What is Co Applicant in Education Loan?

What is Co Applicant in Education Loan?

What is Co Applicant in Education Loan? This is a critical question for many students and their families navigating the complex world of financing higher education. A co-applicant is typically someone who shares the financial responsibility of the loan with the primary borrower, often a parent or guardian. 

Their role can make or break your chances of securing a loan, impacting both approval rates and interest rates. In this article, you will learn what a co-applicant is, their responsibilities, and how their involvement can influence your loan terms. 

‍

Types of Co-Applicants in Education Loans

Understanding the different types of co borrower in education loans can significantly influence your application’s success. A co-applicant is not just a formality; their role is crucial in determining the loan's approval and terms. 

This section will explore the various types of co-applicants, each playing a unique role in the loan process.

Primary Co-Applicant

Primary co-applicants are often the most involved in the education loan process. Typically, these are parents or guardians who sign the loan agreement and share the responsibility for repayment.

Financial Co-Applicant

When a student’s immediate family members cannot fulfil the role of a primary co-applicant due to a lack of a stable income, a financial co-applicant may be required. Eligible financial co-applicants typically include close family members like first cousins and paternal or maternal uncles and aunts, provided they have a stable income. 

‍

Get Education Loan for Any College in India. 100% Fees Financed- Propelld Education Loan

‍

Who Can Be Co Applicant for Education Loan?

Selecting a co-applicant for an education loan is a critical decision that can significantly impact your loan application process. Here's a breakdown of the eligible co-applicants depending on the type of institution.

Public Banks

1. Parents
2. Parents-in-law
3. Siblings
4. Parents' Siblings
5. Spouse

Private Banks

1. Parents
2. Parents-in-law
3. Siblings
4. Spouse

Non-Banking Financial Companies (NBFCs)

1. Parents
2. Parents-in-law
3. Siblings.
4. Spouse
5. First Cousins
6. Parents' Siblings

‍

Eligibility Criteria to be a Co-Applicant in Education Loans

When applying for an education loan, selecting the right co-applicant is crucial, as their eligibility can significantly affect the approval process and terms of the loan. 

Here’s an overview of the key eligibility criteria for co-applicants.

‍

Get upto 100% Education Fees Financed with Propelld. Simplified  Processing  Dedicated Support.

‍

Co-Applicant Requirements for Various Study Abroad Destinations

The co-applicant requirements can vary depending on the destination when applying for an education loan to study abroad. While most financial institutions in India generally accept students, parents, grandparents, or close blood relatives as co-applicants, some countries have specific guidelines. 

Here’s a look at the co-applicant criteria for various overseas study destinations.

‍

Minimal Documentation. Higher Chances of Approval. Easy Online Processes. Check Your Eligibility. 

‍

Co-Applicant vs. Guarantor: Major Differences

When securing an education loan, understanding the roles and responsibilities of a co-applicant and a guarantor is crucial. Both serve essential functions but differ significantly in their roles and implications for the loan. 

Grasping these differences can help you make informed decisions and ensure the loan application process runs smoothly.

Co Applicant for Education Loan

A co-applicant is an individual who applies for the loan alongside the primary borrower and shares the responsibility of repaying the loan. 

1. Shared Responsibility

The co-applicant is equally responsible for repaying the loan along with the primary borrower. If the borrower fails to repay the loan, the co-applicant must cover the payments.

2. Eligibility Criteria

Co-applicants must meet specific financial criteria, including having a stable income, a good credit history, and an active bank account. 

3. Documentation Requirements

Co-applicants must provide comprehensive financial documentation, including proof of income, credit history, and bank statements. This documentation is crucial for assessing their ability to repay the loan. 

4. Impact on Loan Terms

The financial status of the co-applicant directly affects the loan terms, including the interest rate and loan amount. A co-applicant with a strong financial background can help secure better loan terms.

Guarantor for Education Loan

A guarantor agrees to repay the loan if the borrower and co-applicant fail to do so. The role of a guarantor is quite different from that of a co-applicant.

1. Secondary Responsibility

The guarantor’s responsibility comes into play only if the borrower and co-applicant default on the loan. Unlike a co-applicant, a guarantor does not share in the loan’s day-to-day repayment but commits to repaying the loan if necessary. 

2. Eligibility Criteria

Guarantors must also have a stable financial background and a good credit history, but their financial details are less scrutinised than those of a co-applicant.

3. Documentation Requirements

Guarantors are not required to submit detailed financial documents as part of the loan application. Their role is primarily to provide additional assurance to the lender without the need for extensive financial proof.

4. Impact on Loan Terms

While a guarantor provides additional security, they do not affect the terms of the loan in the same way a co-applicant does. 

‍

Get your Loan Disbursed 10 times Faster than Banks. Apply Now.

‍

Additional Factors Considered by Lenders Regarding Co-Applicant

When assessing an education loan application, lenders consider various factors related to the co-applicant beyond their basic eligibility. Understanding these additional factors can help you and your co-applicant better prepare for the application process. 

Here are some key aspects that lenders evaluate.

1. Credit Score

The co-applicant’s credit score, often called the CIBIL score, is a key metric used by lenders to evaluate their creditworthiness. A higher credit score indicates strong credit management and lowers the risk for lenders.

2. Income Tax Returns (ITR) Document

Lenders typically require the co-applicant to submit their income tax returns (ITR) or alternative income proof, such as an income certificate. This document provides essential information about the co-applicant’s financial status and stability.

3. Proof of Income

Lenders usually request salary slips and bank statements reflecting salaried co-applicants salary deposits. A more extensive set of documents is needed for self-employed individuals, including GST registration proof, partnership deeds, memorandums of association, ITR, and profit and loss statements. 

