateral free education loan for abroad, you can reach out to our experienced Education Loan Advisors at ÉLAN Overseas Education Loan.