Educational Loan Options for Undergraduate Courses in Canada

The last couple of years have seen Canada emerge as the preferred international study destination for students from across the globe. The presence of globally ranked and reputed educational institutions, easy immigration policy, low cost of living and low crime rates are all pulling international students, including Indian students, towards Canadian institutions.

In 2018, there were 172,600 Indian students enrolled in Canadian Universities. If you are an Indian student who is contemplating about going to Canada for an undergraduate degree, then read this blog and come to know the various options for bank loans for Canadian education that you can consider to finance your studies in Canada.

What is the average cost of studying a Bachelors in Canada? 

Before discussing the options for education loan for Bachelors (UG) course in Canada, let us first have a basic idea of the approximate expenses involved in studying a Bachelor’s in Canada. Here, we discuss the tuition fee for an undergraduate degree of the top 5 Canadian Universities. According to Statistics Canada, tuition fees for international students rose by an average of 6.3% for international students.

• The University of Toronto ranked 29th by QS World University Ranking 2020, charges a tuition fee of  CAD 51,273 per year (as per the annual schedule of tuition fees approved by the Governing Council, 2019-2020) for an undergraduate degree in Arts and Science and CAD 15,760 per year for Applied Science & Engineering.
• McGill University, another top-ranked University in Canada, charges CAD 45,824.81 (first year) from international students for an undergraduate degree.
• The University of British Columbia charges CAD 46,241 (first year) for an undergraduate degree in Applied Science - Engineering.  
• McMaster University, another top-ranked University, charges a tuition fee between CAD 20,008 and CAD 25,905 per year for an undergraduate degree, while the University of Montreal has an annual tuition fee of CAD 11,980 per quarter.

Apart from the tuition fee, the Canadian student visa requirement mandates that international students headed to Canada for higher studies must have at least CAD 10,000 and CAD 11,000 (if studying in Quebec) towards their living expenses (on top of their tuition fees). This will obviously vary and depend on the lifestyle of the student, as well as the location of their stay (bigger cities are more expensive to live in).

Read more about: Cost of Studying in Canada

However, on further research, we found that the University of Montreal suggests students make arrangements of at least CAD 15,050 annually towards living charges, while the University of British Columbia expects students to spend CAD 15,500 towards living costs per year. Students also need to purchase compulsory health insurance, costing CA$600-800 a year, when studying in Canada.

Read more about: Cost of living in Canada

Now that you know the approximate amount of money that you need to have before heading to Canada, we will tell you about the options for study loan for UG courses Canada that can make it easy for you to finance your Bachelors in Canada. 

How can an education loan help you study a Bachelor’s program in Canada?

The above numbers clearly show that the cost of studying an undergraduate program in Canada is not trivial. This is precisely why many deserving students shelve their plans to study in the country. An education loan in Canada for international students is the silver lining for all such students who need financial help to pursue their studies in Canada. Started in 1995 by the SBI education loans have become a very popular choice for students willing to pursue their education in India or abroad. Today, students can take a study loan for Canada from most public and private banks as well as NBFCs (Non-Banking Financial Companies). For the benefit of our readers, let us discuss the two kinds of education loans that they can apply to pursue a Bachelor’s Program in Canada.

1. Unsecured Education Loan 

Also called education loan without collateral, this loan does not need the student to attach any collateral with the loan application. The rate of interest for this kind of loan is higher. This loan also has a shorter repayment period. Applicants should note that both private and public banks do not provide education loan without collateral for Bachelor’s (UG) in Canada. Therefore, the only lenders that provide unsecured loans for UG in Canada are NBFCs in that too only one i.e. Avanse. The Approval rate of unsecured loan for UG in Canada is less than 10% in our experience. .

Education Loan for UG in Canada - Without Collateral 

* As on 16th Nov. 2019

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• Repayment Period - The repayment period for without collateral education loans from NBFCs is 10 years. If you need an extension of the repayment period, contact us. We will help you get the conditions of the loan customized as per your needs. 
• Processing Time - NBFCs take 4-5 working days to process educational loans without collateral. In the case of any delay from the lender’s side in processing the loans, GyanDhan’s escalation team contact the lending institution's upper management and gets the loan sanctioned immediately.  
• Expenses Covered - Unsecured loans from NBFCs cover 100% of the expenses. Read more about: Expenses Covered Under Education Loan
• Co-applicant Income Requirement - The minimum co-applicant income requirement for unsecured loans from NBFCs should be enough to pay the EMI per month i.e. for loan amount 25 Lakhs, co-applicant income should be ~75k per month. However, the exact income requirement depends on the loan amount. 
• Common Decline Reasons - NBFCs normally reject the loans for the following reasons - low co-applicant income and poor CIBIL scores.
• If your CIBIL score is low, you should inform GyanDhan’s counsellor in advance. We will analyze the situation and let you know solutions which can enhance your chances of loan approval.
• Documents Needed - The documents that are to be submitted with an application for an unsecured loan varies from lender to lender. However, some common documents that are required are KYC documents of the students and the co-borrower, admission letter from the University, relevant mark sheets, tuition fee lists, income certificate of the co-borrower, However, if students find themselves confused as to the documents that have to submit to their respective lenders, they can take the help of GyanDhan. We provide our students with a customized list of documents that are needed for their loan application. Not just that, in most cases, we even help students submit their documents from the comfort of their home, help expedite the loan sanction time and even negotiate the rate of interest on your behalf.

