Acquiring a loan has never been as simplified as it is today, yet, choosing a loan from the many options is quite challenging.
The plethora of education loan options has made it possible for thousands of students to fulfill their dreams of studying abroad. However, it is possible to get confused and derailed due to this variety. But the entire process of loan selection can be simplified by careful planning and implementation. We have summarized the procedure into five steps as a template for you to begin planning.
The first step is self-awareness in terms of your current financial status, academic qualifications, prospective university, required loan amount, duration of course, etc. This involves the formation of a clear picture of a preferred loan option according to your circumstances. Having a well-defined idea of the desired loan option is crucial in order to choose a suitable loan.
The second step involves loan research. Many banks and Non-Banking Finance Companies (NBFCs) have compartmentalized information about their loan products, while others require browsing and enquiry. It is essential that you collect adequate and confirmed details on loan products, and this often involves visits to the finance service. For example, a US Dollar Denominated Education loan from a US bank is disbursed in US dollars, and repayment is also in US dollars. The major advantage is that it does not require collateral, it has low interest rates, and it provides protection from foreign exchange fluctuation. However, this type of loan requires a US cosigner.
The next step is the most intimidating of them all. After collecting sufficient information, you can begin shortlisting loans. But where does one begin the shortlisting process? With countless loan options and a range of selection criteria, it is advised to begin with the most important criterion. This is subjective, for example, the most important criterion for X may be the offered loan amount and for Y, it may be the country of travel. This step helps to eliminate the unnecessary loan options, and highlights those which are to be considered. For example, if you do not have a US cosigner, then shortlisting Indian Bank loans and NBFC loans is a good idea, in order to focus on these options rather than those with a strict US cosigner requirement.
Step four is often overlooked in this time-consuming process. Step four is to consider all possible scenarios during and after the course period. This step involves thinking about all possible cases of employment post-degree, change of interest rates (if any), probability of being able to reimburse the loan amount in the given repayment period, etc. Visiting a financial consultant or contacting a consulting service is recommended.
The final step is choosing a loan. This must be done carefully and with ample thought, because it determines your financial arrangement for nearly a decade. After deciding on a suitable loan option, you can begin the required paperwork.
At a glance, the loan selection process seems daunting, but consulting a financial advisor does help in simplifying the procedure. A loan is more than just a monetary transaction. It is a means for every student to achieve his/her ambitions.