Education loan for studying abroad

The order to do things in

Almost nobody sanctions without an admission or conditional offer letter, because the offer is what fixes the amount. So the sequence is: application, offer, loan file, sanction letter, visa. Trying to run the loan first wastes the weeks you will need later.

The single most useful thing you can do is open the file on the day the conditional offer arrives rather than when the tuition deposit falls due. Those two dates are usually six weeks apart, and six weeks is roughly what a collateral-backed sanction takes.

• Offer letter, with the fee structure the university published
• A written cost estimate covering tuition, living costs, travel and insurance
• Academic documents: transcripts, provisional or degree certificate, mark lists
• Co-applicant income proof, usually a parent
• Collateral papers, for anything above the lender's unsecured limit

Where the file actually stalls

Secured loans above the unsecured threshold need collateral, usually residential property or land, and the slow part is never the lending decision. It is the valuation appointment, the title search and the legal opinion, all of which run on somebody else's calendar.

Check whose names are actually on the deed before you start rather than after the legal opinion comes back. Jointly held property needs consent and signatures from every recorded owner, and tracing an owner who lives overseas can take longer than the rest of the sanction combined.

Apply to more than one lender

Sanction amounts on an identical file differ substantially between a public-sector bank, a private bank and an NBFC, and so do the margin money requirement, the moratorium and the rate. Two or three parallel applications cost you paperwork and nothing else.

Public-sector banks tend to offer better rates against collateral and move slowly. NBFCs move faster and lend unsecured more readily, at a higher rate. Which is right depends on whether your constraint is cost or the calendar.

The sanction letter is also your proof of funds

For the UK, Canada, Australia and Germany, a sanction letter from a scheduled Indian bank is accepted as evidence that you can pay. That is worth knowing because it removes the need to park a large balance in an account for the maintenance period, which is where a lot of applications get into trouble.

Make sure the letter states the sanctioned amount and the disbursement schedule explicitly. A one-line approval note is not what a visa officer is looking for.

Check the schemes before you sign

Central and state governments run interest subsidy and support schemes for overseas students, and eligibility varies by scheme, income band and year. Look up what currently applies to you before signing anything, because nobody at a bank is going to raise it for you.