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POSTED BY ON September 6, 2012 1:32 pm COMMENTS (10)
If a father is not helping a student in getting an educational loan for B.Tech study, are all options closed for her? Well, it seems like that. Her mother is going from bank to bank, but every bank (UCO/BOI/SBI) is asking for father’s signature. What should a non-working mother do, so that her child keeps studying in a reputed college of India? I would like to know logical/legal option for the student as well.
Q1 – Can she get a loan with the help of some guarantor without father’s signature/approval?
Q2 – When does guarantor’s name start appearing in CIBIL? When loan gets approved, when loan EMI gets started or when student defaults?
Q3 – If a person becomes guarantor, will it affect his future loan taking eligibility? Particularly, if EMI has not been started or the student did not default?
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As ashal said, don’t be disheartened.Bank puts so many conditions because there were cases in past of student loan delinquency and they also want some kind of security before loan disbursement.
Ashal/ CreditVidya, Many thanks!
Well, my positive expectations were based on
1) P. Chidambaram’s statement that no deserving candidate’s application should be rejected
2) There is no Margin/Security for loans upto 4 lakhs – and here student needs 4 Lakhs only
3) Student got selected in BIT Mesra (one of the most reputed colleges of India), and in course B.E. got stream Comp. Sc. (one of the die-for stream as of today).
But now I understand the reality. I was just getting wrong impressions by news of needy students getting support by government/banks for higher studies and blah-blah. Also, I was thinking that Education Loan is different/easier than personal loan. But with so many terms/conditions – it looks same to me now – for parents and for guarantor too.
Regards,
Prasoon
Adding more, what my understanding was –
Banks provide Education Loan for professional courses, assuming that student will be able to pay. That is, student was good in academics in past, got admission in good college/university, got good stream, course has got nice prospective of job – which will pay him/her enough to repay the loan amount.
Now I feel –
It’s being taken as capability of parents/ guarantor – then it’s just like a personal loan nothing else.
Dear Prasoon, please do not lose heart. For the given case, if the student or mother can arrange a guarantor, the loan can be arranged with out any collateral if the amount is just 4L Rs. The only thing is – The mother-d’ter should pursue it with the banks seriously.
Thanks
Ashal
Thanks Ashal!
Yes, I do not lose heart. I know that I’ll get some or the other solution on this forum :-). That outburst was partially due to my situation as well, as I can’t be guarantor as of now. And, I really don’t want that student to be out of study.
Prasoon
your understanding about Education Loan was very different. Note that Education loan below 4 lacs is unsecured (no guarantee) , so banks will take a lot of measures to make sure that they get back their money, above that they need some security .
Also one point you should remember that the Loan will be given where the guarantor is residing or the parent is residing . We took education loan for my brother recently and it was not given in the CITY where the student is studying (Pune) , but where the parent (my father) is (Uttar Pradesh) .
So keep that note .
Manish
Regarding point 1:-
Yes that is absolutely possible, her mother can become a co-applicant and take a guarantor because as per bank policy either of the parent should become co-applicant. In this case bank is insisting on father’s signature may be because her mother is not working.
Regarding point 2:-
Yes it’ll start appearing as guarantor’s liability from day 1 and will keep showing in guarantor’s CIBIL report even if actual EMIs are being paid by the student.
Regarding point 3:-
Even if student pays EMI on time it may affect guarantor’s loan taking eligibility because bank may consider guarantee as guarantor’s obligation in case student defaults.
We would like to comment as below on the above query
1. For Educational loan as a policy the parents need to be the co-applicant for the loan. However if the networth of the parent is low then in that case you need to provide a guarantor who’s means are at least equal to the quantum of loan. For further details you should check with Banks policy for approval in this case..
2. Guarantor’s name start appearing in the cibil report as soon as the loan is disbursed to the applicant. As per the regulartory framework lending institutions should report to credit bureau details of all advances.
3. Guarantors are equally and severally liable for any loan. The CIBIL score will get impacted for the guarantor if the applicant defaults in repayment of the loan.
thanks,
Thanks!
Regarding Point 1 –
a) Can not her mother be a co-applicant? And then take a guarantor as her networth is low? Is approval/signature of father is necessary? After all mother is also a parent.
b) Here problem is not father’s incapability, but the problem is his unwillingness.
c) Banks are saying that father’s signature is necessary. I just wanted to confirm that. Whether this is correct or they were just trying to avoid being a small town bank.
Regarding Point 2 –
a) So, it’ll start appearing as guarantor’s liability from day 1 and will keep showing in guarantor’s CIBIL report even if actual EMIs are being paid by the student?
Regarding point 3 –
a) What if student is paying all the EMI on time. Or, let’s say EMIs have not been started yet. Still, will it start affecting guarantor’s loan taking eligibility and will keep affecting till student repays the whole amount?
Dear Prasoon, in the given case, mother is a non working parent & father is not co-operating, hence how ‘ll the bank be assured of return of it’s money? For the given situation along with the guarantor, some collateral like Gold or FDs etc. can be arranged to make it more secure loan.
Rest points already discussed hence not commenting on CIBIL issues for guarantor.
Thanks
Ashal