Read more about: Documents Required for Education Loan

2. Secured Education Loan 

A secured education loan is one in which the student has to attach tangible or intangible security, as collateral, with the loan application. This security can be immovable property, insurance, FDs, etc. This collateral is used by the bank to recover the loan in case of a default. This loan is also called as education loan with collateral. Students opting for this kind of loan typically get a lower rate of interest and also get a longer repayment tenure. 

Educational Loan for UG in Canada - With Collateral

*As on Nov. 16th, 2019

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• Repayment Period - The repayment period for education loans with collateral in the case of public banks is 15 years. In the cases of private banks and NBFCs, the repayment tenures are 20 years and 10 years respectively.
• Processing Period - Public banks usually take 12-15 working days to process these loans. Private banks take 10-12 days for processing, while NBFCs take 7-8 working days. GyanDhan’s relationship officer picks up the documents from your home for free. We ensure that all the documents collected comply with the documentation requirements of the bank and take swift measures if a document is missing or faulty. This accelerates the processing of loans saving you your precious time. In general, it takes one 10-15 days extra to get the loan processed if one is to approach the bank directly.
• Expenses Covered - Education Loans for UG in Canada from public banks cover 90-100% of the total expenses, depending on the bank you are taking the loan from. While private banks cover 85% of the total expenses. NBFCs cover 100% of the total expenses.
• Common Decline Reasons - Both public and private banks cite the following reasons to decline your loan application - incomplete collateral documents and poor CIBIL. NBFCs generally decline applications for low co-applicant income and poor CIBIL score.
• Documents Needed - A loan application for a secured loan, like all other loan applications, requires a bunch of documents to be submitted. Some of these are KYC documents of the students, admission letter from the University, documents related to the security being pledged, relevant marksheets, tuition fee lists, etc.

How to Choose Which Option is Best for You?

Just knowing about the different loan options available for your Canadian study dream is not enough. Students also need to be careful while selecting an education loan. Avoiding common pitfalls like taking an education loan with a high rate of interest, no tax benefits, etc, is crucial to evade financial burden in the future. Therefore, loan applicants must carefully compare the different loan schemes offered by different banks and NBFCs. Ideally, the following factors should be taken into account while making comparisons between education loan options and selecting the most appropriate education loan :

1. Interest Rate
2. Processing fee & Time 
3. Margin Money
4. Moratorium Period
5. Tax Benefits 
6. Loan Duration 
7. Expenses Covered
8. Prepayment terms and conditions

Check Your Education Loan Eligibility

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Applicants who are still unsure about which education loan to take can always consult GyanDhan. We are India’s only education focussed financing platform and help students select the best education loan for their profile. Our dedicated loan counselors study every student’s profile in-depth and then make appropriate suggestions to help them make the best decision.

Students can also make use of our customizable EMI calculator to find out the EMIs and interest they will have to pay for an education loan and determine the loan option which is suitable for them. They can also check their loan eligibility by using our Loan Eligibility tool. This tool, apart from checking their loan eligibility, will also give them the best options based on their requirements.

Which Education Loan Option will be the Best for You - Secured or Unsecured?

For UG courses in Canada, not many unsecured loan options are available; even if you get the unsecured loan sanctioned, the interest rate would be very high. Therefore, it is recommended that you go ahead with a loan with a property. It not only increases your chances of getting a loan sanctioned but also gets you a lower interest rate.  If you cannot afford security against the loan, you can also pledge a third-party asset.

Read Also:

• Top Universities in Canada
• Why Study in Canada in 2023?
• SOP for Canada Student Visa
• Education Loan to Study in Canada: A Detailed Overview
• Canadian Universities’ Application Deadlines
• Path to Permanent Residency in Canada
• Educational Loan Options for MS in Canada

Application procedure for loans for Bachelors (UG) in Canada

Students who are desirous of applying for an education loan, through GyanDhan, for a Bachelors in Canada need to complete the following steps. 

1. They should check their education loan eligibility here and then request for a callback from GyanDhan here.
2. GyanDhan will assign a dedicated education loan counselor to the student. The education loan counselor will analyse your profile and discuss the possible loan options. Post this, he/she will suggest the steps that need to be followed to apply for an education loan with the selected lender. 
3. Students then need to submit all the relevant documents along with their loan application. GyanDhan, again, comes to their help at this stage. If a student resides in a metropolitan city, we will have their documents picked from their home for free. For all other students, we fix a meeting with the concerned branch manager. Students who decide to take an education loan from our partner private bank will have their documents picked up from their home while those taking a loan from an NBFC just need to upload their documents on our website. 
4. The ball will now be in the lender’s court. The lender will review the loan application and will grant the loan, if feasible.
5. After the loan has been approved, the student will have to accept the offer by signing a sanction letter. They also have to pay the processing fee wherever required, for example for NBFCs.
6. The student, along with the co-applicant will then have to sign the loan agreement. Depending on the validity of the agreement letter, this agreement can be signed within 2 to 6 months. After the agreement has been signed by both the parties, the student can request for the disbursal of the loan amount.

Since the process of applying for the loan, getting it sanctioned, and getting the amount disbursed is time-consuming, we urge our readers to apply at the earliest for an education loan, so that they do not face any last-minute problems or delays. Also, know your loan eligibility before applying to reduce chances of rejection. You can also request a call back from expert education loan assistants if you find the procedure difficult or complex. We will do it for you - for free!