Most people get stuck when it comes to Education Loan especially under SPP, so just thought about putting my experience and knowledge for aspiring students to not to make any mistakes and thereby facing rejections.
For SPP Students the 80% of first years tuition fees plus living expenses has to be shown on Loan. Loan Sanction letter is a very crucial piece of paper as not only is it the strongest evidence of financial ability but also it saves CHC/Embassy to go through the hassles of checking financial capability of a student to study abroad thus making the VISA process faster.
First of all, it should be clear with the person/bank offering loan that what it is given for. Most of the banks refrain from offering education loan for Diploma/Certificate course and that is what most of us are applying and aiming for. This problem usually occurs when a person is willing to take an Education loan. Even if a person finds a Bank who is read to offer Education loan for our desired course, its a headache to get all the paperwork done and loan approved from them. So the last option that most of us tend to look at as our savior is Loan against FD.
Many banks do offer loan against FD for higher education abroad viz UCO, State Bank of India, State Bank of Patiala (provides loan under Gyan Jyoti Scheme), etc to name a few. I myself acquired loan from SBI. But there are certain things to take care of while going for Loan against FD or even when its a plain education loan. Its not something big but the usual stuff but sometimes Bank tend to forget to include it which may tend to create a problem for us.
Following are the few points that I think a Loan Sanction Letter must contain:
1. First and the most important thing I would like to say is it should be on Banks letterhead and should have Bank name, Branch Name, Branch address and contact number clearly mentioned. (Often Banks also include their Branch number which is not necessary for us to have)
Also the date on which loan was sanctioned should be included.
2. Name and address of the 1st and 2nd applicant (It is advised to have either of your parent as 2nd applicant when the person going for higher education is not earning).
3. Subject (this is not mandatory but it makes the Loan Sanction Letter look more formal). This can contain information like "Loan For Higher Education in Canada" (Also it should clearly mention either in the subject or the body that loan has been sanctioned.)
The following points can then be included in the body:
a) Name of the facility: Here its Loan against FD/FDR/Banks own Deposit
b) Loan Amount: The loan amount and not the FD amount
c) Loan Account number: Now this point is very important, I myself didn't have this in my Loan Letter but mind you FD number and Loan Account number are the two official ways of finding out about your Loan. So this part should not be neglected. Thanks to "Happy Garcha" I got it included in my Loan letter.
Now if there are multiple FD account numbers, its highly recommended to include the Loan Account Number. Even otherwise I would call it mandatory.
Often this Loan Account Number is also mentioned as the reference number or serial number (do check this out).
d) Margin: If your loan is against FD, the Margin that bank holds while giving you the Loan would be mentioned here. Eg. Loan of Rs. 9 lacs against FD of Rs. 10 lacs (so the margin here is 10%).
e) Purpose of Loan: This is again another crucial part, here one should include its purpose of the loan, name of the institution one intends to attend, address of the institution (just the city, state and country is enough) and name of the applicants. Also don't forget to include name of the course and its duration.
If the Bank doesn't agree for writing "certificate course/diploma course" its okay, you can make them mention name of the program and add "program" suffix to it. (Like "Marketing Management Program")
f) Security/Collateral Security: This part would include either name, number and amount of FDs or other security dealt with to get the loan. Even this part is very very important.
g) Loan Repayment terms and conditions (if any should be mentioned)
h) Interest rate/rate of interest should also be clearly mentioned.
i) and lastly the letter should include Stamp of the particular Branch and Seal of the Branch Manager along with his/her signature in its footer.
Another 2 cents:
Disclaimer: I have tried to include all the points that I could possibly think of for a loan but if I do miss any point, feel free to mark out my mistakes and I shall change it. This was the format my Loan Letter which was very clear and decent looking letter.
Also I have used the word "one should include/one should mention" etc, by which I don't mean one should print a loan letter at his/her place, its just that when you are applying for the loan or if the branch manager/loan officer asks for suggestions or even if they don't you should ask them to include all of the following details. I heard from my consultant that "Allahbad bank" is reputed for not giving a proper loan letter, I don't know to what extent this is true but if someone has a similar problem one should ask them to include the above mentioned details, atleast the mandatory parts should be included. All the data included here is my personal opinion and it does not come from any official source.
-royalsting
For SPP Students the 80% of first years tuition fees plus living expenses has to be shown on Loan. Loan Sanction letter is a very crucial piece of paper as not only is it the strongest evidence of financial ability but also it saves CHC/Embassy to go through the hassles of checking financial capability of a student to study abroad thus making the VISA process faster.
