Education Loan Sanctioned? Here are the Issues you can Expect After the Sanction!

“Congratulations! Your loan request has been granted. Every student’s mood is immediately altered by this comment. They lose sight of the fact that the hill of student loan debt is barely halfway up this as relief pours over them. After obtaining the loan sanction letter, there are still many steps to complete, many of which might cause delays and other issues. Lenders have the option to delay the payment, lower the sanctioned amount, or even reject the loan after it has been approved. Let’s look at the issues after education loan sanction in this blog and how you can avoid them.

Must Read: Expenses Covered in Education Loan

What is Education Loan Sanction Letter?

A sanction letter is referred to as an official document that the loan-giving bank gives to a borrower, outlining basic information such as the course information, the loan amount approved for education, the borrower’s name, the lender’s information, the guarantor’s information, the interest rate, the margin percentage, the repayment period, the security offered, if any, and other terms and conditions of the bank. As a result, a sanction letter for an education loan serves as evidence that the bank has approved the loan. 

Must Read: Types of Education Loans for Indian Students

In Principle Sanction Letter

A sanction letter sent by the bank to the borrower is known as an in-principle sanction letter. It specifies a certain loan amount that will be granted to a student if they are accepted into a particular university. This letter may be used as evidence of financial support throughout the application process for admission and, in some cases, for obtaining a visa.

In order to prove their financial stability and get admission to the university, students may require an in-principle sanction letter. Shortly after learning that they qualify for an education loan, students can submit an application for an in-principle sanction letter. They can then proceed with the loan application and obtain the final education loan sanction letter as soon as the university confirms their admission.

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Issues After Education Loan Sanction

Let’s determine the problems to anticipate following the sanction of an education loan and how to prevent these obstacles. 

  • Documents and the value of the collateral 
  • Property-related litigation 
  • Fees imposed by the lender 
  • Interest rate 
  • Payment and EMI 
  • Disbursement problems 
  • Pre-visa payments 

Documents and Value of Collateral

If you apply for a loan from one of the public banks for INR 7.5 lakh or more, collateral is required. A bank-appointed evaluator will assess the collateral or property, which means the assessment will be less than the property’s market worth. This is due to the 5- to 10-year loan terms, which limit the loan-to-value ratio to 70- to 80 per cent of the property’s market value.

Prior to the loan being approved, the value of the collateral will be assessed. Ensure that the value is greater than the loan amount necessary and that the collateral paperwork is in order. Following loan approval, original documentation must be submitted. Even the most organised persons have problems organising the collateral papers, and even one missing document jeopardises the loan application process. For a smooth process, it is preferable to enlist the assistance of Fly. Finances executive when submitting the documents.

Must Read: Education Loan without Collateral

A bigger loan amount limit, cheaper interest rates, and better terms and conditions are all guaranteed by pledging collateral. However, the lender will not process and accept the pledge if the pledged property is the subject of any litigation or other dispute. The ownership of the property should be clearly stated in the property papers, and it should not be the subject of any litigation. Contact Fly. Finance if you experience this issue, and we will assist you with the necessary documentation and submission.

Fees imposed by the Lender 

Throughout the loan procedure, the lender imposes a number of fees. To stay on top of things, the student should maintain track of all the account statements. Students frequently encounter the problem of arbitrary charges being added to their accounts and struggle to communicate with their different lenders. This occurs because the average bank manager moves on within two to three years, and the loan lasts for about 7-8 years. If the loan is obtained through Fly. Finance, this issue is avoided because an executive monitors your case up until the final repayment.

Interest Rate 

Because the interest rate on student loans is floating, it may go up or down depending on the state of the market. Most frequently, student loans from private lenders like NBFCs and private banks see this abrupt change. This causes a dramatic surge in rates for a number of pupils. Students either pay exorbitant EMIs or have difficulty refinancing their loans at a cheaper interest rate. Simply contact us if you need assistance with increasing rates or refinancing the loan. You may count on our team of professionals to negotiate the finest terms and lowest rates for you.

Must Read: Best Private Student Loans without Cosigner

Payment and EMI 

EMIs and loan payments are two of the biggest problems students encounter after loan approval. A student may experience problems with EMI not being deducted after the moratorium period, when to start repayment, when to postpone repayment, how much to repay, etc.

The Fly.Finance team can fix these problems with ease. If you applied for the loan through us, get in touch with us if you are having any problems with loan repayment, EMIs, or postponement. Unfortunately, if the application did not go through us, we have no influence on the situation. 

Must Read: How to Pay Off Student Loans?

Disbursement Problems 

Took a student loan for college in Germany, but the lender won’t release the funds for the block account? After the loan is approved, problems with a distribution like this one and others become rather typical. You might have delays in payout, issues with the second disbursement, etc., but our team will address any issues quickly. When you contact us, our services begin, and they terminate when you pay the final EMI. So, if you ever experience a problem with the distribution of a loan, contact us. 

Pre-Visa Payments 

Similar to Germany, the USA, Canada, and the UK demand that students present proof of funds that demonstrates the existence of liquid funds in their accounts. Pre-visa disbursement is now necessary and should be communicated to the lender in advance for this specific reason. Many students are still, however, faced with the problem of the lender refusing to release the funds prior to the visa’s approval. This process is made simple by Fly.Finance, which also handles any problems a student could encounter during pre-visa disbursement. 

Conclusion

These are a few issues with education loan sanctions that a student could face after receiving the sanction letter successfully. A sanction letter is, as was previously stated, like halfway up a hill. Contact us to avoid any hassles and finish the remaining steps. Despite our best efforts, we cannot guarantee that the process will go smoothly for you. However, if you do encounter these issues, we will fix them without further delaying the procedure. So get in touch with us right away and begin the loan application procedure knowing that you will receive the money required for your study. As always, there is no fee for using our services. 

Must Read: What are the Student Loan Eligibility Criteria for Studying Abroad?

FAQs

What happens after an education loan is sanctioned?

Once your loan has been approved, the lender will normally send the money right to your college or university. After that, you’ll get a confirmation of the payment.

Can education loans be rejected after sanction?

The student co-borrows an education loan when his parent or legal guardian also co-applies. Additionally, the co-applicant role is very important in education loans. Their credit history is taken into consideration when approving the school loan. The loan application may be turned down if the parent’s credit score is less than the required 750.

What to do after getting a loan sanction letter?

Following receipt of the letter authorising the home loan, the bank or lender sends a certified offer letter outlining the key terms of the mortgage. An acceptance copy must be signed by the applicant and delivered to the lending institution.

This was all about the issues after education loan sanction that a student might face. To know more about Education Loans from different banks and to help ease the loan process, contact Fly.Finances experts make your study abroad experience smoother and faster.

About Vidisha Dewan

Graduated with English as a major, I’m a writing enthusiast. Writing helps me blend my passion and profession to achieve creative satisfaction. Here, you'll find content related to finance: bank accounts, money transfers, loans and more. Still learning about how to handle my own finances better, I keep sharing all the relevant information to help my readers as well. I try to keep my work surroundings creative and fun, with space for constructive feedback.

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