For international students from all around the world, Canada is a must-visit educational destination. Canada is the hub of top-notch educational institutions that provide a diverse range of experiences and opportunities. However, there is a cost associated with these pedagogic opportunities. Aside from tuition fees along with living expenses, a student must additionally deposit 10,000 Canadian Dollars in a Guaranteed Investment Certificate (GIC). A student loan in Canada is the foremost option for funding your studies in Canada. An international student loan is a viable alternative for obtaining financial support to pursue higher studies in Canada.
If you are a student looking forward to moving to the country to pursue higher studies, we have got you covered through our comprehensive guide on education loans in Canada.
International Student Loan in Canada
Canada falls within the top five nations when it comes to overseas studies. The key reason that makes it a quintessential hub is the availability of high-quality education. The presence of open and highly tolerant culture opens doors to numerous opportunities.
Usually, the financial aid offered by the universities are limited to Canadian students, because of which international pupils might need education loans to study in Canada. As an international student, the government expects you to finance your studies on your own.
Sometimes, savings and financial help from your family are not enough to cover the total cost that you need to cover to study in the country. That’s the place where education loans in Canada come into play.
How to Get a International Student Loan in Canada?
Obtaining an educational International student loan in Canada can be a lengthy procedure. Thus, it is recommended to begin with the loan procedure at least 6-7 months before your course actually starts. The following is the step-by-step process to obtain a student loan in Canada:
- Find out which banks in Canada offer education loans to international students, together with their eligibility criteria and documentation requirements.
- Calculate the total amount you’ll need to pay for studying in Canada for the chosen course.
- Obtain a letter of acceptance from your chosen Canadian institution or university.
- Make a comparison of available loan alternatives provided by various banks and choose the finest one.
- Following the selection of a bank, the following step is to determine the loan amount and submit the loan application.
- Once your loan application gets approved by the bank officials, your loan document will be issued. Before signing, you must go through the document carefully.
- The bank will finally distribute the loan amount after you have agreed to all of the bank’s terms.
Types of International Student Loans to Study in Canada
Financial institutions offer two types of education loans in Canada i.e. collateral and non-collateral loans.
Collateral Loan in Canada
To avail a collateral loan in Canada, you need to provide collateral to the bank in terms of security. The applicant has to pledge the collateral to the lender and it is somewhat equivalent to the borrowed loan amount. Below-mention assets can be used as collateral to avail of a student loan in Canada:
– Tangible assets: non-agricultural land, individual houses, flats, and any similar establishments.
– Intangible assets: life insurance, FDs (fixed deposit), government bonds.
Non-Collateral Loan in Canada
In addition to collateral loans, you do have the option of non-collateral loans. As the name says, you don’t have to pledge any asset as collateral to avail such a loan. But, you need to make sure that you have a co-applicant whose income justifies the applied loan amount. When it comes to non-collateral loans, you should count on private lenders. Not all government banks provide unsecured education loans. Thus, to apply for a loan seamlessly, rely on the private banking sector.
Eligibility Criteria to Avail an Education Loan for Canada
To avail a student loan in Canada, international students have to satisfy the eligibility criteria.
- The applicant should have a letter of acceptance provided by a recognized Canadian institution. It must be for a full-time course.
- The age of the applicant should be above 18 years. In case, the applicant is below 18, then the parents will be responsible to apply for a student loan in Canada.
- You don’t need to have an excellent academic record, but having a good academic record will make the loan approval easier.
- The course you are applying for should be a job-oriented course. It not, then it must offer significant career prospects.
- If you are thinking to apply for a secured loan then, be prepared with the collateral you are going to pledge.
Essential Documents to Get Education Loan for Canada
Besides fulfilling the eligibility criteria, you need to submit a specific set of documents. They help the lender to determine your credibility. Be prepared with the below-depicted documents:
- Letter of Acceptance from the university or admission proof
- Loan application form
- Recently clicked passport size photos
- Identity Proof such as Passport, Voter Card, Driving License, or Adhaar Card
- Age Proof
- Academic Proof (Transcripts & Certificates)
- Scorecard of the applicable exam i.e GMAT, GRE, IELTS, TOEFL
- Permanent Address Proof of the loan applicant as well as guarantor
- Bank statements (past one year)
- Guarantor’s Income Proof such as salary slip
In addition, you might need certain other documents including Minority Caste Certificate, and Disability Certificate.
Note: These are the key documents that every bank asks to evaluate a student loan application. Additionally, certain documents may vary from one bank to another.
Find and Compare Student Loans offered by Finance Institutions
If you are an international student looking for a loan for pursuing studies in Canada, follow a comparison approach. Additionally, explore the eligibility criteria of banking institutions before finalising your lender. Go through the repayment options, terms, and conditions before actually applying for an education loan in Canada.
A few things to keep in mind while conducting your research are:
- The maximum amount that you can borrow
- The interest rate (as well as whether it is fixed or variable)
- The time frame for payback
- When and how will your funds be distributed?
Following the evaluation of your application, you will receive requisite details on your offer, such as the applicable interest rate and approved loan amount. The funds are disbursed directly to your institution or university if your application is approved. This procedure takes roughly 6 weeks on average, so prepare ahead.
Repayment of Education Loan in Canada
You can repay your education loan at any time throughout the course of your studies or six months after the completion of the course. If you pay the borrowed amount completely before your academic course ends, you will not have to pay any interest component.
Students receive documents from the government showing the applicable interest rate along with the repayment amounts owed after the grace period usually 6 months. In the case of a CIBC student line of credit, after one year of your graduation, the line of credit gets converted into a personal loan. Students can also choose to extend their payback duration up to 20 years.
In Canada, students frequently use an education loan to pay their academic expenses. For many international students, education loans are a wonderful way to pay for their higher education and make their study abroad ambitions a reality.
When you have an acceptance letter from a well-known university, getting an education loan in Canada is much easier. It’s best to get started on the loan process as soon as possible, as it can take a long time. Prepare the necessary paperwork ahead of time to ensure a smooth financing process. Keep in mind, that taking out an education loan should be your last option. If you are unable to obtain financial aid through the university, then only consider taking out a student loan.
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Frequently Asked Questions
Yes, international students can apply for student loans in Canada. However, several options are available to fund academic studies in Canada, but student loans are best amongst them.
Initially, you need to obtain a letter of acceptance from the chosen institution. Based upon that you can move forward with your loan application procedure. In addition, you will have to submit specific documents such as identity proof, residence proof, age proof, and much more.
The key difference between an education loan contrary to other financial aid is, you don’t have to pay back the latter, but you do have to repay the loan. This means when you avail of an education loan in Canada, you burden yourself with loan repayment. Thus, the loan should be your last option, when anything else doesn’t really work.
You should count on NBFCs (non-banking finance companies) or Private Banking institutions for collateral-free student loans. You can avail of collateral-free education loans in Canada from Incred, Avanse, and Auxilo.
The repayment terms for student loans generally depend upon the signed loan agreement. The lenders set the loan repayment terms before sanctioning your education loan.