How to fund your education

Do you need a bank loan for your education, but find yourself stymied because you have no collateral? Are you tired of running around, filling up stacks of forms and arranging for documents without assistance? Are you applying for a short-term course and can’t find a bank that will lend you the money? Do you want someone who will help you with the process of applying for a loan and arranging for funds? If your answer is yes to any of these questions, don’t fret.

Credila, a non-banking financial organisation, can arrange for your loan if you’re pursuing your undergraduate or graduate studies; if the course is short-term or long-term; and for courses in India or abroad.

The promoters of Credila hit upon this idea when they realised that students of a medical school run by them were unable to procure loans; this led them to research the education loan industry, and they discovered that for every hundred students who apply for the loan, there are 80 who don’t end up getting any financial aid. In some cases, the applications are rejected because the student’s family has no proof of income; in some cases, because they have no property to put up as collateral security. In some cases, the loans were sanctioned on paper, but the students got no money.

Criteria for disbursement

Credila, which started disbursing loans two years ago and is now a division of HDFC, aims to help applicants who cannot conform to certain bank norms. The company assesses the student’s application on several factors: his or her past educational records, and the type of institute the student plans to attend; the co-borrower’s credit worthiness; and the collateral.

According to bank rules, any loan of more than Rs 4 lakh is given only on the basis of 100 per cent collateral, but here, the company makes an exception for students depending on their academic background and potential. Unlike the case in other loans, those applying for a loan with Credila do not have to visit the branch.

Students can apply online for a loan, fill in some forms on the website and provide the necessary information.

Within 24 hours, the applicant will receive an e-mail telling him/her whether he/she is eligible for the financial assistance.

The applicant is informed about the documents that have to be submitted, and any queries are answered over the telephone. When the applicant’s documents are ready, a representative of Credila picks up the documents. The applicant gets a conditional sanction within 15 days.

Successful applicants will receive 100 per cent of their tuition fee and up to 75 per cent of their living expenses. This also means that students do not always need to have the margin money in their accounts before the loan is sanctioned.

Students who are travelling abroad can also borrow the money for their travel expenses.
The rate of interest begins at 9.75 per cent and can vary from case to case, depending on co-borrower, the college the student plans to attend, and the collateral being put up. Loans are also given to working professionals who want to attend short-term, weekend or evening courses.

Innovative and accessible

“We have noticed that most education loan defaulters do so because they are placed abroad, and it becomes a hassle for them to visit the branch where the loan was taken, and pay it every month. To make sure this doesn’t happen, we offer online repayment of the loan,” says Dinesh Gehlot, Assistant Vice President, Credila.

In case of genuine problems like unemployment, or family crises, the organisation extends the time loan term on humanitarian grounds. The organisation now plans to create a platform with recruiters to help students get a job, and enable them to repay the loan amount. For more information, log on to www. credila.com.

Highlights

* Home delivery and pick-up of documents
* Online transactions for repayment; online status tracking available
* Co-borrower need not always be a blood relative; extended family and friends can be the co-borrowers in some cases
* Applicant does not need an account with Credila to obtain a loan
* Loans can be arranged even in absence of collateral
* Rate of Interest varies from 9.75 per cent to 12.25 per cent depending on the co-borrower, collateral and the institute the student plans to attend
* Loans given to working professionals for short-term/ evening courses
* Maximum tenure can be up to 120 months