Updated On: 10 July 2025
Top Mistakes to Avoid When Taking Education Loan for Abroad Studies
Studying abroad is a life-changing dream, and with the right financial planning, making this international dream come true is possible. However, one wrong step in the process of applying for an education loan for abroad studies can lead to a high interest rate, delayed approvals, or even missed university deadlines. Therefore, it is extremely crucial to avoid these common mistakes when applying for an education loan for abroad studies.
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Top Mistakes to Avoid When Taking Education Loan for Abroad Studies
At Study Abroad Loans, we’ve assisted thousands of aspiring students in securing student loans to study in their dream country. Here are the most common mistakes students make when applying for an education loan for abroad studies, and how you can avoid them:
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Not Comparing Interest Rates
One of the biggest and most costly mistakes is not comparing the education loan options available out there. Students often stick to the 1st institution that approves their loan application. But, even a 0.5% difference in the rate of interest could cost you lakhs of rupees over a repayment period.
What you should do instead:
- Compare the rate of interest (ROI) across Indian Banks, International Banks, and NBFCs.
- Consider all types of interest rates (eg, Simple and Compound Interest Rates)
- Consult an education loan expert to understand which option works best as per your budget and repayment capacity.
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Ignoring Repayment Plans
Getting the education loan approved is the 1st milestone. What follows is how and when you make the repayment, and this is where a lot of students face difficulties. Not having the proper understanding of EMI structure, moratorium period, or repayment terms may leave you financially overwhelmed after completing the course abroad.
What you should know:
- Moratorium Period: It is the time given to students before the repayment begins (Usually course duration is 6 to 12 Months).
- Repayment Flexibility: Choose the EMI plans that suit your repayment capacity.
Getting clarity on these terms will surely be of help in planning your finances in a better manner.
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Neglecting Your CIBIL Score
The CIBIL Score plays a key role in whether your Education Loan gets approved or not. Many students/ Co-applicants are unaware of the fact that a low CIBIL score can lead to an increased interest rate or rejection by banks.
What you should do:
- Keep a regular check on your ( and your co-applicant’s) CIBIL score before applying.
- Pay off the existing credit card dues, EMIs on time without any delay.
- A good Credit/CIBIL score not only improves your chances of approval but also makes your profile stronger.
Read More: Why CIBIL Score Matters for Your Education Loan?
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Missing Required Documents
Submitting the appropriate documents to the Banks/NBFCs is extremely crucial. Students/Co-applicants tend to submit inappropriate or incomplete documents, which leads to rejection, delays, or rework. At study abroad loans, we share the complete bank checklist with the students to make the documentation process hassle-free.
The key documents required:
- Offer letter from the University
- KYC Documents (Passport, Aadhaar etc.)
- Academic Records
- Income Proof of co-applicant (ITR, Salary Slips, etc.)
- Collateral Documents (for secured loan)
Please note that the document requirement is based on the profile, such as Business, Salaried, Self-Employed, Agriculture, and NRI.
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Submitting Applications to Too Many Banks
Applying for education loan to multiple banks at the same time seems like a good idea to increase your chances of approval; however, it often backfires. Every bank checks the CIBIL score, and multiple inquiries within a short span can negatively impact your CIBIL score.
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Not Taking Expert Help
Applying for an education loan on your own can be complicated. The various terms & conditions, process, bank follow-up, documentation, interest rates, co-signer, collateral, currency exchange, repayment, tax benefit, and more. Trying to handle it all alone can lead to poor decisions that may cost you financially in the long run.
How Study Abroad Loans assists you:
- The dedicated loan expert assesses your profile and applies to the best-fit bank.
- They help you with faster approval and a negotiated bank processing fee
- The Expert team stays in constant touch with the bank representative to provide you with regular updates
- Whether it’s Australia, the UK, Germany, Canada, New Zealand, or beyond, we offer personalised education loan guidance specialised to the unique requirements of each study destination.
- Study Abroad Loans provides end-to-end support with complete guidance so that you can focus on achieving your international dreams.
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Conclusion
Education loan for abroad studies is more than just financial assistance; it is the milestone towards your dreams beyond borders. If not handled with utmost care, it can also become an unnecessary hassle for you. From overlooking the interest rates to ignoring repayment plans, tax benefits may cause time & money wastage.
The fact is, each one of above mentioned mistakes is 100% avoidable, especially when you have the proper guidance.
At Study Abroad Loans, the experts simplify the entire process for you. Our best education loan experts assist you in comparing the best options, prepare flawless documentation, and secure quicker approvals from top Indian and International Banks
All set to take the 1st step? Connect with our Loan expert today!
Reach out to SIEC for Application inquiries and assistance.
Read more insightful articles:
Free Study Abroad Counselling with SIEC
Global Education Fair 2025 in Chandigarh
How to Find Accommodation Abroad?
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