Pay back your education loan or risk getting no loan in future
Beware all those students who apply for education loan! Any default on repayment is likely to affect your credit score and your ability to take loans in future, advises credit information company CIBIL.
The overall incidence of delinquency on education loans is around 5 per cent (going by dues of 90 days plus), but the default rate for loans with ticket sizes below Rs 4 lakh is at 8.1 per cent. Default rates for other categories are — Rs 4-5 lakh — 4.8 per cent; Rs 5-15 lakh — 2.1 per cent; Above Rs 15 lakh – long-term default rate is under 1 per cent.
As per CIBIL, a joint loan or loan guaranteed by a credible guarantor significantly reduces the delinquency level.
While banks will continue to figure out ways to get back their money, students need to understand that it is important to pay back loans once they complete their studies or else they will find it difficult to get a loan later in life when the requirement might be much more important.
Source: Business Standard