Things to consider before applying for Personal Loans for students

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Higher education has become expensive, given that the standard of living and inflation the world over are perpetually on the rise. Due to these factors, there is a difference between the cost of education in developed countries and developing countries.

When parents cannot finance their children’s education, they may opt for a personal loan for students. Any parent can apply for this loan, and a way to start is to search for cheap personal loans. There is no collateral, but a few documents are required to apply. The list is available at ‘how to apply for a personal loan.’

How to apply for personal loans for students

An application for a personal loan for students consists of the following five steps:

Total expenditure

Knowing the exact amount of expenses to go abroad for education will help determine the approximate amount of loan you would want to obtain.

Eligibility

Your eligibility will determine whether or not your loan application is processed. If you do not meet the pre-requisites, the lender can reject the loan application.

Loan plan

A loan plan considers the amount of money your child requires to fund their education. Accompanying this, you will also come across options for choosing the tenure of the loan for repayment.

Document verification

All the requisite documents asked for by the lending entity will need to be uploaded. They should be visible on the relevant portal for verification.

Disbursal of the loan

After completing all the steps, the loan amount is credited to your bank account within the next 24 hours*.

Documents required to apply for a personal loan for students

Regardless of whether you apply for cheap personal loans or one meant for students, do ensure that the following documents are readily available –

  • PAN card, Aadhar card, or any other ID and address proof documents that are government recognized;
  • Income proof/bank statement over the last six months;
  • Two recent passport-sized photographs of the applicant;
  • Salary slips if you are an employee;
  • Business registration certificate or relevant income tax returns;

Mentioned as follows are the personal loan eligibility criteria that the applicant must meet, and it requires that you should mandatorily –

  • be a citizen of India
  • placed anywhere between 21 and 67 years
  • have work experience of at least one year
  • have a high credit score, preferably above 750
  • provide proof of income
  • meet the minimum-salary limit specified by the lender

Amidst these, the most important is a good credit score, more so if you meet all the eligibility requirements for a personal loan. The credit agency calculated your credit score after considering the number of loans you have taken. The amount loaned to you, your repayment history, and missed payments also make a difference.

Lenders measure the applicant’s creditworthiness while determining the interest rates for their loan. Thus, a high credit score plays an instrumental role in elevating your creditworthiness and may help in acquiring a lower interest rate. It could render the student personal loan easier to obtain than expected.

Other expenses, such as processing fees and prepayment penalties, may also be incurred while acquiring a student personal loan. Also known as an administrative fee, the processing fee is taken after your loan is approved. Some lenders may choose to charge a prepayment penalty when you decide to repay your loan before the end of your personal loan tenure.

Final thoughts

Going abroad for studies might be expensive, but a personal loan for students can render the plan financially feasible. It is especially possible if your finances are in order. It requires minimal documentation depending on the lender and allows repayment on really convenient terms.

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