Credit is very essential to all, especially to students. It helps them reduce the financial burden off their parents’ shoulders and enables them to repay their credit over a period of time. Students require credit in the form of student loans, credit card services etc. A good repayment habit can not only help keep your finances happy but also enable you to opt for credit on a later date. But what can create a set back here is your non systematic repayment of the loan. If banks find you to be unreliable due to the irregular payments, you may lose the opportunity to opt for further debt in future.
Ease of getting an education loan:
It is very easy these days for students to get signed up for a student loan. With the comparatively low interest rates as specified by the Reserve Bank of India (RBI), most banks provide loans on this prescribed rate of interest. As the name of the loan suggests, a student is the primary applicant. The various categories of loans that are available are:
Loans of up to Rs 4lakh: these loans are easily disbursed and require the parent or the guardian to co-sign the loan agreement.
Loans of up to Rs4 lakh – Rs7.5 lakh: these loans require a third party guarantor along with the signature of your parent or your guardian
Loans of above Rs7.5 lakh: These loans require a tangible collateral security, the expected future income that you might possibly earn along with the co- obligation from your parents.
Loan Repayment:
It takes 6 months to 1 year after your course completion or after you have managed to get your employment for you to start the repayment process, based on which phenomena occurs earlier.
If you have applied for a loan or are applying you must know about the Moratorium period. Basically the moratorium period is the tenor of the loan while your course has kick started. During this moratorium period, you can pay only the interest amount on the loan amount disbursed to you.
What to do if you are cash strapped?
If in case your family’s income after taking into consideration all your sources of income is less than Rs4.5 lakh, approaching the state issue authority after obtaining an income certificate can provide you some relief. You may get a subsidy on the entire interest during the moratorium period.
Apart from that if you have not managed to find yourself a job or are facing any such difficulties prior to the loan repayment dead line, you need to contact your bank and let them know of this situation so that they can be a little lenient when it come to repayment and may provide you flexible terms such as, you can be benefitted with an extension in the moratorium period of 2 years.
Credit History:
It is very important for you to maintain a good credit record and credit score. Although you may be applying during your youth for an educational loan any irregularities will be reflected even after 10 years if in case you need to apply for a loan at a later date. The bank from where you wish to raise the loan from will approach the Credit Information Bureau of India Ltd. (CIBIL) and ask for your Credit Information Report (CIR) which will state your credit score and credit health. Therefore if you wish to raise finances at a later date without any problems it is important that you keep a squeaky clean financial record and be regular when it comes to repayment; be it repayment of your education loans, credit card loans etc.