Amongst the few NBFCs functioning successfully in India, Credila education loan, a subsidiary of HDFC Bank is one among them. Being the very first financial institution to lend education loans to those in need is one of the feathers in Credila’s hat. The HDFC Credila education loan is the preferred choice of most students who wish to take an abroad education loan. However, there are many other better options than Credila education loan today in the Indian market. Our financial officers at WeMakeScholars will help you understand all the options so that you compare and get the best one suiting your profile. Also, before deciding on borrowing an education loan from Credila, it is essential to know everything about their policies regarding abroad education loans. This article will guide you through the entire education loan functions. 

HDFC Credila education loan mainly lends abroad loans to two separate categories of students. Those who want to study in the USA and those who want to study in countries other than the US. Let us take a look at the general information on Credila education loan and then move on to their country-wise schemes.

What kind of loans does Credila provide?

Although the Credila education loan without collateral is known in the market, they also lend collateral-based education loans to students in need.

HDFC Credila accepts the following as collateral:

• Immovable property: residential house, non-commercial flat, etc.
• Liquid Security: A Fixed deposit assigned in favour of HDFC Credila.

The Credila education loan documents related to a collateral education loan are listed further in this article.

However, despite placing your property as collateral security for your education loan, the interest rates are pretty high in HDFC Credila. If you have a property, there are better options who can give an education loan at 1-2% less than HDFC Credila. To know more about this factor, you may go through this episode or may approach the financial team at WeMakeScholars.

Who can apply & how to apply for a Credila education loan?

Students who wish to pursue their higher education (MS, MBA) in countries like the USA, Canada, Germany, etc, can apply for an abroad education loan in Credila. To apply for one, HDFC Credila has an online application form which is to be filled by the loan applicants. The following documents need to be provided by the student after submitting the application form first.

1. Fully filled application form.
2. 2 passport sized photographs (applicant and co-applicant)
3. Photo ID of the applicant and the co-applicant (PAN card, Aadhar card, Voters ID, Driving License, Passport)
4. Proof of residence (Aadhar card, PAN card, Voter’s ID, Driving license)
5. Proof of Admission to college/university: A printed admission letter to the respective college/university with the letterhead. (if available)
6. Academic documents of students:
   a. Mark sheet/Certificate of 12th Exam
   b. Mark sheet/Certificate of Subsequent Years of Education e.g. BE, BCom, BSc, etc.
   c. GRE/GMAT/TOEFL/IELTS, etc. Marksheets (If applicable)
   d. Scholarship Documents (if applicable)
7. Previous 8 months’ bank statements of students.
8. Income proof of co-applicant.
9. Collateral documents.

These days, Credila is offering collateral-based loans to many students. We generally advise students to think twice before taking a Credila education loan as there are many other feasible options for students where you can pledge collateral and get a rate of interest which is 1.5-3% lesser than that of Credila. Know more about this by speaking with the WeMakeScholars team.

Eligibility criteria for Credila education loan borrowers and co-applicants.

Eligible courses for loan applicants:

Credila provides education loans for all Masters and MBA courses from prominent universities and colleges in the above-mentioned countries. The eligibility criteria for loan applicants and co-applicants for an education loan in Credila are:

For Loan applicants:

1. Any student who is an Indian citizen can borrow loans for higher studies abroad through this loan scheme.
2. The student must have secured admission to the preferred college/university before loan disbursement.

For Co-applicants:

1. The co-applicant must be an Indian citizen having a fixed source of income.
2. The following people are accepted as co-applicants: loan applicant’s father, mother, brother, sister (married). They should be earning members and must be compatible with HDFC Credila’s credit and underwriting norms.
3. The co-applicant has an equal responsibility to repay the loan amount as the applicant.
4. The co-applicant has to produce the necessary documents showing their relationship with the borrower.
5. Credila also provides collateral education loans. In case if the loan applicant is not able to provide collateral of sufficient market value from the co-applicants mentioned above, they can pledge third-party collateral belonging to the following people - Father-in-law; Mother‐in‐law; Sister‐in‐law; Brother‐in‐law; Maternal or Paternal Uncle or Aunt, Grandparents & First Cousins.

