It is a very known fact that students take overseas education loan to study abroad. The fact that you have landed on this page shows that you have availed or are about to avail a overseas education loan. But if you do not plan it in a smart and informed way the education loan repayment can be a concern as many see the student loans for studying abroad as a liability. Prior to selecting the loan, the fact that if there’s a little amount of contemplation and planning is done, all these worries can be put to rest easily.
It is imperative for you to understand the policies and various other aspects of loan repayment in India for the purpose of planning the loan repayment. To plan your education loan repayment process in an effective manner read on to get profound know-how of the policies and tactics.
Read on to know what will happen if you default on your education loan?
• There are lot of chances that the study abroad loan can be NPA – Non-Performing Asset. Going forward let us know what will happen when your education loan will be classified as NPA.
• The bank will classify the loan as a non-performing asset if a student fails to pay the EMI for 3 consecutive months. To recover the loan, amount the bank may seize your collateral and use it and thus borrower’s collateral will be at risk.
• The credit score of both the borrower as well as his co-applicant’s credit score will be affected once the loan is classified as an NPA thus reducing the ability to borrow money in future for both of them.
However, the NPA numbers are nothing to be scared off.
Soon after disbursal, a wise loan repayment plan begins and all it requires is a combination of planning and diligence along with the basic measures like;
• Using the funds wisely
• Making sensible lifestyle choices
• Importance of budgeting has to be understood and implemented
Do You Need to Repay While Studying?
The first question that crosses a student’s mind once students know the number of EMIs they have to pay to repay their education loan. It is prudent for the students to know the different repayment options in order to plan their loan repayment intelligently.
The students are entitled to moratorium period s they would have availed overseas education loan. It is during this period that the loan taker need not pay anything to the bank. This duration is between the end of the course and the end of the job with a grace period of 6 months to 1 year to get a job. For the loan borrowers this period acts as a financial cushion and gives them time to find a job after completing their course.
During the moratorium period lenders in India have different policies for repayment. Check the different policies for repayment during the moratorium period for the lenders in India below:
• Students have to pay zero interest
• Students have to pay partial interest
• Students have to pay full interest
• Students have to pay EMI
It is our advice to start repaying the loan at the earliest to avoid unnecessary burden for a long period in life. Based on the individual student profile check out for the best bank for overseas education loan to get it sanctioned in the shortest time too.
Hope now it is clear on what happens when you default study abroad loan.
So, never do it, instead repay it on timely basis and get done with it.
Good Luck.