4. Annual Income

A sufficient annual income increases the likelihood of loan approval by demonstrating the co-applicant’s capability to support the loan financially.

Also Read: How to increase CIBIL score - 10 Easy Tips

‍

Document Required by the Co Applicant for Education Loan

When applying for an education loan, the co-applicant must provide various documents that help lenders assess their financial stability and credibility. 

Here’s a comprehensive list of documents typically required.

‍

How to Apply for an Education Loan with a Co-Applicant?

Applying for an education loan with a co-applicant involves several steps to ensure the application is processed smoothly and efficiently. 

Here are a few steps to help you through the process.

Step 1: Explore Various Lenders

Compare education loan options from different banks, financial institutions, and NBFCs. Focus on interest rates, processing fees, repayment terms, and eligibility requirements to find the best fit for your needs.

Step 2: Verify Loan Eligibility

Review the eligibility criteria for the education loan. This often includes assessing your academic performance, the course you intend to pursue, and the educational institution's reputation.

Step 3: Choose a Suitable Co-Applicant

Select a co-applicant with a stable income, strong credit history, and ready to share the financial obligations. Consider factors like family relationships, reliability, and age when choosing.

Step 4: Submit the Loan Application

Apply for the loan by visiting the lender's branch or completing the application online. 

Step 5: Provide Required Documents

Submit all necessary documents for both the student and the co-applicant. Ensure these documents are valid and self-attested to meet the lender’s requirements.

Step 6: Undergo Credit Verification

As part of the approval process, the lender will perform a credit check and verify the income details of the co-applicants.

Also Read: How to Apply for Education Loan in India- Complete Process

‍

‍

Why Should You Opt for an Education Loan?

Opting for an education loan can be a strategic decision with significant benefits. Here’s why an education loan might be the right choice for you.

1. Access to Quality Education

An education loan provides financial support to pursue courses and programs that may otherwise be unaffordable. It allows you to attend reputable institutions, access advanced resources, and gain a higher-quality education.

2. Flexible Repayment Options

Education loans often come with flexible repayment options. Many lenders offer a moratorium period, where you are not required to start repaying the loan until after you complete your studies or secure employment. 

3. Build a Strong Credit History

Timely repayment of an education loan helps build and maintain a good credit score. A strong credit history can be advantageous for future financial transactions.

4. Lower Interest Rates

Education loans typically come with lower interest rates compared to other types of loans or credit cards. Public banks and government schemes often offer subsidised interest rates, making them a cost-effective option for financing education.

5. No Collateral Required

Many education loans, especially those provided by government schemes and certain banks, do not require collateral. This means you can secure funding without needing to pledge assets.

Also Read: Banks That Give Education Loans without Collateral for Abroad

By understanding what is co applicant in education loan you can significantly enhance your chances of securing the necessary funding for your studies. You can streamline the loan application process by carefully selecting a co-applicant, ensuring all required documents are submitted, and being aware of the specific requirements for different study destinations. 

Ready to break financial barriers? From personalised loan solutions to flexible repayment plans, Propelld is here to support your journey. And that’s not all! Propelld offers various other benefits that you can avail. Read on to know more!

‍

Why Propelld?

‍

Apply with Propelld today and turn your educational dreams into reality!

‍

‍

What is Co Applicant in Education Loan: Important FAQs

What is the role of a co borrower in education loan? 

A co borrower in education loan is responsible for repaying the loan along with the primary borrower. They must have a stable income, a good credit history, and an active bank account.

Is co applicant mandatory for education loan? 

While it's not always mandatory, having a co applicant for education loan can significantly improve the chances of securing a loan. Lenders often require a co-applicant to ensure the loan is repaid.

Who can be co applicant for education loan? 

It includes parents, parents-in-law, siblings, spouses, and even first cousins, depending on the lender and the type of institution.

What are the eligibility criteria for a co-applicant in an education loan? 

The co-applicant must be willing to assume the role of the primary debtor, have an active bank account, and demonstrate financial stability.

How does a co-applicant affect the loan terms? 

The financial status of the co-applicant for education loan directly affects the loan terms, including the interest rate and loan amount.

Can a guarantor be a co-applicant in an education loan? 

No, a guarantor and a co-applicant in education loan are different. A guarantor agrees to repay the loan if the borrower and co-applicant default, while a co-applicant shares the responsibility of repaying the loan.

What documents are required from a co-applicant for an education loan? 

The co-applicant must provide documents such as income tax returns, proof of income, bank statements, and a statement of assets and liabilities.

How does a co-applicant's credit score affect the loan application? 

A co-applicant's credit score, or CIBIL score, is a key metric used by lenders to evaluate their creditworthiness.

Can a co-applicant be a non-family member? 

In some cases, a non-family member can be a co-applicant for education loan, but this depends on the lender's policies and the specific circumstances.

What is the difference between a co-applicant and a guarantor in an education loan? 

A co-applicant in education loan shares the responsibility of repaying the loan, while a guarantor agrees to repay the loan if the borrower and co-applicant default.

How does a co-applicant's income affect the loan application? 

A co-applicant's income is an essential factor in determining the loan amount and interest rate.

Can a co-applicant be changed during the loan tenure? 

In some cases, a co-applicant for education loan can be changed during the loan tenure, but this depends on the lender's policies and the specific circumstances.

What are the benefits of having a co-applicant in an education loan? 

Having a co-applicant for education loan can improve the chances of securing a loan, provide additional financial support, and offer more flexible repayment options.

How can I apply for an education loan with a co-applicant? 

To apply for an education loan with a co-applicant for education loan, explore various lenders, verify loan eligibility, choose a suitable co-applicant, submit the loan application, and provide required documents.