A personal loan for students is an unsecured loan designed to cover education-related or personal expenses. It can be used for tuition fees, accommodation, study materials, or even travel and training costs. Unlike education loans, these loans offer flexibility in usage and do not require collateral. Students or their parents can apply for such loans, often with a co-applicant to meet eligibility criteria.
Offered by banks and Non-Banking Financial Company (NBFCs) in India, these loans come with flexible tenures and competitive interest rates. Repayment terms are tailored to the borrower’s financial capacity, making them a suitable option for managing educational expenses.
- How Does a Personal Loan for Students Work
- Key Features of a Personal Loan for Students
- Eligibility Criteria for a Personal Loan for Students
- Documents Required for a Personal Loan for Students
- Benefits of a Personal Loan for Students
- How to Use a Personal Loan EMI Calculator
- Points to Keep in Mind Before Applying
- Conclusion
How Does a Personal Loan for Students Work
A personal loan for students is simple to understand and functions like other personal loans. Here’s a step-by-step breakdown of how it works:
Application
Students or their co-applicants apply for the loan by submitting required documents to a bank or NBFC. Applications may be online or offline.
Approval and Disbursal
After verifying documents and eligibility, the lender approves the loan. The amount is then credited to the applicant’s account.
Repayment
Borrowers repay the loan via EMIs comprising principal and interest, which can be estimated using a personal loan EMI calculator.
Tenure
Tenure usually ranges from 1 to 5 years, allowing borrowers to choose terms that match their financial situation.
Key Features of a Personal Loan for Students
Here are the key features of a personal loan for students explained briefly:
No Collateral Required
These loans are unsecured, so no assets need to be pledged as security.
Flexible Usage
Funds can be used for tuition, accommodation, or any education-related or personal expenses.
Repayment Flexibility
Borrowers can select a suitable tenure and estimate EMIs using a personal loan EMI calculator.
Quick Disbursal
Loan amounts are disbursed promptly after approval for immediate access to funds.
Eligibility Requirements
Eligibility depends on the co-applicant’s income or the student’s earning potential.
Eligibility Criteria for a Personal Loan for Students
To apply for a personal loan for students, certain criteria must be met. The requirements may vary across financial institutions, but common criteria include:
Age Limit
Applicants must meet the lender’s age criteria, typically between 18 and 35 years.
Co-applicant
A co-applicant, typically a parent or guardian with a steady income, is necessary.
Income Proof of Co-applicant
The co-applicant’s income and repayment capacity are assessed during loan approval.
Academic Records
Lenders may request proof of admission or academic performance for loan verification.
Citizenship
The applicant and co-applicant must usually be Indian citizens to qualify for the loan.
Documents Required for a Personal Loan for Students
Applicants need to submit several documents during the loan application process. The documentation ensures that the applicant meets the lender’s requirements. Common documents include:
KYC Documents
Identity proof such as Aadhaar, PAN card, or passport is needed.
Address Proof
Documents like Aadhaar, utility bills, or voter ID serve as address proof.
Income Proof
Salary slips, bank statements, or IT returns of the co-applicant are required.
Academic Proof
Admission letters or educational certificates may be requested by lenders.
Photographs
Passport-sized photographs of the applicant and co-applicant are mandatory.
Benefits of a Personal Loan for Students
Here are the benefits of a personal loan for students explained briefly:
Immediate Funds
These loans provide timely access to funds for urgent education-related expenses.
Customisable Tenure
Borrowers can select a repayment tenure based on their financial capacity.
Multipurpose Loan
Funds can be used for various needs, including accommodation, travel, or study materials.
No Restriction on Courses
The loan supports any course, including professional training or certification programmes.
Quick Approval
Approval is simple and faster if the co-applicant has a good credit history.
How to Use a Personal Loan EMI Calculator
A personal loan EMI calculator is an online tool that helps borrowers estimate the EMI amount. It is simple to use and requires only three inputs:
- Loan Amount: The amount the borrower wishes to apply for.
- Interest Rate: The applicable interest rate, expressed annually (p.a.).
- Tenure: The loan duration, in months.
Once the details are entered, the calculator instantly shows the EMI amount. This tool is available on the official websites of most banks and NBFCs. It allows borrowers to compare loan options and choose one that fits their budget.
For example, if a borrower applies for a loan of ₹2,00,000 at an interest rate of 12% p.a. for a tenure of 24 months, the EMI would be approximately ₹9,424.
Points to Keep in Mind Before Applying
Before applying for a personal loan for students, consider the following factors:
- Interest Rate: Compare interest rates across lenders to find a favourable option.
- Processing Fees: Check if the lender charges a processing fee or other charges.
- Repayment Capacity: Use a personal loan EMI calculator to assess affordability.
- Credit Score: A strong credit profile of the co-applicant could help secure better terms.
- Loan Tenure: Choose a tenure that balances EMIs and total interest outflow.
Conclusion
A personal loan for students is a helpful financial tool to meet education-related and personal expenses. It is flexible, quick to access, and comes with varied tenure options. Borrowers should carefully assess the loan’s interest rate and repayment terms. Using a personal loan EMI calculator can simplify this process and help in informed decision-making.