Getting Quotes: Do’s and Don’ts

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You’re reading an excerpt of Admitted by Soundarya Balasubramani. Written by an Ivy League graduate from India, this is the proven guide for students worldwide looking to pursue undergraduate or graduate study abroad in the U.S., Canada, or Europe. Purchase for instant access to the guide and other exclusive resources—including sample SOPs, sample resumes, scholarship lists, and a private community with other readers.

As you begin to approach these entities, keep the following in mind:

  • Do your due diligence before, during, and after the process.

    • Before: Check websites like Quora to read other people’s experiences.

    • During: Prepare a list of questions you want answered (to make your job easier, we’ve added a checklist of questions to ask in the Resources folder).

    • After: Begin thinking about your repayment plan from day 1 (more on this soon).

  • Do bargain. The people you talk to will mostly be sales reps who get commissions based on the number of sales. Use that to your advantage and ask for a reduced interest rate, reduced fee, flexible terms, etc.

  • Do apply to more than one entity. In most cases, getting a quote is free. Once you get from more than one, you can begin to compare offerings.

OK great, we’re glad you got quotes from a bunch of places! The process you need to follow to pick one is no different from the one you followed to pick your university.

actionFirst, create a table with the factors you care about. Here are the ones we think you should look at: sanctioned amount, interest rate, annual percentage rate, expected EMI to be paid, processing and disbursement time, fees or penalty, loan tenure, currency of disbursement and repayment, repayment terms, etc.

Second, assign priorities. This is very important. If you don’t, it will look like each offering is equally good, as it will fare well in a few categories. For example, a neobank might give you a lower interest rate than a private bank, but the sanctioned amount will also be less than you need.

Finally, don’t restrict yourself to picking just one option. Remember what we mentioned in the beginning of the chapter? It’s better to pick more than one option if it means you get a lower interest rate overall.

Below are some handy tips to keep in mind as you make your choice:

  • APR >> interest rate. Some lenders mention a low interest rate but add a lot of charges that end up making your APR much higher than other offerings. Watch out for that.

  • Imagine the worst-case scenario and ask yourself, will I be able to pay the EMI even then? Pick the option(s) where the answer is yes. Don’t choose a low-tenure loan just to get a low APR, if there’s a risk of defaulting on the loan.

  • Keep an eye on the bottom line. Calculate the total amount you would end up paying at the end of the tenure for all offerings. Longer tenure loans usually mean higher total amounts paid, even if interest rates are lower.

danger Although it might sound like fixed-rate interest is better than variable-rate interest, studies have found that over time, the borrower is likely to pay less interest overall with a variable-rate loan.* Again, this is not true all the time. Our recommendation would be to go for a variable-rate loan for a short tenure, and a fixed-rate loan for a long tenure (assuming the variable-rate loan has a lower interest rate/APR). This way, you can escape market fluctuations that could impact the interest rate. In fact, during the 2008 financial crisis, many borrowers who had picked a variable-rate mortgage on their house found that their monthly payments had skyrocketed once the rates began to adjust.

Congratulations once again on getting your admit and supporting your dream, financially!

  • As mentioned earlier, create a repayment plan on day one. Create a good-looking tracker (like the Dream Tracker) that you update regularly, and review it every month to see your progress.

  • Look for refinancing options in the host country. Given the cutthroat nature of the lending market, most lenders will refinance an existing loan at a lower rate, especially if you build up a strong profile. And guess what? Once you begin your grad school, you’ll add a few more feathers to your cap through assistantships and grades.

  • Try to consolidate your loan down the line. Lenders tend to offer favorable terms to consolidate, given that you’re more likely to pay it off once you do that. This goes hand-in-hand with refinancing. Try to do both at the same time if you can.

With that, we’ve reached the end of helping you secure your loan!

Final Thoughts on Handling Loans

Loans and visas are two topics that people think of as a given, and almost no one dives deeper to understand the nuances. But we know you’re different! And we hope you read this chapter completely. If you didn’t, here are some key points to remember: loans are not the only way to fund yourself, traditional banks are not the only source of loans, and it is important to follow the do’s and don’ts we laid out if you choose to take a loan.

If you’ve decided to take a loan, fantastic! First, make sure to use the Loan Estimation sheet in the Dream Tracker to figure out exactly how much you need, then add a 10% buffer on top. We laid out some key terms related to loans in the chapter, which will come in handy. One of the biggest factors in taking a loan is your credit score: the higher it is, the better are your terms.

We covered four kinds of entities that lend money: traditional Indian banks, traditional U.S. banks, neobanks, and non-banks. A neobank is a new type of bank that is 100% digital, sometimes mobile-only. Non-bank lenders are typically fintech companies who are primarily focused on lending, but also offer other useful features like scholarships and U.S. bank accounts. You can use the flowchart we created to figure out suitable options, and then use the table to compare them further.

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