Overcoming Common Hurdles in Collateral Free Abroad Education Loans

Securing collateral free loans for international education often presents challenges, but overcoming these hurdles is crucial for aspiring students. This article explores common obstacles faced by applicants and suggests strategies to navigate them successfully.

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There are many students who cannot afford to study abroad due to the high cost of studying. Though there are funding options available such as scholarships and bursaries, due to its competitive nature not every student can take benefit of it.

In today’s era, overseas education loans can be a windfall to the dreams of all the students aspiring to study abroad. There are numerous financial lenders who have opened gates to taking secured and unsecured education loans to study overseas. Though it comes with a lot of advantages, it is important for applicants to be aware of the common challenges that they might face during the loan processing tenure which can lead to loan rejection.

This article will help you be prepared for the challenges that can occur with an unsecured education loan for abroad studies. So, sit back and scroll down.

An Overview of Collateral-free Education Loan

An unsecured loan or a collateral-free education loan doesn't require any collateral to be pledged as security. The loan application process is relatively quick due to minimal documentation requirements. However, there are some common challenges that applicants may encounter when seeking an unsecured loan.

Common Hurdles While Taking Collateral free Education Loan

  • Low CIBIL Score

Since unsecured loans don’t demand security, an applicant needs to assure the lenders that they have the potential to repay the loan amount in the given tenure by having a good CIBIL score. CIBIL (Credit Information Bureau (India) Limited) is an organization that keeps a track record of one's credit information and the score is calculated on the basis of a person’s credit history. Thus, it proves the creditworthiness of the applicant to the lenders.  To improve your CIBIL score you need to avoid any delay in your EMI payments of previous loan or credit card invoices. Your score will start improving after 3 months of regular loan repayment.

  • Multiple Loan Enquiries

When you decide to apply for a loan, your credit score undergoes scrutiny. If there are multiple inquiries, this can deplete your CIBIL score, negatively impacting your financial profile and possibly leading to loan rejection. To elude any kind of hurdle or rejection, you can take guidance from the best online loan services for studying abroad, they will guide you to pick the right financial lenders.

  • Co-applicants Income Challenges

Unlike secured loans where financial institutions can use the pledged asset to recover the loan amount in the event of a default, unsecured loans require co-applicants to ensure loan repayment within the specified tenure. Therefore, the financial stability of co-applicants is essential in the approval of unsecured education loans. If the co-applicant's income is insufficient, it may lead to the rejection of the loan application.

To overcome this hurdle, it is advisable to secure a backup by including an additional financial co-applicant if the initial co-applicant's income is low. Also, opting for study abroad education loans from lenders such as Non-Banking Financial Companies (NBFC) and international lenders is beneficial. These lenders sanction loans based on applicant profiles and scores of standardized tests.

  • Loan Disbursements Issues

This can be a quagmire situation, where applicants need to pay the tuition fees for their first year of studying and living expenses before commencing their visa process. The transfer of funds by financial lenders to the applicant's account or the university is referred to as a disbursement. The main challenge faced by the applicants is when they ask the lenders to disburse the loan amount and the bank asks for a visa first.

It is always better to check with your financial lenders about the disbursement policies, specifically whether they can disburse the loan amount before the visa processing stage. And, to simplify this process and avoid such hassles, seeking guidance from overseas education loan advisors is a wise step.

Wrapping Up

We hope this article was helpful to aware you of the common hurdles pertaining to an overseas education loan. If you’re planning to opt for a collateral-free education loan to study in UK, US, Canada, Australia, or any other country. To gain more updates and insights you can search for top study abroad education loan advisors. Good luck!

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  • Riya Niar: Riya Nair is a passionate writer and education industry enthusiast. With 15 years of writing experience, Riya has authored numerous articles on Study Abroad. With her writing, she brings a unique perspective to the education abroad industry and is committed to creating informative and engaging content that resonates with readers. Twitter -