A Personal Loan for education is a funding option that gives professionals or their children a chance to upgrade their qualifications and succeed. You can use the loan amount to gain higher education, hone your skills to get a better job or excel in your profession. Previously, obtaining these loans had been quite daunting for students and their families. However, technologically advanced NBFCs have started supporting 100% loan procedures with simple eligibility conditions and minimal documentation to make the process remarkably simplified. With this guide to getting an education loan in India, you can complete the process without hassle.
While the loan application, approval, disbursement and repayment process may differ among various financial institutions, most financial institutions like Hero FinCorp follow a simple procedure with expert guidance on every step.
Steps for a Hassle-free Personal Loan Application
Applying for an easy Personal Loan involves the following steps:
1. Determine the Loan Amount Based on the Cost of Education
The process begins with determining the loan amount you would need to cover the education-related expenses. The costs may range from admission and tuition fees to transportation, accommodation, study material, and other personal expenses when studying abroad. You can easily procure an estimate of these expenses from the university’s website or local portals displaying the cost of living in the place. Once you get an estimate, you can determine the loan amount you need to borrow.
2. Compare Various Loan Offers
After determining the loan amount, the next step is to find a suitable lender with a favourable loan plan. Several lending institutions in India provide loans for studying in Indian or international institutes. Contact these lenders with your loan requirements and get an idea of their financial products.
Reputable loan providers offer customised loan plans with simpler eligibility criteria, no branch visits, zero paperwork, and no collateral requirement. Compare these easy Personal Loan offers based on their interest rates, customer service, eligibility and documentation requirements, processing charges, etc. Finally, opt for one with the most suitable loan offer with EMIs you can easily afford.
3. Check Out the Eligibility Criteria
Once you select an appropriate loan provider with the best loan offer, check out their eligibility criteria to see if you qualify for them. Standard eligibility conditions include minimum and maximum age limits (usually 21-58 years), minimum monthly income requirement (around Rs 15,000), Indian citizenship, stable employment with sufficient work experience, etc. A decent credit score and a low debt-to-income (DTI) ratio are also favourable for your loan requirement. So, before applying, ensure you fulfil the lender’s minimum eligibility requirements to avoid rejection.
4. Choose an Appropriate Repayment Tenure
Finance companies offer flexible loan terms on their Personal Loans. When you apply for a Personal Loan for education, you can choose a repayment term with EMIs you can easily afford. The longer the loan tenure, the smaller the EMIs and the higher the interest cost.
For instance, if you borrow a 2 Lakh loan at a 12% interest rate for 12 months, its monthly instalment will be Rs 18,667, and the total interest cost will be Rs 24,000. On the other hand, if you borrow the same loan amount at the same interest rate for 48 months, your monthly EMI will be Rs 6,167, but the interest cost will increase significantly to Rs 96,000. A Personal Loan EMI calculator helps calculate EMIs for various loan terms, allowing you to choose one that best suits your monthly repayment capacity.
5. Apply for a Personal Loan for Education
After making crucial loan-related decisions, the next step is filling out an online application form. Modern NBFCs have online application forms on their websites and loan apps that you can fill out from the comfort of your homes. Filling out the form includes your personal, financial, employment, and contact details. If the lender’s representative needs any other information, they may call you to collect the same. Be careful to fill in accurate information in the application, as any errors or discrepancies will negatively impact your eligibility and approval chances.
6. Submit the Required Documents
Documentation is an integral process in any loan application. Lenders want to see your identity, address, and income proofs to determine your stability and repayment capacity. Common documents that lending institutions demand include the following:
- Duly filled application form
- Coloured passport-sized photograph
- Identity proof: driving licence, passport, PAN card, Aadhaar card
- Address proof: driving license, passport, Aadhaar card, ration card, utility bill
- For salaried employees:
- Address proof, like maintenance bills, utility bills, property documents, or rent agreements
- Income proof, like the last six months’ salary slips, the previous six months’ salary account statement, Form 16.
- Job continuity proof, like an appointment letter from the current employer or an experience certificate from the previous employer.
- For self-employed professionals:
- Residence ownership proof, like maintenance bills, electricity bills, or property documents.
- Business existence proof, like shop establishment proof, a copy of tax registration, or a company registration certificate.
- Income proof, like the last six months’ bank statements and ITR for the previous two consecutive years.
Since the documentation requirements vary for salaried and self-employed individuals, you must submit the relevant documents according to your profession. Don’t worry; you don’t need to visit the lender’s office to submit these documents in physical form. New-age companies accept soft copies of the required documents uploaded through their website or app.
7. Read and Sign the Loan Document
Once the lender verifies your information and approves your loan, they send you a loan offer with details like your approved loan amount, interest rate, and repayment tenure. Before signing, you must read the loan document carefully to understand the terms and conditions. In case of any doubt, call the lender’s customer care number for clarification. Don’t miss the fine print, as it mostly includes the additional charges the lender levies in various situations.
8. Disbursement and Repayment
Once you sign the loan document, the loan company disburses the loan amount directly to your concerned bank account. The repayment begins from the next month in easy EMIs you choose according to your budget.
The key to a successful Personal Loan application is comparing and analysing the loan options. It helps you get the best Personal Loan for education offer while avoiding any last-minute complications. The best advice is to start early and research for a smoother experience.