Loan Terms Explained
Have you stepped in the race of studying abroad too? Well, congratulations! It’s one of the mostamazing and exciting experiences you’ll have in life. Now that the decision is made, let’s get to the basics! How do you plan to fund your education abroad? Is an education loan on your mind? That’s one of the most suitable options, allowing you to pursue your academic aspirations without financial hassle. You get substantial funds with a flexible repayment tenure, along with tax benefits from the Indian Government. However, do loan terms and jargon confuse you, leaving you searching for explanations? Well, Lorien Finance is here to help with loan terms explained, clarifying all the important terminologies you need to know when taking an education loan. Let’s get started! Application Checklist A predefined itemised list of documentation that the borrower needs to provide at the time of applying for a loan. This list is intended to cover most information needed to begin the underwriting/application process for most loan requests. It typically includes financial, academic, and identification documents required by the lender to assess your eligibility. APR (Annual Percentage Rate) The annual percentage rate (APR) is the total yearly cost of taking out a loan. This rate includes theinterest rate, along with any other finance charges. For example, when you apply for your education loan, you might have to pay loan origination fees or processing fees. If you only consider the loan’s interest rate, it would be lower because the overhead costs aren’t included. Under the Truth in Lending Act, lenders must disclose the APR, so you have a complete understanding of how much it’ll cost to take out a loan. Borrower When you apply for an education loan and receive funds, you are the borrower. As the borrower, you’ll have to repay the loan according to the loan terms agreed upon. If your father applies for an education loan to pay for your tuition fee and living expenses, then hewould be considered the borrower. In this case, the lender will hold your father responsible for loanrepayment. Collateral When you pledge a valuable asset (tangible or intangible) as security for your loan, it is considered to be a collateral. Tangible assets that can be considered collateral include land, building, vehicle, gold, while intangible assets include intellectual property, such as patents, copyrights, trademarks, trade secrets, contracts, licenses, franchise agreements, leases, securities and bonds. If the borrower stops repaying the loan, the lender can seize and sell the collateral to get their funds back. Cosigner A person who agrees to be equally responsible for the repayment of the loan if the borrower cannot repay it, is considered to be a cosigner or a co-borrower. If you apply for a loan but do not have sufficient income or credit history, your father or brother (with sufficient income) can become your cosigner. Cost of Education Cost of Education includes the total amount a student needs including tuition fee, living expenses,accommodation, books, transportation travel fare for foreign education. While choosing your education loan lender, ensure if they cover 100% of the cost of your education, as some only cover a part of it. Credit Score A score that represents your creditworthiness, based on your borrowing and repayment history. This score is calculated by the lender on the basis of your payment history, current debt amount, credit history length, and new credit activity. As per the FICO credit model, a good credit score is at least 670. With an excellent credit score, youcan secure an education loan at the best possible interest rate. Credit Worthiness Creditworthiness is the likelihood that you i.e. the borrower will repay your loan based on yourfinancial history, income, and credit score. Lenders evaluate you by your creditworthiness to determine your loan eligibility and ability to repay the loan. Default The inability to repay the loan according to the terms and conditions agreed upon at the time of loan approval, usually after several missed payments. This can lead to serious financial consequences, including damage to credit and legal action. Deferment Period It is the time when you aren’t required to make any payments, usually when you are still studying or a few months after graduation. Education Loan Disbursement The process through which the ender transfers the loan amount directly to you or the institution you’re planning to study in. EMI The fixed monthly payment to the lender to repay the loan, including both principal and interest. The Equated Monthly Instalment (EMI) payment begins once your moratorium period is over. Fixed Interest Rate When a loan has a fixed interest rate, the interest rate remains the same for the duration of the loan. Since the interest rate remains the same, the monthly payment doesn’t change. The predictable monthly payments make it easier for you to budget your loan payments. Grace Period The short duration upto 12 months after graduation during which the borrower does not have to start repaying the loan. This period allows the borrower to secure employment or make other necessary arrangements before starting the repayment. Interest may or may not accrue during the grace period, depending on the loan terms.It’s usuallyfollowed by the start of EMI payments. Guarantor In the case of student loans, a guarantor is a third party, whose assets are pledged to the lender assecurity. Hard Credit Check When you apply for a loan, the lender will perform a hard credit check or inquiry. This credit inquiryusually has a small impact on your credit score—your score may drop by up to four points. A hardcredit check remains on your credit report for two years. Late Fee A penalty charged by the lender to you on missing a scheduled loan payment. This fee is charged when you make the past due payment. The loan agreement states the amount of this late fee and when does your lender charge the same. Loan Agreement A formal contract between the lender and you, outlining the terms and conditions of the loan, including the loan
HDFC Credila Study Abroad Loan: A Complete Guide
