Role of Co-Applicant in Engineering Education Loan Approval
Introduction
When applying for an engineering education loan, most lenders require a co-applicant, especially for students with little or no income. The co-applicant plays a crucial role in ensuring the loan is approved & also shares responsibility for repayment. Understanding the responsibilities & importance of a co-applicant is vital before initiating your loan process.
Who Can Be a Co-Applicant?
Usually, a parent, guardian, or close relative can be a co-applicant. Their primary role is to support the loan application financially and legally. In some cases, a spouse or sibling may also qualify.
Why Lenders Need a Co-Applicant
Since students don’t have a stable income while studying, banks require someone with a reliable financial background to guarantee the repayment. A co-applicant helps the lender assess risk & increases the chances of loan approval.
Documents Required from Co-Applicant
To process an engineering education loan, the following documents are needed from the co-applicant:
- Identity and address proof
- Income proof (salary slips, IT returns, bank statements)
- Employment certificate or business proof (if self-employed)
- PAN card and Aadhaar card
Co-Applicant's Financial Standing Matters
A co-applicant with a strong credit score and stable income can:
- Help secure higher loan amounts
- Reduce the interest rate offered
- Avoid the need for collateral (in certain cases)
Responsibility During Repayment
Once the repayment starts, the co-applicant is equally responsible for ensuring that EMIs are paid on time. If the student fails to repay, the bank can legally demand repayment from the co-applicant.
Conclusion
The role of a co-applicant in an engineering education loan is not just procedural—it’s financial and legal. Choosing the right co-applicant with good credit history & stable income can significantly improve loan approval chances and reduce borrowing costs. Always discuss the obligations clearly before applying.