Education loan is one of the primary needs for students seeking higher education, as the education costs are soaring each day. However, many education loan applications are rejected due to numerous reasons. Therefore, it is essential to consider a few points to avoid application rejection.
Top 10 reasons behind education loan application rejection
The primary reasons behind education loan application rejection are provided below –
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False information
While filling up an application for an education loan or education loan schemes, such as the Vidyalakshmi Scheme, students must remember to fill out the application form correctly. Any wrong information or discrepancy in details can lead to the rejection of an application.
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Incomplete documentation
Applicants must remember to provide all the necessary required information to avail of a loan successfully. Filling up online forms for major financial institutions or schemes, such as the Padho Pardesh Scheme, provide correct and valid documents in the application form. Also, if required, after uploading the documents, send necessary hard copies of documents to the lender.
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Collateral requirement
Most lending institutions also provide education loan against property for loan seekers. For disbursing this type of loan, financial institutions need a property to be mortgaged and based on the valuation, they provide the loan amount. However, if the property has faults or is not up to the lending institution’s standards, they might reject the loan application.
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Unrecognized educational institution
While applying for educational loan, lenders may ask for the name of an academic institution. Nevertheless, if an institution is not recognized or unaccredited, the loan might get rejected due to the non-credibility of the institution.
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Location of the institution
As stated above, the institution’s credibility is primarily essential to avail an education loan. However, if an academic institution is from a country that does not have a rich history of education or employment, they may not approve the loan application.
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Poor credit report
A questionable credit report of an applicant might also act as a primary cause of loan application rejection. Hence, to enhance credit reports, individuals must repay their dues on time and maintain a healthy CIBIL score throughout a particular financial year.
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Course of application
Most lenders consider disciplines like STEM, arts, or humanities the most sorted for abroad education. However, if applied for unrecognized subjects, lenders often reject the application. This is because these subjects provide less scope of job opportunities, and the risk for financial institutions is high.
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Low CIBIL score
For a loan application, a high CIBIL score is one of the most common requirements among lending institutions. They usually prefer a score of 750 or more as this portrays an applicant’s creditworthiness and trustworthiness. Apart from it, this also proves the disciplined repayment history of an applicant. So lenders often trust these applicants and process the application form faster.
Tax status and nationality of a candidate
Individuals seeking an education loan should be residents of the country. However, if the applicant is not a residing citizen, the application form may get rejected. Also, guarantors of the education loan must be the nationals of the country.
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Language requirement
To study in an English speaking country, one primary requirement is to submit the English language proficiency test score. But, if an applicant fails to provide the acceptable standards of the English language requirement, the lender may reject his/her application.
In India, selected financers extend pre-approved offers that simplify and expedite loan processing. Such offers are available on various financial products like loans against property, home loans, etc. You can enter your name and contact number to check your pre-approved loan offer.
Thus, candidates must check their eligibility, documents, and other allied factors before applying for an education loan for a smooth application process. This will make the availing process of a loan against property much smoother and increase the chances of loan sanction.
