- Seeking an education loan but don’t know the conditions you need to meet to get the same?
- Don’t worry, we have explained conditions in this post - read the same and apply accordingly!
There are a few conditions you need to meet to get an education loan approved by the bank. And the foremost condition is the purpose for which you are taking the loan. You can use the amount only for studies and not for any personal expenses as the usage of funds is tracked by the lender. So, you need to be careful while using your funds. Read this post and know more about the conditions you need to meet to get an education loan.
Repute of the Institution Where You Look to Study
To pursue your higher studies such as graduation or post-graduate studies, you can get an education loan. And based on the course you apply for the loan limit is decided. You can secure your admission to the university or education institution. Because without having admission first, you can’t get an education loan. But even more important is the reputation of the college or university where you want to study. If the institution has a poor placement record, it might work against you. Yes, the lender might deny you a loan. Lenders like to be convinced of your job prospects before extending you a loan. And, if that becomes weak which is more likely the case when you study in an institution with a poor placement record.
Margin Money Requirement
You need to pay the margin money by yourself which is deducted from your loan amount if it exceeds INR 4 lakh. As per the RBI guidelines, the bank puts a margin to your borrowed amount which the user has to pay from his/her end. While the rest of the amount will be disbursed to your account. For studies in India, the margin is 5% to your loan whereas it is 15% for overseas studies.
Submission of Collateral
Education loans above a specific amount require the backing of collateral. Loans upto INR 7.5 lakh can be financed without any collateral. But if you require more than that, you will need to submit collateral to the lender. They can be land & buildings (excluding agricultural land), Fixed Deposit, Insurance Policy, etc.
Eligibility for the Loan and Expenses Covered with it
Students can apply for the loan if they have secured admission to the college or university by obtaining required marks in a qualifying examination or by clearing the entrance test. But what are the expenses covered by education loans?
- Fee payable to college, school or hostel
- Examination, Library, and Laboratory fee
- Purchase of books, equipment, instruments and uniforms
- Deposit of building fee that is refundable
- The tuition fee should not exceed 10% of the loan amount