yeah...a bit of frustration there as well..with EDUCATION LOANS
My first assignment(unofficial) was getting an education loan. And like all those people who are on a high after getting a good call converted, I just acted like a manager, made a BIG BIG BIG list of the loans available from various banks.
Go to the net, and you'l have everything (I thought!)
duh!
But how would one know the nature of minds of those sitting on BIG posts at these so called nationalised banks???!!
(wait, to hear more...)
So...me and my list were all very happy, with the list of comparison between various banks..
With each and every column ready: Loan amount, Rate of Interest, Margin, repayment period, Incentives if any, and so on..
I just patted on my back, to have completed a complex task so very easily.
Now all I had to do was, go to the bank which offered the best deal and get the loan..
wallah!!
(wait you idiot, to face the REAL world)
With the most genuine smile and the look of a "big war won"(for getting selected in a good instt.) I went to the bank XYZ, to meet the manager.
Me: Sir, I am so&so, got selected for abc instt. and require a loan..
He cut me..
Him: Hmm...so do you have an account with our bank, or your father??!!
Me(ALL SHOCKED!!): Excuse me Sir!?
Him: Do you have an account with us? Or your father??
Me: Ahem! No sir, actually I'm here for the education loan..
Him: Yes, I'm talking about the same. If you dnt have an account, you won't get a loan!
By the way, where do you have an account?
Me: Sir, so&so Bank.
Him: Then try there itself. They also provide loans..
I was getting the shock of my life, just because you don't have an account, you won't get a loan????No such thing was mentioned at the site or by RBI!
Me: Sir, but..
Him: See, until and unless you have an account here, and that too an old one, we can't do anything.
Now, I was really angry, and better thought of leaving than arguing with a person like him.
Then I thought of approaching the next bank on my list: SBI.
Thankfully it didn't deny the loan offer, but its interest rate was higher than others. But one point to be noted is, that for upto a loan amount of 7.5Lacs, it doesn't require any collateral(it means a guarantee through property or bonds,etc) That is why the interest is high, since the risk is high!
I did apply for loan there, but I wanted to explore other options as well, the interest rate being one concern and yes, the requirement of security, the other.
Upto 4Lacs, no bank would ask for any security, but your parents and guardian would be co-borrowers. But you wnt have to mortgage your land or other assets.
However, the Interest rates of banks vary. In some, there is FIXED interest rate, and in some it is FLOATING.
Its very important to keep these factors into mind, before applying.
Most of the Nationalised Banks I visited, demanded an old account with the same. It was a real disappointment, because a genuine student would not be able to avail a good loan deal for such reasons. I could not understand why such a demand. Though, before giving a loan, every bank demands proof of the person taking it and also the credit history(Know-Your-Customer, I once read in ET), but to fulfill such a requirement they'd ask for a copy of account summary of last 1year, if you are not there customer, and 6-months if you are there customer.
That is why, it frustrated me even more, that simply to increase there customer base, they adopted such techniques, and that too the nationalised banks!!
Since I had a deadline to meet, I thought else(than getting frustrated and cursing them) and applied to a bank. Not SBI, since I needed a loan amount much less, upto 4Lacs, and also since I didnt want to give the property papers. So, I applied to another bank, where upto 4lacs the interest rate is lower.
One thing to notice is, the interest rate in most banks upto 4lacs is different and it is higher above 4lacs. Also, the repayment period varies accordingly.
In view of incentives provided, different banks have different policies.
Some would even provide a 1% concession for girls. But mostly, the 1% concession comes, in case you start paying in the period, while your studies are going on. During your study period, the money is Simple interested. But later, that is, either 1 year after course completion or 6months of job, it is Compound Interest.
Here's a brief idea of how it is in SBI:
Eligible Courses
All courses having employment prospects are eligible.
- Graduation courses/ Post graduation courses/ Professional courses
- Other courses approved by UGC/Government/AICTE etc.
- Fees payable to college/school/hostel
- Examination/Library/Laboratory fees
- Purchase of Books/Equipment/Instruments/Uniforms
- Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution fees for the entire course)
- Travel Expenses/Passage money for studies abroad
- Purchase of computers considered necessary for completion of course
- Cost of a Two-wheeler upto Rs. 50,000/-
Any other expenses required to complete the course like study tours, project work etc.
Amount of Loan
- For studies in India, maximum Rs. 10 lacs
- Studies abroad, maximum Rs. 20 lacs
For loans up to Rs.4 lacs - 12.25% p.a. Floating
For loans above Rs.4 lacs - 13.25% p.a. Floating
- No processing fee/ upfront charges
- Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money
Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.
| Place of Study | Loan Amount | Repayment Period in Years |
| Studies in India | Rs. 10.0 lacs | 5-7 |
| Studies Abroad | Rs. 20.0 lacs | 5-7 |
| Amount | For loans upto Rs. 10.00 lacs for Studies in India and upto Rs. 20.00 lacs for studies abroad |
| Upto Rs. 4 lacs | No Security |
| Above Rs. 4 lacs to Rs. 7.50 lacs | Collateral security in the form of suitable third party guarantee. The bank may, at its discretion, in exceptional cases, weive third party guarantee if satisfied with the net-worth/means of parent/s who would be executing the documents as "joint borrower". |
Above Rs. 7.50 lacs. | Tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments. |
Margin
- For loans up to Rs.4.0 lacs : No Margin
- For loans above Rs.4.0 lacs:
- Studies in India: 5%
- Studies Abroad: 15%
- Completed Education Loan Application Form.
- Mark sheets of last qualifying examination
- Proof of admission scholarship, studentship etc
- Schedule of expenses for the specified course
- 2 passport size photographs
- Borrower's Bank account statement for the last six months
- Income tax assessment order, of last 2 years
- Brief statement of assets and liabilities, of the Co-borrower
- Proof of Income (i.e. Salary slips/ Form 16 etc)
Phew!
I applied on 28th feb, and still haven't got the cheque for the first instalment. If you have a deadline to meet too, you better hurry!!!
;)
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