Studying abroad is truly a life-changing experience. With many academic opportunities comes along a whole new world of learning cultural and professional experiences. But for many students, taking an education loan is an essential step to make this dream possible. You can guarantee a seamless loan application process and concentrate on reaching your objectives if you are well-informed and prepared. When applying for education loan, international students frequently make the following five mistakes.
Let this blog help you avoid them.
Top 5 Mistakes Students Make When Applying For Education Loan
1. Missing EMI Payments
One of the most common mistakes is missing repayments on your student loan for abroad studies. Skipping even a single EMI (Equated Monthly Installment) can have serious consequences.
Why It’s a Problem:
Late or missed payments can lower your credit score and make it harder to get loans later. You may also face penalties or higher interest rates which adds on to your financial stress.
How to Avoid It:
Prioritize your loan payments. Make a monthly budget that includes your loan EMI as a fixed expense. Consider setting up auto-debit to ensure timely payments.
Pro Tip:
If you find it difficult to pay your study loan abroad, contact your lender. Many offer flexible options, such as extending the repayment period or reducing EMI amounts temporarily.
2. Not Understanding Foreign Exchange Rates
Many students overlook the impact of fluctuating foreign exchange rates when repaying their abroad education loan.
Why It’s a Problem:
Exchange rates can change unpredictably. A weaker Indian rupee compared to the foreign currency increases the repayment amount in your home currency, leading to unexpected financial strain.
How to Avoid It:
Track exchange rates regularly. You can use a forex card or remittance service to lock in exchange rates and avoid sudden changes. Some lenders also offer education loans with fixed exchange rates, which helps reduce the risk of rising costs.
Pro Tip:
Speak to study abroad consultants or your lender about how currency fluctuations may affect your loan repayment. Planning ahead can save you from surprises later.
3. Ignoring Financial Aid Options
Many students fail to explore scholarships, grants, or other financial aid options before applying for a student loan for overseas study.
Why It’s a Problem:
Scholarships and financial aid reduce the amount you need to borrow. Ignoring these options means taking on a higher education loan for abroad studies, which increases repayment obligations.
How to Avoid It:
Start researching financial aid early. Many universities offer scholarships for international students. Check into private organizations also that provide grants for deserving candidates.
Pro Tip:
You can ask reputed study abroad consultancies for help to find scholarships that match your profile. Their professional guide can help you through the application process and ultimately reduce your financial burden.
4. Failing to Read Loan Documents Thoroughly
Students often rush through the loan application process for their study loan abroad and fail to read the fine print carefully.
Why It’s a Problem:
Missing key details can result in agreeing to terms that don’t work in your favour. Examples are high interest rates, hidden charges, or tough repayment rules, etc.
How to avoid it:
Go through the loan agreement carefully before signing it. Pay special attention to interest rates and processing fees. Also, mind the repayment schedule and any penalties for late/ missed payments.
Pro Tip:
Involve a trusted family member or financial advisor when reviewing your abroad education loan agreement. A second opinion can help you spot potential issues.
5. Not Comparing Loan Options
Some students go with the first lender they find, whether it’s a local bank or a popular financial institution. While it may feel easier, this choice can stop you from finding better loan deals.
Why it’s a problem:
Every lender has different interest rates, repayment terms, and loan benefits. If you pick the wrong one you could end up paying more over time.
How to avoid it:
Take time to compare lenders (banks and NBFCs). Use online tools to check interest rates, fees, and how flexible the repayment options are.
Pro tip:
Choose lenders that offer benefits such as no prepayment fees, grace periods, or discounts for early repayment. These features can make it easier to handle your education loan.
Bonus Tips to Avoid Education Loan Mistakes
Here are a few additional tips to ensure a smooth process when applying for a study loan for abroad:
Understand Eligibility
Ensure you meet the lender’s requirements, such as academic scores, course eligibility, and collateral conditions.
Borrow Wisely
Borrowing a bit more than your estimated budget is often helpful. It gives you a buffer for unexpected costs like medical emergencies or additional academic expenses.
Loan Insurance
Consider taking loan insurance to protect yourself and your family from financial strain in case you cannot repay the loan.
Monitor Credit Score
A good credit score improves your chances of getting an education loan for abroad studies with favorable terms.
Stay in Touch with Your Lender
Keep your lender informed about any changes, such as extending your course duration or switching universities.
Conclusion
Applying for an overseas education loan is the most important part for studying abroad. However many mistakes in this leads to stress and extra costs. Watch out for common mistakes mentioned in this blog. Do you need guidance get approved for an international student loan? Unipay Forex is up for it.
With proper planning and guidance, you can find a loan that fits your needs. Take the time to research, compare options, and handle your finances carefully.
