Getting higher education in India has become increasingly important, but the financial costs can be challenging for many. That's when an Educational Loan acts as a lifeline, allowing students from all backgrounds to access quality education.
However, to get these loans, you might need an Education Loan guarantor, who plays a crucial role in ensuring the borrowed money is paid back successfully.
Who is a loan guarantor?
A loan guarantor is a person who agrees to repay the loan if you are unable to do so. Lenders ask for a guarantor in certain situations, such as if the borrower's income is low or if the borrower has a poor credit score. Larger loan amounts and longer repayment periods also require guarantors. Having a guarantor improves the chances of loan approval.
Benefits of an Educational Loan guarantor
- Increased accessibility: If you have not qualified for Educational Loans due to insufficient financial credentials, you will be able to secure funding with the backing of a Education Loan guarantor.
- Customised loan options: Lenders often offer more favourable terms, such as higher loan amounts and lower interest rates, when a loan guarantor is involved. This can help you tailor the loan to your specific needs.
- Faster processing: The presence of a loan guarantor can expedite the Education Loan approval process, ensuring that you can commence your educational pursuits without unnecessary delays.
Potential risks and considerations
- Impact on credit score: If you default on loan repayments, it can adversely affect your guarantor's credit score, potentially impacting their future borrowing capacity.
- Legal liabilities: In case of non-payment by you, the lender has the legal right to pursue the guarantor for the outstanding debt, including interest and penalties.
- Financial burden: If you are unable to repay the loan due to unforeseen circumstances, the guarantor may be required to shoulder the financial burden, which could strain their financial resources.
Also Read: Getting lowest-interest Education Loan in India - Complete Guide
Conclusion
While serving as a loan guarantor can unlock educational opportunities, it is a significant responsibility that should not be taken lightly. Both you and your guarantor should thoroughly comprehend the terms and eligibility criteria of an Education Loan. This awareness can help prevent legal complications or negative impacts on credit scores in the event of a default.
Axis Bank offers Education Loans with interest rates starting at just 6.5% p.a. Loan amounts start from as low as ₹4 lakh and include features such as pre-admission sanction and flexible repayment options. Get an Education Loan from Axis Bank and make your academic dreams come true!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
