In today's competitive world, education is the key that unlocks countless doors of opportunity. However, the rising costs of quality education can often make it seem like a barrier. This is where personal loans for education come into play, offering a financial lifeline to ambitious students and professionals alike. In this article, we will be exploring how personal loans for students can help you invest in yourself and your future. How is it different from education loans, and what are the terms and conditions for getting it.
What is a Personal Loan for Education?
Personal loans for education are unsecured loans that you can use to finance your education/higher studies. Unlike traditional education loans, which are specifically designed for academic purposes, personal loans offer more flexibility in terms of usage and repayment.
How Do They Differ from Traditional Education Loans?
While both types of loans can help fund your education, there are some key differences:
- Flexibility: Personal loans can be used for a wider range of educational expenses, including short-term courses, skill development programs, and even study materials.
- Quicker Processing: Personal loans often have faster approval and disbursement processes compared to education loans.
- No Collateral Required: Unlike some education loans, personal loans are typically unsecured, meaning you don't need to provide any collateral or guarantor.
- Immediate Repayment: Personal loans usually require immediate repayment, while education loans often offer a moratorium period.
Who Can Benefit from Personal Loans for Students in India?
- Working Professionals: Looking to upskill or pursue part-time courses
- Students: Needing additional funds beyond their education loans
- Career Transitioners: Funding new qualifications for a career change
- Lifelong Learners: Pursuing passion projects or hobby courses
- Parents: Supporting their children's education, especially for courses not covered by traditional education loans
Step-by-Step Application Guide for a Personal Loan for Higher Education
The following are the steps you will need to follow to apply for an instant loan for students:
Step 1: Research and Compare
- Do your research, explore all the loan providers in the market, and compare loan offers
- Look beyond interest rates; check factors like processing fees, prepayment charges, and loan tenure
- Read user reviews and check the financial institution’s reputation for customer service
- Use the Shriram Finance Loan EMI Calculator to understand your financial standing and how much you can afford.
- Pay attention to any special offers for students or tie-ups with educational institutions
Step 2: Gather the Required Documents
- Prepare clear, legible scans or photographs of all required documents:
- KYC documents:
- Aadhaar card (mandatory for most loan providers)
- PAN card
- Passport or Voter ID (as additional address proof)
- Income proof:
- Last 3 months' salary slips
- Form 16 or Income Tax Returns for the last 2 years
- Bank statements:
- Statements for the last 3-6 months from your salary account
- Ensure all pages are included and clearly show your name and account number
- Employment proof:
- Employee ID card
- Appointment letter or current employment contract
- Business registration documents for self-employed applicants
- Some financial institutions may require additional documents like educational certificates or course admission proof
- KYC documents:
Step 3: Apply for a Personal Loan for Education
Fill out the application form for your loan. The online application form requires you to input various personal, professional, and financial details. It is crucial to fill out this form with the utmost care, ensuring that all the information you provide matches exactly with your supporting documents.
Providing false or misleading information can lead to your application being rejected and have legal repercussions. Many loan providers now offer a 'soft enquiry' option, which allows you to check your tentative loan offer without affecting your credit score. This can be useful in checking your chances of approval before submitting a full application.
Step 4: Undergo the Verification Process
After submitting your application, prepare yourself for the verification process, which typically involves a telephonic or video Know Your Customer (KYC) procedure. During this step, you'll need to have your original documents readily available.
Some lending institutions may require an in-person verification. This additional step is a standard precaution, so don't be alarmed if the representative visits you in person.
The representative will likely ask you detailed questions about your loan purpose, employment status, and overall financial situation. Be prepared to provide clear and concise answers.
Step 5: Loan Approval
Following the verification process, you can expect to receive an in-principle approval for your personal loan for education, typically within 24 to 48 hours. However, this initial approval is conditional and subject to the final verification of all your documents and information.
Conclusion
A personal loan for students is an ideal financing solution to fund higher studies when education loans are impossible. With personal loans for higher education, parents and working professionals can optimise their chances of approval on a collateral-free personal loan by researching interest rates, having a creditworthy co-applicant, and providing proof of income.
FAQs
1. Can students get a personal loan without proof of income?
Most financial institutions will require proof of income or a co-applicant, even if the student does not have a full-time job. Proof of part-time work will show the repayment ability.
2. What is the minimum credit score required for approval?
A credit score of at least 750 is ideal for quick loan application approval. However, applicants with a low credit score can also apply for the loan. You can expect higher interest rates and lower loan amounts with that. Nevertheless, you should work on improving their creditworthiness before applying.
3. How soon can I get the loan amount once approved?
It depends on the lender and the policy. However, once you complete the documentation process and accept the loan terms, the financial institute will disburse the amount into your account within 3-4 working days.
4. Which financial institutions offer the lowest interest rate on personal loans?
Interest rates vary according to the applicant's profile. Various financial institutions offer rates as low as 10.5% to applicants with good credit scores.
5. Can I foreclose or prepay the loan anytime?
Yes, most financial institutions in India allow the foreclosure of student personal loans after a few months of disbursal, subject to a small foreclosure charge. Part prepayments can also be made subject to specified conditions.