You may have noted that the criteria set by HDFC Credila for co-applicants are pretty stringent as compared to those set by government banks. For example, if your co-applicant is unemployed or retired, Credila often hesitates lending education loans to such co-applicants. To know more about education loans from NBFCs and to have a hassle-free education loan process, feel free to reach out to the financial team at WeMakeScholars.

What are the loan amount criteria set by HDFC Credila for borrowers?

Credila provides education loans above Rs.1 Lakh, up to 50 lakhs. Many times, students going to countries like the USA or other top universities in the world require higher loan amounts- over 50 lacs. If you are one of them, then check your eligibility for the best education loan option in the Indian market by reaching out to your assigned financial officer. They will explain to you in detail. 

Students who have borrowed a Credila education loan are eligible for income tax exemption under Section 80 E

What is the Credila education loan interest rate?

While calculating the Credila education loan interest rate, the bank considers a spread, in addition to the CBLR. A spread is determined on the basis of certain factors of a co-applicant’s profile that is considered to be a possible risk for the financial company.

The Credila education loan interest rate is based on something called CBLR. The interest rate of an education loan from Credila is calculated as (CBLR + Spread)% per annum. The current CBLR for abroad education loans is set at 11.80%.

Some of the factors that are considered while calculating the spread are:

• A student’s academic profile, employability of the student based on the course, college and country of study opted by them.
• The financial strength of the co-applicant/co-borrower, their loan repayment capability and credit history. Co-applicants exhibiting a good financial profile are generally considered by Credila for an education loan.
• They also consider whether the borrowed education loan is a collateral-based loan or not.
• Another important factor considered by Credila is the serviceability of the loan through HDFC Credila’s branch network, cost/s associated with underwriting and servicing the loan etc.
• Also, Credila says that they charge you simple interest. But, it is actually compounded. 

As is the case with any NBFC functioning in India, it is mandatory for loan applicants to apply for a loan insurance scheme at the time of applying for an education loan. The loan insurance charges are 1-1.5% of the total loan amount. All these expenses literally squeeze a lot of money from students and hence many opt for public banks like SBI as they can save about 4-6 lakhs in the entire loan tenure. 

Processing Fees:

The processing fee charged by Credila for their abroad education loans is generally 1-1.2% of the loan amount with an additional 18% GST charges. This means, for a 40 lakhs education loan from Credila, you have to pay about 40K-48K + GST processing fee. At the same time, if you apply for an education loan at a public bank, the processing fee is only up to 10K.  

Costs covered under the Credila abroad education loan:

Any education loan borrowed from Credila covers up to 100% of the student’s expenses.

1. These expenses include tuition, living and hostel expenses, travelling expenses, examination fees, library/laboratory fees; purchase of books/equipment’ s/instruments/uniforms; passage money for studies into India; purchase of computers/laptops considered necessary for the completion of the course as decided by HDFC Credila.
2. Travel fare is restricted to one economy class return ticket between India and the study location (USA, Canada, Germany etc,.)

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Credila education loan disbursement process:

Earlier, the disbursements of Credila took place smoothly. Students could have just requested disbursement and they initiated the process soon. However, as per the recent feedback from students, there is much hassle around Credila disbursements. Credila is stringent to release the funds and this is, in turn, causing delays. Anyways, below are the terms:

1. The loan amount is disbursed in INR.
2. Credila disburses the tuition fee directly to the institute's account or through other authorized services (embassy-approved third-party payment options such as Flywire for the US, Scotia bank for Canada, etc.)
3. The tuition fee will be disbursed at regular intervals as required by the university/college.
4. The loan amount related to other expenses will be disbursed from time to time in installments as per Credila’s underwriting norms and regulations.

