A co-signer is a significant requirement to get approval for an Education loan. A co-signer is a person who agrees to pay the loan in case the borrower is unable to repay the loan. The higher the credit score of the borrower and the co-signer the more likely your loan will be approved. In most of the cases, a co-signer is the borrower's parent or spouse but it can also be any member of the HUF. The borrower and the co-signer are equally responsible for repaying the loan.
For somebody to be a co-signer in India he/she should fulfil the following criteria:
He/she must be a citizen of India.
Must be a salaried citizen of India and have a reliable source of income.
The credit history of the co-signer must be significantly high probably above 720. The chances of sanctioning a loan to the borrower increases.
The co-signer must also have a low debt-to-income (DTI) ratio.
Banks also check the job history of the co-signer as a guarantee for loan repayment.
Parents can be a student loan co-signer but in other cases, anyone with a good credit history or willingness to offer help can also be suitable for this position.
The co-applicant must possess the following documentation for the loan approval:
PAN Card
Aadhar Card
Permanent address proof
Salary Slip
Company ID
Collateral documents (if any)
For any loan amount, a co-signer or a guarantor is a prerequisite for Education loan. An Education loan is not sanctioned without a co-signer. Some lenders reduce the interest rates of the loan when the borrower has a co-signer with a good credit score as the risk that the loan will go into default is significantly low.