Top Reasons for Rejection of Education Loan Without Collateral
Indian students are moving to popular study abroad destinations like the USA, UK, Canada, Australia, and New Zealand. Moving to a new country to study can come up with a lot of challenges and expenses. Majority of the students prefer to take education loan for financial assistance. There are two types of education loan - Secured loan (Collateral Loan) and Unsecured Loan (Non-Collateral Loan). Secured education loan consists of a lot of documentation, this makes the process very time consuming. Unsecured education loan is quick to process in comparison to secured education loan.
Education Loan Without Collateral is also known as unsecured education loan. Since this loan does not require any collateral, it is based on the applicant’s and co -applicant’s credibility. If the applicant has all the documents cleared, the process and verification take less time to sanction the loan.
Banks Offering Education Loan Without Collateral
Banks and Financial Lenders that offers education loan without collateral at ELAN are given below
Nationalized banks: Bank of Baroda, Bank of India, State Bank of India
Private banks: Axis Bank, ICICI Bank, IDFC First Bank
International lenders: MPower Financing, Leap Finance, Prodigy Finance
Top Reasons for Loan Rejection
Top reasons for Education loan rejection without collateral are given below
1. Low CIBIL Score of the Applicant, Co-Applicant or Guarantor
CIBIL score is an important aspect of profile evaluation for unsecured education loans. All private banks and NBFCs are very particular about the CIBIL score of the applicant and the co-applicant. CIBIL score of 700 and above is required for education loan without collateral. Applications with scores lower than 700 get rejected by the lenders. Some of the major reasons for low CIBIL Score are cheque bounce, delay in EMI payments and delay in repayment of credit card bills.
2. Previous Academic Performance of the Applicant
The previous academic performance of the applicant is an important reason for loan approval and rejection. The applicant who has performed well in their academics have high chance of success in the education loan sanction. However, if the applicant has average or below average grades there will be high chances of the loan getting rejected. The bank accepts 5-6 backlogs with justification. For academic gap an affidavit needs to be submitted to the bank.
If the bank is not satisfied with the applicant’s academic performance, they will reject the loan application.
3. Age Limit of the Applicant, Co-Applicant or Guarantor
Age Limit is an important criterion for both the applicant and the co-applicant. For unsecured education loans applicant’s maximum age limit can be up to 28 years. If this limit exceeds, it can be a reason for rejection of the loan.
The age of the co-applicant is also considered while sanctioning the loan. If the co- applicant is employed and has an age close to retirement, the loan might get rejected as they will have low repayment capacity. This is also a reason why education loan for abroad studies by Indian government doesn’t provide unsecured education loans.
4. University and Course Applied for Higher Education
Financial lenders consider the university ranking and type of course selected by the applicant for granting unsecured education loan. This type of loan is not applicable for bachelor courses.
Students applying for Engineering, management and Medicine courses for high rank universities have high chances of getting the education loan. Courses in the field of humanities and commerce have chances of getting rejection for their loan applications.
Hence, university and course can be a reason for loan rejection.
5. Financial Income of the Co-applicant
Financial Income of the co-applicant is an important reason for sanctioning of loan for higher education abroad. If the applicant fails to pay the loan amount, the co-applicant is supposed to do the repayment. That is why, the financial status of the co-applicant is considered by the lenders for sanctioning of the education loan without collateral. The moratorium period starts as soon as the loan amount is disbursed. The co – applicant is required to make the payments of the applicant during the moratorium period.
If the co-applicant has low income or repaying capacity, the bank will reject the application. This is the reason why income of the co-applicant is important for rejection of education loan without collateral.
Apart from the above-mentioned reasons, there are many other reasons that can reject your education loan application. Some of the reasons are incomplete and fake documents, multiple loan enquiries and applications, serving as a guarantor to a defaulter, low repaying capacity, etc.
Now that you know the reasons why your Education Loan Without Collateral might get rejected, try to abide by the requirements of the financial lenders. If you worried about the loan process, we at ÉLAN Loans will help you with the entire application process.
Keep reading to know how ÉLAN Loans can assist you with their services.
Simplify your education loan without collateral process with ÉLAN loans
ÉLAN loans are the optimal solution for your overseas education loans. Here’s how we can assist you for your education loan process without collateral.
• Our experts create your profile and checks the eligibility for loans
• We will assist you with the entire documentation and application process
• We will try our best to provide 100% funding
• We also offer pre – admission loans
• We provide quick loan sanction
• We will assist you with our additional services like scholarships, forex, travel Insurance and international sim card.
Get in touch with Élan Overseas Education Team to start your loan processing.