Choosing the best financial institution for a higher education loan

1. Choosing the best financial institution for a higher education loan

2. It is very common to find students taking education loans to pursue further studies. With the academic expenses rising so high, students need financial support to be able to complete their courses. This is especially in the case of top universities, as they charge high tuition fees. But getting a loan is not difficult. There are many financial institutions that students can choose from. Banks are not the only option that they are left with any longer. A lot of borrowers choose to take loans from Non-Banking Financial Companies (NBFCs). But when it comes down to the two of these lenders, which one should a borrower go for? There are various aspects that you have to compare before you can make this decision.

3. Let us learn more about these two lenders to better understand which lender to take a higher education loan from:

4. Credit score requirements Anyone who needs to apply for a loan has to keep their credit score in mind. This is because every financial institution, be it a bank or NBFC, checks the applicant’s credit score before applying for a loan. Banks are usually stricter towards their credit score requirements as compared to NBFCs. Nevertheless, both banks as well as NBFCs are most likely to provide the best of their loan plans to those with credit scores over 750. Eligibility for getting a higher education loan Both banks as well as NBFCs have the common requirements for the borrower to be an Indian citizen over the age of 18. But banks only give loans to those students who are pursuing vocational courses. NBFCs offer a wider range in this aspect, as they do not have such stringent restrictions when it comes to the courses.

5. Documentation process Banks have often known to have complicated loan procedures. They require loads of documents and borrowers have often taken a lot of time getting past this tedious process as they are sent back to repeat the process if they are missing one or two documents. NBFCs are a lot of better in this aspect, as they provide doorstep assistance and take care of your documentation. This helps avoid the hassle and ensures that you finish this process smoothly. Repayment options Both banks as well as NBFCs provide multiple repayment options for their borrowers. Each lender will have different repayment options that you can choose from, so this depends entirely on your lender. You should look to choose a repayment option that is convenient for you to pay off your higher education loan.

6. Collateral requirements Banks make it mandatory for applicants to provide collateral for any loan amount that crosses Rs.7.5 lakhs. For a higher education loan, this is an amount that you are likely to cross, especially if you are looking to go abroad for further studies. NBFCs are much better in this case as they do not require any collateral and also agree to provide 100% financing for the student’s academic expenses. We hope that this article has been useful to you, all the best!

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