First of all, it should be clear with the person/bank offering loan that what it is given for. Most of the banks refrain from offering education loan for Diploma/Certificate course and that is what most of us are applying and aiming for. This problem usually occurs when a person is willing to take an Education loan. Even if a person finds a Bank who is read to offer Education loan for our desired course, its a headache to get all the paperwork done and loan approved from them. So the last option that most of us tend to look at as our savior is Loan against FD.
Many banks do offer loan against FD for higher education abroad viz UCO, State Bank of India, State Bank of Patiala (provides loan under Gyan Jyoti Scheme), etc to name a few. I myself acquired loan from SBI. But there are certain things to take care of while going for Loan against FD or even when its a plain education loan. Its not something big but the usual stuff but sometimes Bank tend to forget to include it which may tend to create a problem for us.
Following are the few points that I think a Loan Sanction Letter must contain:
1. First and the most important thing I would like to say is it should be on Banks letterhead and should have Bank name, Branch Name, Branch address and contact number clearly mentioned. (Often Banks also include their Branch number which is not necessary for us to have)
Also the date on which loan was sanctioned should be included.
2. Name and address of the 1st and 2nd applicant (It is advised to have either of your parent as 2nd applicant when the person going for higher education is not earning).
3. Subject (this is not mandatory but it makes the Loan Sanction Letter look more formal). This can contain information like "Loan For Higher Education in Canada" (Also it should clearly mention either in the subject or the body that loan has been sanctioned.)
The following points can then be included in the body:
a) Name of the facility: Here its Loan against FD/FDR/Banks own Deposit
b) Loan Amount: The loan amount and not the FD amount
c) Loan Account number: Now this point is very important, I myself didn't have this in my Loan Letter but mind you FD number and Loan Account number are the two official ways of finding out about your Loan. So this part should not be neglected. Thanks to "Happy Garcha" I got it included in my Loan letter.
Now if there are multiple FD account numbers, its highly recommended to include the Loan Account Number. Even otherwise I would call it mandatory.
Often this Loan Account Number is also mentioned as the reference number or serial number (do check this out).
d) Margin: If your loan is against FD, the Margin that bank holds while giving you the Loan would be mentioned here. Eg. Loan of Rs. 9 lacs against FD of Rs. 10 lacs (so the margin here is 10%).
e) Purpose of Loan: This is again another crucial part, here one should include its purpose of the loan, name of the institution one intends to attend, address of the institution (just the city, state and country is enough) and name of the applicants. Also don't forget to include name of the course and its duration.
If the Bank doesn't agree for writing "certificate course/diploma course" its okay, you can make them mention name of the program and add "program" suffix to it. (Like "Marketing Management Program")
f) Security/Collateral Security: This part would include either name, number and amount of FDs or other security dealt with to get the loan. Even this part is very very important.
g) Loan Repayment terms and conditions (if any should be mentioned)
h) Interest rate/rate of interest should also be clearly mentioned.
i) and lastly the letter should include Stamp of the particular Branch and Seal of the Branch Manager along with his/her signature in its footer.
Another 2 cents:
Always be prepared with the source of funds that were converted into FD.(By this point I do not intend to scare anyone who is willing to go for Loan against FD but in rare case, yes very very very rare case, if they do invite you to appear for an interview to ask the source of funds, you are prepared with it. So far I have not seen any single case like this.)
My advice would be to show about 95% (not 80%) of first years fees + living expenses (this excludes payment of the fees of first term).
- Also do make them include its an Education Loan if possible. Its not mandatory, but I would HIGHLY RECOMMEND it.
Disclaimer: I have tried to include all the points that I could possibly think of for a loan but if I do miss any point, feel free to mark out my mistakes and I shall change it. This was the format my Loan Letter which was very clear and decent looking letter.
Also I have used the word "one should include/one should mention" etc, by which I don't mean one should print a loan letter at his/her place, its just that when you are applying for the loan or if the branch manager/loan officer asks for suggestions or even if they don't you should ask them to include all of the following details. I heard from my consultant that "Allahbad bank" is reputed for not giving a proper loan letter, I don't know to what extent this is true but if someone has a similar problem one should ask them to include the above mentioned details, atleast the mandatory parts should be included. All the data included here is my personal opinion and it does not come from any official source.
-royalsting
