Many aspire to pursue their further education through graduation and post-graduation courses. The cost of education is higher outside the country as compared to within India.
Those students wishing to pursue a course abroad have to make the arrangements to fund their course fees as well as meet their accommodation and other daily financial expenses. This makes it a more expensive affair.
A simple way to obtain the required funds is by applying for a personal loan for educational purposes. There are numerous financiers in the market who provide loans at competitive and attractive interest rates. Besides, lenders these days offer customized repayment plans wherein applicants may repay as per their cash flow. Additionally, potential loan seekers may also avail of a personal loan online through the lender’s web portal. Online application provides a great degree of flexibility and convenience as applicants may apply from the comfort of their home.
Eligibility criteria for personal loan for education
Applicants have to fulfill the eligibility criteria as specified by the lender in order to get an approval. The individual needs to submit his past academic record and state his ability to secure a job after the completion of the course. Lenders also evaluate the reputation of the institute where the applicant wishes to pursue further education. The most important aspect is the credit history of the applicant or the co-applicant. As the applicant is generally a student, the credit score of the co-applicant, mostly the parents, is taken into consideration.
About credit score
A credit score is a rating given by the Credit Information Bureau (India) Limited (CIBIL). This score is a number ranging from 300 to 900. A higher score indicates that the applicant has a sound financial position with a history of timely payments of loan and credit card debt. Moreover, lenders have greater confidence in those with a higher credit score. Hence, individuals with high credit scores get loan approval quickly.
Having a poor credit score does not imply that the loan does not get approved. Following are three tips to secure a loan in spite of a poor credit score.
- Use a collateral
Loan seekers may use collateral, such as a house or property, as security against the loan. Offering collateral gives assurance to lenders in case of default on payments. However, it important to understand that the financier may seize ownership of the asset in case the borrower fails to make payments.
- Avail of peer-to-peer (P2P) lending services
Peer-to-peer lending services offer personal loans for education to those with a poor score. Such online sites offer loans up to INR 5 lakh with a repayment period of 12 to 36 months, thus enabling those with a low score to fulfill their dream.
- Negotiate well with NBFCs
The chances of getting a loan approval from a Non-Banking Financial Company (NBFC) are higher than that of banks. Hence individuals with lower credit score may apply for a personal loan through NBFCs. However, the rate of interest charged by these financial companies may be slightly higher than that of banks.
The aforementioned tips will help individuals with poor credit scores to avail of personal finance easily. In case there is an adequate amount of time left before the loan application, borrowers may improve their credit score by making credit card and loan installment payments on time.