Dreaming of studying at a top global university, but worried about how to finance it? You’re not alone! Many aspiring students face the same challenge, and the idea of funding an overseas education can seem overwhelming. But here’s the good news—there are smart, accessible ways to make those academic dreams a reality without breaking the bank. That’s where HDFC Credila comes in. As India’s leading non-banking financial company specialising in education loans, they offer customised solutions designed to help you secure the funding you need, with flexible terms that fit your unique journey. In this complete guide, we’ll explore everything you need to know to take that next big step—without the financial stress! HDFC Credila Abroad Education Loan HDFC Credila, is India’s first and only education loan specialist, with numerous databases on education sector. Their credit scoring model for the approvals of loans is designed specifically for student loans. HDFC Credila, therefore, understands problems, challenges and issues faced by the students and their parents. With an objective of working closely with students and parents to identify the appropriate education loan programs for them, HDFC Credila customises their product depending on the school and the student’s grades. This ensures that all students have a good shot of getting a loan, and that too at an attractive rate of interest. Overview FEATURES EDUCATION LOAN DETAILS Loan Amount Upto 100% of cost of education(collateral)Upto Rs 75 lakhs (non-collateral) Margin Money NIL Interest Rate Starting at 10.50%* Processing Fee 1% + GST Loan Tenure Upto 14 years Moratorium Period Study period + 6 to 12 months Prepayment Charges NIL Income Tax under Section 80E benefits by HDFC Credila HDFC Credila stands as the only Indian NBFC offering tax benefits under Section 80E on noncollateral education loan. Section 80E of the Income Tax Act allows us to claim a deduction for the interest paid on aneducation loan for a maximum period of eight years, starting from the year in which therepayment of the loan begins. The deduction can be claimed for the interest paid on the loan. It is important to note that the tax benefit under Section 80E is only available for the interest paid on the education loan and not for the principal amount. Who can apply for an education loan at HDFC Credila? Students aspiring to pursue their higher education at bachelors or masters level abroad from countries like USA, Canada, Germany, Australia, New Zealand, UK and are looking forward to avail financial assistance can apply for an education loan at HDFC Credila. Let’s look at some of the important criteria to apply for an education loan with HDFC Credila: Nationality Student and co-applicant must be Indian Age Limit At least 18 years of age Countries Covered USA, Canada, Germany, Australia, New Zealand, UK, France, Singapore, UAE, Ireland, Netherlands and more Academic Performance Strong academic performance meeting the minimum academic criteria set by the lender with prerequisite tests such as GRE, IELTS, or TOEFL. Co-applicant MandatoryMother, father, sister, brother, spouse, relative from their paternal or maternal side, or a legal guardian can be a co-applicant if they have a steady source of income and a positive credit history Collateral Both collateral as well as non-collateral loansavailable Partial List of Universities Funded by HDFC Credila in the US Arizona State University Boise State University California Polytechnic University Carnegie Mellon University Columbia University Cornell University Georgia Institute of Technology Illinois Institute of Technology Indiana University Bloomington Michigan Technological University New Jersey Institute ofTechnology North Carolina State University Northeastern University Ohio State University Oklahoma State University Polytechnic Institute of New YorkUniversity Purdue University Rochester Institute of Technology San Jose State University Southern New HampshireUniversity State University of New York atBuffalo Syracuse University Texas A&M University University of Bridgeport University of Chicago University of Cincinnati University of Florida University of Houston – Clear Lake University Of Illinois – Chicago University of Maryland University of Michigan – Ann Arbor University of North Carolina –Charlotte University of Pennsylvania University of South Carolina University of South Florida University of Southern California University of Texas at Arlington University of Texas at Dallas Wayne State University Partial List of Universities Funded by HDFC Credila in other countries Asian Institute ofManagement (Philippines) Centennial College(Canada) Chemnitz University ofTechnology (Germany) Concordia University(Canada) Coventry University (UK) Delft University ofTechnology ( Tu Delft )(Netherlands) ESC Rennes School ofBusiness (France) HEC Paris (France) IE Business School – Spain INSEAD (France,Singapore) La Trobe University(Australia) London Business School (UK) London School ofEconomics and PoliticalScience (UK) Nanyang TechnologicalUniversity (Singapore) National University ofSingapore (Singapore) Newcastle University (UK) Rotman School ofManagement, University of Toronto (Canada) Rotterdam School ofManagement(Netherlands) Royal Melbourne Institute of Technology University (Australia) S P Jain School of Global Management (Dubai) Schulich School ofBusiness, York University Sheffield HallamUniversity (UK) Srh Heidelberg University of Applied Science (Germany) The University ofManchester (UK) The University ofNottingham (UK) The University of Sheffield (UK) University of DuisburgEssen (Germany) University of Glasgow(UK) University of Leeds (UK) University of Melbourne(Australia) University Of Oxford –Said Business School University of Warwick(UK) Documents Required for HDFC Credila Education Loan Let’s provide you with a detailed list of all the documents required to apply for a an education loanwith HDFC Credila! Applicant’s Documents Co-applicant’s Documents Income proof for salaried co-applicant Income proof for self-employed co-applicant Perks of an HDFC Credila Education Loan When taking an utmost important decision of financing your education abroad, it is essential forstudents to make informed decisions regarding their education loans. When it comes to funding your education, making the right choices can shape your future. Do not miss out on the several crucial steps to be considered even after disbursement, including: Tax benefits Save taxes by claiming your interest paid as a deduction, as per Section 80E of the Income Tax Act of India, 1961 with HDFC Credila Education Loans. 100% cost of education covered Fulfil your study abroad dream seamlessly with complete financing from HDFC Credila EducationLoans. Quick and hassle-free loans Once the documentation is complete your loan is processes quickly and HDFC Credila