The education loan disbursement process of HDFC Credila takes place in the following stages:

1. Pay the origination fees: In order to collect their original education loan sanction letter from HDFC Credila, the student has to pay any pending origination fees to the bank, which is nothing but the processing fee.
2. Decide the date of disbursement: Decide the exact date of disbursement. It depends on the date of the student’s visa interview or the last date for tuition fees payment.
3. Decide the disbursement amount: The disbursement amount has to be decided by the student. They also need to decide on factors such as when they would like HDFC Credila to disburse the first installment and remit the university for fees, how much part of the loan they will be requiring for their other expenses, etc.
4. Decide disbursement details: Students should provide details about how the tuition fees should be remitted to the university and to them, by providing the exact bank account details viz. Method of payment (bank payment, wire transfer, demand draft, etc.)
5. Prepare final loan agreement documents: It is only after they receive all the above information that HDFC Credila can prepare your final loan documents. These loan agreements need to be signed by the loan applicant, all the co-borrowers, and the guarantor (if any) by visiting Credila’s office. Any delay in the final loan agreement will lead to further delay in the loan amount disbursement.
6. Providing final original documents to HDFC Credila: While visiting the Credila office to sign the final loan agreement, loan applicants need to carry the following original documents:

• Original KYC Document of student, co-borrowers & guarantors, e.g. PAN Card, Passport, etc. to show it to HDFC Credila's loan officer to validate your identity.
• Two original copies of the completed ECS Mandate Form signed and stamped by your bank, as mentioned above.
• 8 cheques favouring HDFC Credila Financial Services Pvt. Ltd. as security from the bank account from which the ECS Form is provided. (If you do NOT have 8 cheques from this bank account, please make sure that you apply for additional cheques from your bank as soon as possible to avoid any delays in getting the education loan amount from HDFC Credila. Banks can take up to 2 weeks, in some cases, to provide you with the additional cheques.)
• If you are providing Fixed Deposit as collateral, please provide the original FD Receipt to HDFC Credila.
• If you are providing Flat, House, Land as collateral, then please bring all your original documents to hand over to HDFC Credila. This is very critical, so please understand the list of all the original collateral documents you will need to bring in advance to avoid any delays.
• If you have already paid the Tuition fees, it is mandatory to provide a photocopy of the fees paid receipt.
• Get ECS (Electronic Clearing System): You will need to get three copies of the completed ECS (Electronic Clearing System) mandate from HDFC Credila, which you will then need to get signed and stamped from your bank (from where you will be making the monthly repayment to HDFC Credila). One of the original copies of the ECS form needs to be given to the bank manager for their records. This can only be done after you have decided the exact date of disbursement.

Once the final loan agreement has been signed without any hassles, HDFC Credila will transfer the required amount as per information provided by you at the time of providing disbursement details. But, as told earlier, there is much hassle around the disbursements done by Credila. To avoid such issues, reach out to the WeMakeScholars team so that we can get you the best education loan offer.

Credila education loan repayment terms:

Students need to keep the following important points in mind during the abroad education loan repayment to Credila.

• The payment of the interest component of the abroad education loan will start in the following month after the disbursement of the education loan to the respective student.
• Total tenure of the education loan comprises of Course period + Grace period after the course + loan repayment tenure. A grace period granted by NBFCs means that the loan EMI payment doesn’t start until after this time period. Students only have to pay the interest amount till the time the loan repayment period starts.
• The maximum loan repayment period granted by HDFC Credila to students is 12 years.
• This is, however, subject to factors such as the student’s capacity to repay loans, co-applicant’s financial profile, their age and other factors according to the norms and conditions set by Credila.
• The monthly repayment amount will be deducted from the borrower/co-applicant’s account through the ECS (Electronic Clearing System).
• Also, do remember, the interest rate charged is compound- not simple interest as they say.

The procedure is the general process to avail of any abroad education loan from HDFC Credila. Credila has customized education loan packages designed for various countries like the USA, Canada, Germany, etc. Let’s take a look at some of the salient features of the abroad education loans available for these countries.

