Availing an overseas education loan is a huge responsibility on one’s shoulders and there are various factors involved in it. One of which is the co-applicant. In an education loan, a co-applicant plays an important role as many a times, this can be the reason for applicants facing a hard time to avail an education loan from the prominent financial lenders.
Co-Applicant: A co-applicant in an education loan is an additional person with a secured financial profile who co-signs the education loan agreement with the loan applicant. A co-applicant is the only person to whom the financial institutions will turn if the loan applicant fails to repay the education loan due to any unforeseen circumstances. A co-applicant is often referred as a co-borrower or a co-signer.
Majority of the financial institutions prefer students, parents, grandparents or first blood relatives as a co-applicant for education loan in India for study abroad. However, there are some exceptions. Read on to know!
• Australia: According to the Australian Embassy, the co-applicant for an overseas education loan can be parents, siblings, grandparents. But if in case the collateral property is jointly held by other family members too then maternal and paternal grandparents are also accepted for an overseas education loan application.
• United Kingdom: For United Kingdom, the UK Embassy strictly accepts only students or the parents as a co-applicant for an overseas education loan.
• United States of America: The USA Embassy does not have any specific criteria for the co-applicant. The co-applicant can be anyone right from blood relatives, cousins to family friends. The only requirement is that he/she must fulfil the financial eligibility criteria for the co-applicant.
• Canada: When it comes to Canada, the embassy accepts first blood relatives and family members as a co-applicant, provided they should meet the financial eligibility criteria.
• Ireland: The Irish Embassy is also quite flexible with the co-applicant. It says that as far as the person is fulfilling the financial criteria, he/she is suitable to become a co-applicant.
• New Zealand: The New Zealand Embassy states that only parents, siblings and grandparents can become co-applicant in an overseas education loan.
• Sweden: The Visa Immigration Officer of the Swedish Embassy does not consider the loan sanction letter. Hence, students are required to show the funds in their own savings account only. Joint accounts or Fixed Deposits are not accepted.
The co-applicants are divided into two broad categories, Primary Co-applicant, and financial co-applicant. Let us understand the eligibility criteria for these two.
• Primary Co-applicant: A primary co-applicant is referred to the students or their parents despite their financial profile. Students can put their parents who are retired pensioners or does not have a stable income as a primary co-applicant for their overseas education loan.
• Financial Co-applicant: A financial co-applicant is a person who is related to the loan applicants by blood. He/she can be first cousins, siblings, paternal uncle or aunt and maternal uncle or aunt. A financial co-applicant is required only when the students are unable to name individuals having a permanent income as their primary co-applicant in their student loans for studying abroad.
A co-applicant plays an important role in an overseas education loan process. Here are some of the parameters that are majorly considered while assessing the profile of the co-applicant. Read on!
1. CIBIL Score: A CIBIL Score is a term that refers to the benchmark credit score allotted to the individuals of the basis of their previous financial activities. Before processing of an overseas education loan, the financial lenders consider the CIBIL score of the co-applicant. An ideal CIBIL score is 685 and above.
2. IT Returns Document: Income Tax Returns document is the crucial requirements in an overseas education loan process. The financial lender institutions including, banks and NBFCs, are strict with the submission of IT Returns. To avail an unsecured overseas education loan, the submission of ITR document is a must.
3. Income Amount: The annual income of an individual is also taken into consideration while processing of an overseas education loan. In case of the co-applicant, an individual must have at least INR 30,000 per month excluding all other liabilities.
4. Income Proof: It is important for a co-applicant to submit the last six months salary slips reflecting the timely salary transactions. If an individual runs a business, then he/she will be required to submit the following documents to show the income proof:
• GST registration proof
• Vendor bills
• Financial statements of the business accounts for the past six months
• Profit or loss statement of the business
At Elan Loans, we have a team of experts who will guide you right from the beginning of your overseas education loan process to the disbursement process. Contact us and be rest assured.
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