“Congratulations!” Your loan request has been approved.” This is a statement that instantly lifts the spirits of every student. As relief washes over them, they forget that the education loan mountain is only halfway up. After receiving the education loan sanction letter, there are many more steps to take, many of which can cause delays and problems in the process. Lenders may withhold disbursement, reduce the sanctioned amount, or even reject the loan after it has been sanctioned.
Let’s look at what to expect after an education loan is approved and how to avoid these stumbling blocks-
- Documents and collateral value
- Legal dispute over property Charges imposed by the lender Interest rate
- Repayment and EMI
- Disbursement issues
- Pre-visa payments
Documents and Collateral Value
A loan application to a public bank for INR 7.5 lakhs or more requires collateral. A bank-appointed evaluator evaluates the collateral/property, which means that the valuation is lower than the market value. Because the loan terms range from 5 to 10 years, the loan to value ratio is limited to 70 to 80 percent of the property’s market value.
While the value of the collateral is being evaluated prior to education loan sanction, ensure that it is greater than the loan amount required and that the collateral papers are complete. Original documents must be submitted once the loan has been approved. Arranging the collateral papers is a task that even the most organized people struggle with. Moreover, even if one document is missing, it will jeopardized the education loan sanction process.
i.e Secured/ Collateral Loan- Banks and NBFCs require collateral in the form of property, fixed deposits, or other investments and savings when someone wants to borrow a large sum of money. This collateral is considered a form of security for the bank. Moreover, it has the right to be withheld if you are unable to repay the loan.
Yes, the bank will require you to provide proof that you have some collateral to place. The advantage of these types of loans is that the interest rate is 9.05%. It is, in fact, lower than the interest rate on a personal loan!
Unsecured/ Non collateral Loan- It is sometimes enough for a bank to know that you are attending a university in another country for your studies. They do not require any collateral and rely on you to repay the loan amount (plus interest) once you graduate and begin working.
Instead of collateral, they look at documents that demonstrate your abilities. Such as college transcripts, standardized test scores, university admissions, and the course you intend to pursue. They will assist with the education loan sanction once they are satisfied that you are more than capable of pursuing your education abroad and finding work. If they are still not convinced, they will ask you to share documents proving your parents’ ability to repay the loan on your behalf.
International Loan without Co-signer- There are numerous requirements for obtaining a student loan, whether federal or private, many of which are more difficult for international students to meet.
Credit score and credit history
An international student loan, like a co-signer, will require you to demonstrate an excellent credit score and a long credit history in the United States. This is obviously very difficult for international students, as college is often their first extended stay in the United States. Even if you started building credit in college, it would most likely not have grown sufficiently for you to be eligible for an international private student loan without a co-signer.
Students have a very limited budget
Most students don’t have a lot of money during college because they aren’t yet qualified for high-paying professions and don’t have enough time to work while attending classes. As a result, the majority of college students fall short of the income requirements for private lenders.
Interest rates that are extremely high
If you barely fulfil the aforementioned requirements but don’t have a cosigner, the lender will compensate for your lack of security by charging you a substantially higher interest rate.
Although being able to qualify on your own is advantageous, a high interest rate implies your loan will be quite costly. A skilled cosigner might assist you in obtaining a reduced interest rate.
2. Property-related legal wrangling
Collateral guarantees a higher education loan sanction amount limit, lower interest rates, and better terms and conditions. However, if the property pledged is the subject of a legal or other dispute, it will not be processed and accepted by the lender. The property should not be in dispute, and the property papers should clearly identify the owner.
3. Charges imposed by the lender
Several fees are assessed by the lender during the education loan sanction process. To stay on top of things, the student should keep track of all account statements. Students are frequently subjected to arbitrary charges and find it difficult to communicate with their respective lenders. This occurs because most bank managers are transferred within 2-3 years, and the loan term is 7-8 years.
4. Interest rate
The interest rate on education loans is variable, which means it can rise or fall depending on market conditions. This sudden shift is most common in private student loans from NBFCs and private banks. As a result, several students are experiencing a sudden increase in rates. Students are either forced to pay high EMIs or struggle to refinance their loans at a lower interest rate. Simply contact us if you are having difficulty with higher interest rates and refinancing your loan. Our team of experts will negotiate the best possible deal for you, with lower rates and better terms.
5. Disbursement issues
Have you taken out an education loan for Germany, but the lender is refusing to release the funds for the block account? After the education loan sanction approval, this and other disbursement issues are quite common. You may experience disbursement delays, problems with the second disbursement, and so on, which will be quickly resolved by our team. Our services begin when you contact us and end when you pay the final EMI. So, please contact us if you have any problems with loan disbursement.
6. Disbursement of Pre-Visa Fees
Countries such as the United States, Canada, and the United Kingdom, like Germany, require students to submit proof of funds that show liquid funds in their account. As a result, pre-visa disbursement becomes a requirement that must be communicated to the lender in advance. However, several students continue to face this problem, in which the lender refuses to disburse the funds before the visa is approved.
At ForeignAdmits, we understand how important this decision is. We are here to help you every step of the way. Right from finding the correct school to getting admissions and securing scholarships.
ForeignAdmits have a team of experienced counselors. We can provide you with customized guidance based on your individual needs contact us today to get started. We look forward to helping you achieve your educational and career goals!