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Credila education loan for the USA:

1. As everyone knows, in order for students to procure an I-20 form from their respective universities/colleges, they have to provide proof of liquid funds before receiving their admission letters. For this purpose, students have to submit an education loan sanction letter.
2. HDFC Credila provides a loan sanction letter to such students. The only mandate for the student to get it issued from Credila is to ensure that they pay the entire processing fees at the right time.
3. Generally, universities/colleges in the USA do not ask students to pay tuition fees or show proof of it before they are given admission. However, if they do, Credila also provides students with a pre-admission disbursement if it is a requirement.
4. Credila also supports third-party wire transfer of the loan amount only if it is a mandate for the student to do so.

As an education loan is a long term affair, it is better to choose wisely than blindly going to one lender. Try getting the best deal in the market. Check your eligibility for the best education loan.

Credila education loan for Canada:

Students applying to colleges/universities in Canada need to deposit their one year’s total expenses into the GIC. Most students require their lending banks to provide a copy of the education loan sanction letter and a receipt of payment of tuition fees for the first year, for the same purpose. The loan amount has to be disbursed to a partner bank for this same purpose. The Canadian embassy has listed Scotia bank, ICICI Canada and SBI Canada as partner banks to which the GIC amount can be transferred via wire transfer. 

Credila education loan for Germany:

Similar to Canada, students who wish to study in Germany, need their education loan amount to be transferred into a ‘blocked account’ or 'Sperrkonto', in a German bank. HDFC Credila can do this into the listed banks for this purpose.

Cons of applying through Credila:

Now that we have stated the normal procedure of applying for an abroad education loan from HDFC Credila in detail, let's take a look at some of the cons of doing so. While borrowing an education loan, it is very important that students focus on the pros as well as the cons of approaching an NBFC like Credila for their education loans. Below listed are some of the common problems faced by students when they approached Credila for an abroad education loan.

• Late response: Time is an important factor when it comes to education loans. Especially when a student is borrowing it to fund their higher education abroad. The finance team at WeMakeScholars has come across many such students who had to miss out on their admission dates just because of the late response from Credila's side. This is a common occurrence, so students need to take particular care about this factor before they decide to apply for education loans through Credila.
•  Fluctuation in interest rates: NBFCs in India had faced some serious financial setbacks in the past year. In order to recover from these troubles, NBFCs including Credila increased the interest rates of many education loan borrowers without any intimation being provided to them. Since NBFCs are not exactly banking institutions and their financial standing mainly depends on the interest collected from their borrowers, there are high chances that Credila may increase the interest rates at any point during your loan tenure.
• Rejection with no explanation: Many students have complained about Credila rejecting their loan applications without providing any valid excuse to them.
• Higher ROI compared to other options: As mentioned in the paragraphs above, Credila has set the abroad education loan interest rate at 12% for abroad education loans. When you compare this figure with the interest rates offered by banks, you will find that it is way too high. So do keep this factor in mind while applying for an education loan.
• Hidden terms and conditions: Have you ever wondered how Credila calculates the interest charges for abroad education loans? WeMakeScholars has an entire article devoted to exposing how NBFCs, including Credila, generally calculate their interest charges, and how they misguide their loan applicants by using complex terminologies. To put it out straight, although Credila claims to charge you with simple interest, in case of latency in interest payment, they eventually compound your interest charged during the grace period. To know more about this, do make it a point to watch the 12th episode of Loanflix, a web-series developed by our team to give you complete information about education loans and beyond.

If you have faced any of the above problems while applying for your abroad education loan with Credila and are looking to change your lender or are planning to borrow an unsecured education loan for your higher studies abroad, feel free to contact the team at WeMakeScholars. We work closely with NBFCs to ensure you get the best offer in the Indian market and a smooth education loan process. Our team ensures that our students get the better end of any abroad education loan when they apply through us.

Conclusion

It is true that NBFCs in India sanction abroad education loans to students at a faster rate as compared to government banks. However, it is to be noted that they charge a comparatively higher rate of interest and charges. The major Credila education loan complaints have been about their fluctuating interest rates. There is a complaints section on the Credila website where you can register your Credila education loan complaints.  It is always advised that students research this well and then proceed with their decision to borrow an abroad education loan from NBFCs.

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s at free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, New Zealand, France among others.