Everyone agrees that the most important qualities one should have in order to pursue higher education are determination, self-control, and intelligence. However, something even more crucial, financial resources, are required for higher education. That’s right; getting a higher education costs money, a lot of money, and the best way to acquire that money is through an education loan.
Students can secure the funds necessary to complete their education with the assistance of an education loan. It even covers extra costs like the fees for the library and the laboratory in addition to the tuition fees, the fees for accommodation, and the fees for equipment, among other things. When you take out a robust study loan, you won’t need to take out a separate loan for a laptop. After finishing your education, you will not have to make any payments toward the student loan for a considerable amount of time. The repayment period for student loans can be as long as 15 years.
What would happen if I don’t repay my education loan?
Although there are many benefits associated with education loans, the interest rates are typically quite high. There is a higher level of unpredictability regarding the manner in which the loan will be repaid, which is why financial institutions such as banks, NBFCs, and online lenders all charge exceptionally high-interest rates. There are times when a student may not be able to successfully complete their education or find a job that pays well.
If one of the scenarios described above occurs and you are unable to make your minimum monthly payment (EMI) on your education loan, what steps will the lender take to collect the money owed? This is an important question to consider because education loans come with a number of advantages. In India, what are the guidelines for making payments on student loans? Well, let’s get to it:
Making Payments on Student Loans
As was previously mentioned, a high level of uncertainty results in a higher interest rate on education loans. It follows that if the risk is higher for the lender, the applicant also has reason to be concerned because of the implications of this fact. The repayment of student loans requires careful financial planning that takes into account a variety of contingencies that may arise over a period of more than ten years in the future. It is essential to take the necessary steps to ensure that the loan, along with the interest, is repaid.
What Are the Consequences of Non – repayment on an Education Loan in Nigeria
Therefore, if you decide to take out an education loan and the repayment of the education loan cannot be completed within the required tenure of the loan, then you will be subject to some very serious implications. The consequences of failing to make a repayment are depend on three different circumstances. The amount of the loan that you take out will determine how each circumstance plays out. The failure to make payments on an education loan in India can result in the following three consequences:
- The amount of the education loan is less than 2 million naira
- The second scenario requires a guarantor for the loan.
- The third scenario involves a security deposit or some other form of collateral.
1. The amount of the education loan is less than 2 million naira
You have not taken out a loan for more than 2 million naira for your education. It indicates that the principal amount is not high enough to call for any kind of security or collateral to be provided. In addition, a guarantor is not required for the loan in the vast majority of instances. In this particular scenario, the lender will start off by sending you notices, and then they will move on to sending you warnings. You will be considered a defaulter, however, if you continue to disobey the terms of the agreement and do not begin making payments.
Once you start missing payments on your bills, your credit score will start to suffer. In addition, your name will be added to CIBIL’s list of people who have defaulted on their payments. It will make it impossible for you to obtain a loan in the future or until your credit score has improved to a satisfactory level again, whichever comes first. As a direct consequence of this, it will be exceedingly challenging for you to obtain any kind of loan for a considerable amount of time.
2. In the event that the Loan requires a Guarantor
There are some financial institutions that will not grant loans unless there is a guarantor involved. In most cases, the guarantor must either have a good credit score or a good standing with the lender in order to be considered. You may be eligible for a lower interest rate on your education loan if you have a guarantor for your loan. In addition to this, there is a possibility that the loan approval process will go more smoothly for you. On the other hand, if you are unable to make a repayment on an education loan, the lender will send notices and warnings to both you and the guarantor of the loan.
If neither of you complies with the terms of the loan and begins making payments, the lender will send additional notices to the guarantor. If the loan goes into default, however, both your credit score and the credit score of the person who guaranteed the loan will take a significant hit. Additionally, there is a possibility that CIBIL’s defaulter list will include both you and your guarantor.
3. If there is security or collateral involved in the transaction
The total amount of the education loan might be so high that the lender believes it justifies the need for an asset to be mortgaged and used as either collateral or security. It is possible that this will enable you to obtain the loan at a lower interest rate for education loans. The value of the asset being mortgaged and the kind of asset being mortgaged both play a role in determining the interest rate.
In the event that you are unable to make the required payments on your education loan, the lender will send you various notices and warnings. If you do not comply with the terms of the agreement, the lender will have the legal right to take possession of the assets that you mortgaged. The lender has the option of selling off your property or asset at auction or making use of it. You will also be added to the defaulter list maintained by CIBIL, and this will cause a significant drop in your credit score.
Although an increase in the availability of education loans is a positive development for students, industry experts advise that before applying for an education loan, prospective borrowers should perform what is known as “due diligence.” You have a responsibility to ensure that the education you are pursuing will assist you in paying back the loan.
Immediate Student loan
Because there are so many unknown factors, the interest rate on student loans makes it difficult to make repayments. On the other hand, if you are unable to repay the loan, you may have to deal with some serious implications. To find out when it is best for you to start making payments on your student loan, click here. This will ensure that your loan is paid off.
If you only need a loan for a modest amount, going to the bank and going through all of the drawn-out and laborious steps involved in getting a loan might not be the best idea. Instead, you can get an instant personal loan of up to =N= 200,000 at some online lending platforms. You can get the loan by downloading the loan app and using it. In addition to receiving immediate approvals, you won’t have to provide anything as collateral or security for the loan.
How should one go about repaying a student loan?
The process of paying back student loans is not a time-consuming one. You can talk to the manager of your bank or the lender, and they will take down the information about your account and set up an automatic deduction system for your repayment.
How do I go about getting a loan for my education?
You can get a loan for your education from a financial institution or from an online lender. There are some financial institutions that provide the most competitive interest rates on student loans. You can also apply for an education loan if you are a student studying to become a CA.
What are the repercussions of being unable to repay a student loan?
In the event that you are unable to make payments on your education loan, the lending institution will send you various notices and warnings. You will be considered a defaulter if you are unable to comply with their requirements. After that, it will be very difficult for you to obtain any other kind of loan for a significant period of time.
What are the consequences if I am unable to make payments on my education loan in Nigeria?
In the event that you are unable to make payments on your education loan in Nigeria, the lending institution will begin sending notices to both you and your guarantor, if you have one. If you choose to ignore the warnings, you will be in breach of the terms of your loan, which will have a devastating effect on your credit score. In the future, you will have a very difficult time getting approved for any kind of loan.
How can I escape paying back my student loans?
You cannot get out of paying back your student loans without having to deal with the consequences of doing so.