Education Loan Sanctioned, Admission On Hold - Can I Use It For Another University?

Ans: Hello Neelam
You can submit provisional certificate, marksheets and letter from University stating that Bachelor degree takes time and the student has passed her 4 years of Bachelor degree from 2020-2023. With this UK university will process the application.

Ans: Hello R. It is great that your daughter has been accepted by a couple of universities in the US. To answer your question first, generally, banks do ask for I-20 to process the loan application; however, a few banks or NBFCs, e.g., HDFC Credila, could issue a loan sanction letter on the basis of the offer letter issued. You could use this sanction letter to call for the I20, provided the university is accepting the letter, or show the required funds in your savings account, provide a bank certificate, and then call for the I20.Expenses to be shown in the bank certificate or savings account to call for the I20 are for a year, which includes the total of tuition, food, accommodation, and miscellaneous [if any]. I20 will show expenses for 9 or 12 months; however, it will also clearly mention the start and end dates of the course, which would help the bank know the total duration of the course and accordingly sanction the loan amount will be sanctioned. Yes, both the savings account and the education loan letter could be used during the visa interview.

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Ans: Evaluating the Car Loan Offer from Union Bank of India
Understanding the Situation
You are considering a car loan of Rs. 9 lakhs from Union Bank of India for 5 years. With a CIBIL score of 800, you were initially offered a rate of interest of 8.70%. However, the sanction letter shows a rate of 9% and a tenure of 7 years. The bank proposes to fix this by reducing the tenure to 5 years and compensating with an extra 0.30% interest. Let’s evaluate whether accepting this offer is wise.

Genuine Compliments and Understanding
You have a commendable CIBIL score of 800, reflecting responsible credit management. This score should ideally provide you leverage in negotiating better loan terms.

Assessing the Interest Rate
Initial Offer vs. Sanctioned Rate
The initial offer was an 8.70% interest rate for a 5-year term. The sanctioned letter reflects a 9% rate over 7 years. This discrepancy is concerning and warrants a closer examination.

Proposed Solution: Additional 0.30% Interest
The bank proposes to adjust the term to 5 years and apply an extra 0.30% interest rate. This brings the total interest rate to 9.30%. This needs careful consideration.

Evaluating the Loan Tenure
Shorter Tenure Benefits
A 5-year tenure is preferable as it reduces the total interest outgo. Paying off the loan faster can save you a significant amount in interest.

Impact of a 7-Year Tenure
A 7-year tenure, though reducing the EMI burden, increases the total interest paid over the loan period. This is not ideal for long-term financial health.

Impact of Extra 0.30% Interest
Cost Implications
The proposed additional 0.30% interest rate increases the total cost of the loan. This needs to be evaluated against potential alternatives.

Negotiation Leverage
With your strong CIBIL score, you have leverage. Consider negotiating for the originally promised 8.70% interest rate without any additional percentage.

Practical Steps Forward
Communication with the Bank
Communicate clearly with the bank. Highlight the initial offer and your CIBIL score. Request adherence to the original terms.

Alternative Lenders
Explore other banks or financial institutions. They may offer better terms given your strong credit profile.

Importance of Clarity and Documentation
Document Review
Thoroughly review all loan documents before signing. Ensure that the terms reflect what was agreed upon.

Seek Professional Advice
Consider consulting a Certified Financial Planner. They can provide personalized guidance based on your financial situation.

Managing Loan Repayment
Efficient EMI Payments
Ensure your EMI payments are manageable within your monthly budget. Avoid any strain on your finances.

Prepayment Options
Check for prepayment options without penalties. This can help in reducing the overall interest burden.

Balancing Immediate Needs and Long-term Goals
Immediate Financial Stability
Ensure that the loan repayment does not compromise your immediate financial needs. Maintain an emergency fund.

Long-term Financial Goals
Keep your long-term financial goals in sight. Ensure that taking this loan does not derail other important financial plans.

Conclusion
Given the discrepancy between the initial offer and the sanctioned terms, it is wise to reconsider the proposed solution. Communicate with the bank to seek better terms or explore alternative lenders. Ensure that any loan taken aligns with both your immediate financial stability and long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in