Education loans have become synonymous with study abroad. When you plan to study abroad several expenses need to be kept in mind like travel expenses, hostel and examination fees, etc. Education loans, being comprehensive in nature, help you in paying for these different kinds of expenses. However, we all know that as the rate of interest on education loans is rising, it is becoming increasingly difficult to pay back these loans on time.
The reason why a lot of students are opting for ‘education loan refinancing’ is to secure lower interest rates and favourable payment conditions. When you apply for education loan refinancing, you are required to fill out and submit the detailed loan application form and submit the necessary documents. Let’s check all the details about the documents required for education loan refinancing.
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Also Read: Demystifying Education Loan Refinancing for Indian Students: Know the Details Here
Why is Education Loan Refinancing a Good Option?
Education loan refinancing helps in bringing down the interest rates, reduces the monthly payments and gives more time to completely pay off the loans. Let’s understand further why refinancing is a good option for you:
- It gives the option to explore competitive interest rates across different banks.
- Some banks like SBI do not charge any processing fees on the take-over of education loans.
- Your monthly obligations are reduced giving you the flexibility to plan your budget.
- Some banks provide flexible repayment tenure of up to 15 years.
- It becomes easier to manage a single loan than multiple loans.
List of Documents Required For Education Loan Refinancing
The documents required for refinancing an education loan include:
- Loan application form
- Documents provided by your previous lender containing the details of your loan
- Complete the loan account statement of your education loan account since the account started
- Final foreclosure letter specifying the total amount you need to pay to the bank to close the loan
- Original documents of the collateral, if applicable
- A certificate issued from the previous bank stating the security you have pledged to obtain an education loan
- A copy of the loan sanction letter
- Aadhaar Card & PAN Card
- Proof of residence
- Proof of income
- Bank account statements of co-borrower/guarantor
- IT returns
- Statement of assets and liabilities of the parent/co-borrower
- A consent letter (stating to clear off the outstanding amount to the old bank by debiting the money from your new loan account)
Process of Education Loan Refinance
The process for refinancing your education loan is very simple. Here is the list of the same:
- The first step is to approach your current lender, and ask for a ‘loan foreclosure application’.
- Fill out the loan foreclosure application carefully and submit it.
- The next step is to apply for refinancing of your existing education loan to a lender. You can explore different options and choose the one that offers the lowest rate of interest.
- After you submit the necessary documents, your new lender will verify these documents start the process of paying the foreclosure amount to your previous lender and issue a cheque for the same.
- After the cheque is cleared, your previous lender will foreclose the loan.
Also Read: How to Secure a Good Education Loan at a Low Interest Rate? Know About it Here
FAQs
You must check and understand the loan transfer documents. Also, you should know about your credit score and debt-to-income ratio.
Yes, education loan refinancing helps in getting lower interest rates and other favourable conditions.
To be eligible for education loan refinancing you should have a credit score above 650, a debt-to-income ratio below 50% and a steady source of income. To know the complete eligibility criteria you should reach out to your respective bank.
This blog was all about the documents required for education loan refinancing. Though we have listed down all the necessary documents, you may have to submit a few extra documents as required by your bank. Contact your bank executives to check if you are required to submit any other documents.
To know more about education loan refinancing, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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