Canada is home to many topmost and renowned universities in the world and needless to say, it almost always remains at the top spot when we talk about the most educated country in the world. According to the Times of India, the first four months of 2021 saw more than 67,000 students getting approval to study in Canada. So to sum it all, it’ll be not wrong to say that there is an eternal bond between Indian students and this country!
But this Canadian dream can be shattered due to the cost of living and the cost of studying. It can be exorbitant and not everyone can afford it. In this scenario, a study loan for Canada might be the most feasible option.
We often find that there’s a stigma attached to loans and many people are afraid to take the first step. But with all the necessary prerequisite information and knowledge, an educational loan might solve all of your study abroad problems. Don’t worry, you’ll find every detail in this blog.
The types of loans.
1- Secured Education Loans: These are the education loans with collateral where you will have to pledge an asset to the lender as a security to get an education loan. The Rate of interest in these loans is much lower than the Unsecured loans. Also, the student doesn’t have to pay a single penny during the Moratorium Period (Course duration plus an additional 6-12 months). Many PSUs like SBI, BOB, and PNB have their educational loan schemes and fall under the secured loan category.
2- Unsecured Education Loans: These are the education loans without collateral where you do not need to pledge any security to the lender to avail of the education loan. However, there should be a co-applicant and his/her income becomes a major determinant of the loan sanction. The Rate of Interest is high (AXIS and ICICI charge 10-11% as compared to SBI and BOB, which charge around 8%) and in most cases, Simple Interest is paid during the Moratorium Period. Many Private banks – AXIS and ICICI, NBFCs- Incred, Credila, Avanse, Auxilo, and International lenders- Mpower, Prodigy, fall under the unsecured loan category.
To make it easier for you. Look at it this way. If you have collateral (Secured Loan), say a residential property (residential properties get very fast approval, provided you have all the necessary documents) then getting a loan with much less ROI would be easier. Additionally, you don’t have to worry while you’ll be studying there, as you don’t have to pay any amount during that period and even a few months or a year after that. So to begin with, always consider seeking a loan with collateral, if you have any.
Even if you don’t have collateral, you will still get a loan from private banks, NBFCs, and International Lenders. The only difference would be in a few calculations here and there and it would cost you some extra money. Either way, the loan can be granted to you if you have all the documents and prerequisites demanded by the banks or lenders.
I want to highlight the fact that if after reading this you have known your category/type of loan and you’re inching towards a specific lending option, it is very important to visit each lender’s website to seek out important information like Rate of Interest, moratorium period, documents required, co-applicant minimum requirements, to name a few.
It is very important to do your research when applying for a loan. Nonetheless, I have jotted down a few pointers which will help you in deciding the best option for you.
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A few pointers to remember:
- The best option for you would be the SBI Global Ed-Vantage scheme if you are taking a secure loan. (ROI is approx 8%)
- If you fall under the unsecured category (no collateral), the best option for you would be ICICI bank (ROI is approx 10.5%), if your college falls under its A1 category. (Check the list on the website)
- If you fall under the NBFC category, the best option for you would be HDFC’s Credila, if your profile and your test score (GRE, IELTS, etc) are also very good. Another important thing to remember is that if no lender is giving you the loan then Avanse would give it.
By now you must have decided the best option for you, especially those who were thinking of applying for a loan already.
Here’s a list of another quick few steps that’ll make your loan approval/seeking process simpler.
- Check your loan eligibility
- Get expert loan counseling from a loan counselor to compare the education loan options available..
- Select a lender.
- Get a document checklist.
- Submit the documents either online or personally by visiting the bank,
- Property & other legal evaluation charges (in loans with collateral, done by banks through a third party).
- Get the loan sanction letter after the lender’s approval.
Now you must have gained pretty good knowledge about educational loans and which lender would be best suitable for you. Nonetheless, it is always advised to seek advice from experts or counselors. Just keep your college name, application letter, collateral or co-applicant income, GRE, or other scores in handy and the best option is surely out there for you.