An education loan is a loan availed by a borrower from a financial institution to cover education expenses. It is vital for a borrower to know how to get an education loan and which loan to avail. There are two forms of education loans. The first one is an education loan which is an unsecured advance. The second format is an education loan against property, which is a secured loan.
With a loan against property for education, the borrower mortgages a property to avail advances. Such loans do not come with any end-use restriction and can be easily utilised to meet varied expenses beyond just tuition fees, such as lodging, food, living expenses, logistics, etc. Leading financiers offer up to Rs.3.5 crore with such loans. Unlike that, in an unsecured education loan, a borrower can only obtain funds listed as expenses by the educational institution they are enrolled at.
An applicant can avail an education loan against property only with proper documents and if they have met all the necessary eligibility criteria such as –
- Salaried borrowers should be employed with an MNC or private or public sector.
- Salaried employees should be aged within 33-58 years.
- Self-employed individuals should have a steady income source.
- Self-employed borrowers should be aged between 25-70 years.
Documents required by an applicant include –
- Aadhaar card.
- PAN card.
- Bank account statement of the previous 3 months.
- For salaried individuals, they have to provide their last 3 salary slips.
- Income Tax returns.
- Photocopy of their property documents.
With an explicit knowledge of the various aspects of how to get an education loan, an individual can also determine which one is better for them between a loan against property and education loan.