Basic Overseas Education Loan Terminologies – Glossary 1

Most Indian students who wish to pursue their higher education abroad, for them overseas education loan is the popular choice of funding. In the process, there is a high chance for such higher education aspirants to get lost in technical jargon as these terminologies can be tricky.

Some of the most commonly used terms in student loans for studying abroad is listed in this article to give you a thorough understanding. All the terminologies covered in this article, are applicable for both secured (with Collateral) and unsecured (without collateral) loans.

So, let us begin first with types of loans.

Secured Education Loan:

In this type of loan, you need to mortgage certain types of assets as collateral security to the lending bank. Collateral Overseas Education Loan is another name of the secured loans. In simpler words if the borrower is opting for a secured loan then, the applicant is required to pledge some kind of asset as collateral like an immovable property or liquid security.

Unsecured Education Loans:

In this type of loan, you need not mortgage any assets; thus, they are overseas education loans without collateral, or unsecure overseas education loans. This means that the borrower need not pledge anything to avail this loan, which is generally offered by private banks and NBFCs (Non-Banking Finance Companies).

Hope we are clear with the differences between the kinds of overseas education loan offered by the banks. Going forward let us understand the jargons used in the finance sector.

Basic Education Loan Terminology

Principal Amount:

The basic loan amount granted by lenders to the students in need is called as principal amount.

Interest Rate:

The money paid to the lender in exchange for borrowing the principal amount is called as the interest rate. By Indian lenders of abroad education loans, this education loan terminology is often considered in terms of percent per annum. On the basis of the MCLR the Indian Lenders decide the interest rate while the International Lenders decide it based on LIBOR (London InterBank Offered Rate).

Co-Applicant/Co-Signer:

The person who signs the education loan agreement with the loan applicant is referred as a co-applicant who is liable to repay the education loan, should the loan applicant fail to do so. Co-signers is what the international lenders call them. The co-applicant has to be someone who is a close family member of the loan applicant in order to apply study loan for abroad studies. The lenders prefer, parents and siblings as co-applicants.

Guarantor:

A guarantor is someone other than a close family member basically known as a third party whose assets have been pledged as collateral security against the collateral education loan. It is important to note that a guarantor and a co-applicant are not one and the same. Other than your parents and siblings this guarantor can be anyone for example uncle, aunt, cousins, etc.

These were just the basic terminologies of Overseas Education Loan. There are a lot many things to know yet. You can keep following our page for the entire terminologies and gain insight on many more such topics related to study abroad loans.

You can check for online loan application for abroad studies and start the loan process for your foreign studies.
Good Luck!