How Does a USD Loan with a Co-Applicant Save You Lakhs?

Most students are advised to get an education loan in Indian currency and earn in foreign currency because it is considered profitable. However, with Prodigy Finance's new loan product, this advice is outdated. This global lender has now expanded its product line with a new co-signer loan option for Indian students and made education loans even more feasible. Students can now secure an unsecured education loan at competitive interest rates, starting from just 8.35%, with borrowing limits of up to USD 220,000.

This blog takes you through all the pros and cons of Prodigy Finance’s latest offering and highlights how co-signer loans can make a significant difference. Since education loans are a long-term financial decision, even a small concern today can turn into a major issue later, so it’s important to get all the facts before making a choice.

Know More About Prodigy Finance

Prodigy Finance is a global lender committed to making quality education affordable and accessible to students. Since 2007, the company has funded over 43,000 postgraduate students from more than 150 countries, disbursing over USD 2.3 billion in education loans. They also received a USD 310 million funding commitment from the US International Development Finance Corporation. This financing prioritises empowering global leaders of the new generation, therefore making Prodigy Finance a champion of inclusive access to global education.

Earlier, Prodigy offered only no co-signer, no collateral loans starting at 10.5%, with a processing fee of 4% of the loan amount. However, recently, they launched a new product where the interest rate decreased to 8.35%, which is remarkable. Let’s learn more about the co-applicant product.

What is the Co-Applicant Product?

A co-applicant loan involves an individual from your family, known as a co-signer. They share the legal responsibility of loan repayment with the primary borrower. This means that both the borrower and the co-signer are equally responsible for making timely loan repayments.

Earlier, when there was no co-applicant included in the education loan, the interest rate would be higher, making it bothering for many students. However, with a co-signer now available, students can access education loans under this new product, which also significantly reduces the interest rate to 8.35%.

Benefits of the Co-Applicant Product

The benefits of the co-applicant loan product are not limited to the overall interest rate. This loan option also impacts other components of education loans, making it more favorable for students exploring financing options.

Lower Interest Rate:

The co-applicant loan is offered at interest rates starting at 8.35%. But, on a broader level, when a co-applicant contributes to loan repayment after the moratorium period, the EMI is significantly reduced and shortens the repayment tenure. This means you can become debt-free sooner and build a strong credit score for future financial needs.

Increased Loan Amount:

Unsecured loan amounts are calculated based on the course and the university’s placement statistics. As a result, the approved amount may be lower than expected. However, when a co-applicant backs your loan, the sanctioned amount can be increased to better meet your financial requirements.

Easy Approvals:

The involvement of a co-applicant improves your chances of loan approval, as they bring a credit history, something students often lack.

Credit Score Benefits:

If a co-signers have a higher credit score, it helps you negotiate better loan terms. This also allows you to take advantage of personalized repayment plans during the moratorium period.

Disadvantages of the Co-Applicant Product

Even though the new product is quite fascinating, it has a few disadvantages that might influence your decision.

Longer Application Process:

Since this co-applicant loan product depends on the co-applicant's financials, getting their acknowledgment is necessary. This adds an extra step to the process and can cause delays if the co-applicant doesn’t respond swiftly.

Moratorium Period:

The moratorium period, which includes the course duration and a six-month grace period, is not fully available under this loan product. During this time, the co-applicant is required to pay a monthly amount of USD 100 (~INR 8,500).

Co-applicant Obligations:

This loan adds financial responsibility to the co-applicant, affecting their finances for around 2.5 years, including the moratorium period. Additionally, if any EMI is missed, it directly impacts the co-applicant’s credit score as well.

Who Can Be a Co-Applicant?

A co-applicant can be anyone who follows the following eligibility criteria:

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  They should be an Indian citizen.
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  A good credit score and strong financial background are mandatory.
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  The parents or blood relatives are eligible co-applicants.
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  The co-applicant should have a steady income to provide security for loan repayment.

How To Apply for a USD Loan with a Co-applicant?

The application process with Prodigy Finance is seamless and can be completed in just four simple steps. However, loan approval and disbursement add two additional steps to the process.

Step 1: Start Application

Create an account and submit your application for eligible universities. You can check the list of eligible universities, here.

Step 2: Get Offer

After applying, you’ll receive a provisional offer letter with a 14-day validity. At this stage, your co-signer's details need to be included.

Step 3: Documentation

If the offer suits you, accept it and upload the requested documents for both the applicant and the co-signer. Once verified, you’ll receive information about the available funding.

Step 4: Loan Approval

After funding is allocated, the co-signer must accept the offer and pay a USD 500 processing fee to proceed with the application.

Once you’ve given the green signal, it’s time to learn about the Prodigy dashboard. This ensures everything is on track and also helps you make timely repayment to avoid any harsh consequences on your credit scores.

Step 5: Final Steps

Explore the Prodigy dashboard before finalizing the loan agreement, this ensures that everything is in place for you and your co-signer.

Step 6: Loan Agreement

After you have taken the first step and stepped into your dream university. It’s time to sign the loan agreement. Then, all your funds will get directly disbursed to the university account.

How GyanDhan Helps With Education Loans?

Many students wonder if they can get better deals on education loans by adding a co-applicant. However, the interest rate, starting at 8.35%, is a good deal and makes a big difference. So, instead of overthinking it, why not rely on trusted guidance this time?

With GyanDhan’s Eligibility Tool, you can get a customized list of lenders and connect with a loan counselor who will support you throughout the entire loan application process. And if you’re still in the process of applying for admission abroad, a counselor can guide you through that as well, also available through GyanDhan.

Conclusion

Prodigy Finance’s new co-applicant loan product offers a refreshing alternative for Indian students. These unsecured loans are bringing down interest rates, increasing approval chances, and helping with higher loan amounts. Also, the co-applicant gets a responsibility that offers long-term benefits like reduced EMIs, shorter repayment tenures, and better financial terms.

But it’s essential to weigh both pros and cons carefully when it's about finances. This new alternative doesn’t provide a full moratorium and adds obligation to the co-applicant. These two factors can’t be overlooked thus, a student requires guidance at this time.

Instead of doing everything alone, take advantage of tools and simplify your search. Make a long-term commitment towards the dream education with confidence.