A member of your family (preferably your parents) who co-signs the loan application and assumes responsibility for repayment if you are unable to do so is known as a co-signer.
Additionally, banks require a local contact in India for any due diligence while you are away.
In other words, whether applying for a loan from a public or private lender, having a principal co-applicant is required. A primary co-applicant and a financial co-applicant can be the same individual, although private lenders (private banks and NBFCs) require one during the loan application procedure.
The need for a co-signer
In many situations, having a co-signer for your loan makes sense.
- Your credit is poor.
- You don’t make a lot of money.
- You are a young person without any credit to your name.
You can get around these obstacles and be granted a loan by using a co-signer. If you and your co-signer are accepted, you might even be able to acquire interest rates that are lower.
However, a few things must be in place for this configuration to function:
Between the co-signer and the borrower, you should be confident that you can trust each other because the borrower will be demanding a lot from the co-signer.
The co-signer must be in good financial standing. Co-signers may not be permitted to co-sign on the loan if their credit is equal to or worse than yours.
The co-signer must be capable of making the loan payments on their own in the event that the borrower defaults on the loan.
Looking for a co-signer
Most borrowers who employ a co-signer pick someone close to them, such as their spouse, parent, grandparent, sibling, or a person with a similar relationship.
Sadly, not everyone has access to these choices, and in certain situations, family members may not have excellent credit, which is needed if they intend to apply for a loan with you.
Try contacting these people if you find yourself in this situation:
- Friends: Do you have a friend that is trustworthy with money and has a stable income? Inquire if they would mind signing your loan as a favor.
- Close relatives and cousins from extended family are all acceptable co-signers. Just make sure they have solid financial standing and decent credit (i.e., manageable debts and steady income).
- Mentors: You can also consider finding a personal or professional mentor. Remember that they will need to know you well enough to have confidence in your financial routines.
- Friends of your parents: You’ve probably known a couple of your parents’ friends all your life. Are any of them willing to take a risk on your behalf?
Why do you need a co-applicant or co-signer?
A co-signer is essential to having the loan approved throughout the entire procedure.
Banks require some type of guarantee from borrowers that the loans won’t turn into bad loans in the event of non-repayment for whatever reason. As a result, students have found it difficult to deal with the circumstance when they needed a co-applicant or co-signer.
In a scenario, where the student defaults on the loan after completing their studies, a co-signer assures that the lending agency’s requirements are met and that there are reasonable prospects for the loaned amount to be recovered.
- Cases where students’ loan applications are denied because they lack a co-applicant or co-signer
For the processing of student loans from overseas, there are numerous channels available. The most crucial need for students to meet in order to proceed with the application for an education loan is having a co-signer.
However, this restriction is no longer a concern for students whose parents or other close family members are unable to serve as co-signer.
There are a few methods currently for processing a sizeable portion of the tuition cost through loans without needing collateral or a co-signer, so if a student doesn’t have a co-signer, they shouldn’t worry too much.
- The granting of unco-signed, unsecured loans
Before granting a loan, banks, and NBFCs review a student’s profile and take into account a number of variables. The likelihood that the loan will be approved and credited to the college’s account at the time of admission or in the loan account is extremely high if a student meets the requirements established by the banks.
Nonetheless, if you are a working person, the procedure may become simple, and acquiring the loan may also enhance.
The following considerations are taken into account while determining the loan amount:
- The college to which applicants have been admitted.
- The university belongs to the upper tier or the tiers below.
- The candidate’s credit history.
- The sum of the scholarship received. (If any)
