The ever-rising cost of education can create hurdles in accessing higher education. However, students aspire to finance their education independently by opting for a student loan to overcome the obstacles. Hence, student loans are increasingly gaining popularity. An education loan is a smart choice as it eliminates the need to liquidate family savings and also helps students earn a self-made badge.
Although many financial institutions have moved the application process online, various factors may lead to delays. Every financial institution will follow a different turnaround time (TAT) to verify education loan documents to sanction the student loan. Read this guide to know the factors that may lead to delays in the procedure and rejection of education loans.
Why are student loans delayed
Having inadequate information about the education loan process may delay the loan sanction. Some other factors that cause a delay in student loans procedure are as follows:
Finance-related verification process: The CIBIL or credit score is thoroughly checked to determine the borrower’s creditworthiness to repay the education loan. The financial institution can rely on a third party or deploy digital tools to evaluate the credit score. This sometimes takes more than the required time, which may cause delays.
Finance-related document process: Documentation is an integral part of the education loan journey. Applicants (with work experience) and co-applicants need to submit finance-related documents, such as income proofs and Income-Tax Returns (ITR), to the lenders to meet the education loan eligibility criteria. Delay in gathering these documents or submitting incomplete documents can slow the procedure.
Before gaining clarity about collateral-related documents, let’s understand the types of student loans and collateral. Secured and unsecured are two kinds of education loans offered by financial institutions. In secured loans, a borrower pledges some asset as collateral, whereas no collateral is pledged for an unsecured loan. A borrower needs to submit documents related to the asset that is being pledged as collateral in case of a secured education loan. The financial institutions verify these documents at their end. If the borrower has submitted false or insufficient documents, the education loan can get rejected or delayed.
A collateral can be an asset such as residential property or non-agricultural land that a borrower offers to the financial institution against the student loan if they opt for a secured loan. Collateral acts as a security for the lender to recover their loan amount if a borrower fails to repay it. Most lenders offer secured and unsecured loans, and you can select between them basis your financial requirement. But if you choose to offer security, please ensure all your collateral-related documents are in place.
Why education loans for students can get rejected
Therefore, it is advised to understand the eligibility criteria of an education loan from your lender before applying for it to avoid the last-minute hassle.
Loan for education from Avanse Financial Services
At Avanse Financial Services, we understand the importance and urgency of education loans. Hence, as a responsible financing partner, we provide a document checklist when you apply for a student loan. Also, we ensure following up with students for the documents to offer a seamless education journey. We offer customised educational loans with unique features like 100% finance, quick sanctions and flexible repayment options. So, connect with us today to know more about eligibility criteria and interest rate for an education loan.
We always aim to offer you competitive interest rates on your Avanse Education loan.
The rate of interest on your loan is calculated as: Interest Rate = Avanse Base Rate + Spread.
Our current Base Rate is 14.25% (WEF 01.05.2023).
The Spread is floating and is based on analysis of overall credit and course profiling.
This rate is subject to the terms and conditions of Avanse Financial Services Ltd.