For many students, an educational loan is often their first experience with credit, and so they might not know how to navigate the student loan journey and can end up making some mistakes. If you're planning to offer a student loan, here are some common mistakes in the education loan process you can avoid.
Key highlights:
- Some Mistakes to Avoid When Applying for an Education Loan
- Little to No Research
- Not Being Careful - Mistakes to Avoid in Student Loan Application
- Not Planning Repayment - Student Loan Tips for Repayment
- No Emergency Corpus
- Not Reading the Fine Print
- Not Knowing Which Costs Are Covered
- Not Sharing the Right Documents
Some Mistakes to Avoid When Applying for an Education Loan
- Little to No Research
Since students are first-time borrowers, it is crucial to conduct thorough research to understand the nuances of an education loan. So, advice for student loans is that instead of shortlisting the education loan provider based only on interest rates, you must also check multiple aspects such as benefits, time taken for sanctioning student loans, repayment options, and customer service.
Also, there are two types of student loans - secured (with collateral) and unsecured (without collateral). The secured student loan will require collateral such as residential property or fixed deposits. Unsecured education does not require any collateral. You must select between the two based on your financial requirements and personal preference. One of the student loan tips is to carry out desktop research to understand the eligibility criteria and documentation requirements of your preferred financier.
Also Read: Secured and Non-Collateral Education Loan: A Brief Guide
- Not Being Careful - Mistakes to Avoid in Student Loan Application
When applying for an education loan, ensure you opt for the right amount, not less or more than required. To make an effective decision when applying for a student loan, you can use online tools such as the Education Loan EMI Calculator to estimate your EMIs, College Course Expense Calculator to understand your potential college expenses and Eligibility Calculator to know the approximate student loan amount you are eligible to borrow based on your current finances.
- Not Planning Repayment - Student Loan Tips for Repayment
One of the common mistakes in an education loan is not planning your repayment journey from day one. One of the education loan tips for repayment is making contributions in the form of simple interest (SI)/partial interest (PI) during the moratorium period. As the moratorium period is not an interest-free period, interest begins to accrue from day one. Therefore, you must pay SI/PI during this grace period, which will also instil financially prudent habits.
- No Emergency Corpus
Also, creating an emergency fund can help you immensely with student loan repayment. Setting aside some moolah to be used in case of contingencies is crucial. It will ensure that you have enough funds to continue with your repayment even during situations such as a pandemic.
Also Read: Everything You Need to Know About Education Loan Repayment
- Not Reading the Fine Print
One of the education loan mistakes is not reading the loan document. You and your co-borrower must understand everything mentioned in the loan document before signing it. If there is any confusion, you must approach your chosen education loan provider to clear your doubts.
- Not Knowing Which Costs Are Covered
Most student loans cover a wide range of expenses associated with education. However, one of the study abroad loan mistakes is not finding out which costs are covered by the loan offered by your preferred financial institution.
At Avanse Financial Services, we offer student loans that cover the holistic cost of education, including tuition fees, accommodation costs, travelling expenses, the cost of learning devices, living expenses and other education-related expenses.
- Not Sharing the Right Documents
If you are wondering how to apply for an education loan effectively, then let us tell you that documents will play an essential role. One of the education loan approval tips is to ensure all your important documents are in place before applying. Some important documents are student KYC and educational academic documents, proof of admission, co-borrower's KYC and income details and collateral documents (for secured student loan).
With this information, you can plan your education loan journey while making no mistakes at all. Whether you want an education loan for study abroad courses or to study in India, at Avanse Financial Services, we offer student loans with multiple benefits. You can get 100% financing, quick student loan sanctions, flexible repayment options and more. If you have any further queries, please remember we are just a call away.
