Education loans make it easier for students to follow their dreams without worrying about money. But sometimes, paying back that loan on time becomes hard. You might still be looking for a job, or your salary may not be enough to handle the EMIs.
In such situations, an education loan extension can be a solution. However, how to do it without any negative impact on your credit rating? Let us find out.
What Is an Education Loan Extension?
An education loan extension is the process of requesting your bank or lender to extend the time period for repaying your loan. Instead of skipping EMIs or going into default, you formally ask for an extension to your repayment period.
For example, if the original repayment term was 5 years, you might extend it to 7 years. This means your monthly EMI is lower, and you are given time to get your finances in order.
However, there is a negative side; if not managed properly, it can harm your credit score. Therefore, you should make it happen the right way.
Why Do Students Need a Loan Extension?
The financial aspect of many students’ lives gets challenging once they get their degrees. The most common causes of these challenges are,
- Delay in getting jobs
- Unexpected spending on personal or family matters
- Enrolling for a master’s degree immediately following graduation
- Health conditions or emergencies
Instead of skipping payments or defaulting, extending your loan period is a smarter choice. It keeps your credit history clean and your lender happy.
Step 1 – Speak to Your Lender Early
If you are having difficulties in making repayments, do not wait until you miss an EMI. Get in touch with your bank or lender at the earliest.
Make your situation very clear, whether you are still a student, waiting for a job offer, or are under financial stress. Generally, lenders are understanding and may give you a grace period or restructure your loan.
Do not forget that communicating early is the secret to reducing credit risks.
Step 2 – Review the Conditions of Your Education Loan
Before asking for an extension, go through your loan agreement. Some banks and NBFCs already have flexible repayment methods or moratoriums.
For example, you might be allowed to start full EMI payments six months after getting a job. Understanding your terms helps you choose the best option without penalties.
Step 3 – Look for Refinancing Possibilities
Another good option is loan refinancing. It is the transfer of your current education loan to a new lender that provides lower interest rates or a longer tenure. This can lower your monthly EMI, and therefore, the repayment pressure will be less.
Platforms like Olyv make the loan process faster and simpler. With Olyv’s digital lending platform, you can apply for personal loans up to ₹5 lakh with no collateral and minimal paperwork. While Olyv mainly focuses on personal and instant loans, its approach shows how digital NBFCs are helping borrowers manage credit responsibly.
Using tools like these helps you to stay in control and avoid credit risk.
Step 4 – Calculate Before You Extend
Before going ahead with an extension, a loan EMI calculator must be used. It displays the amount of interest that you will pay if the tenure is increased.
For instance, if your EMI is ₹10,000 for 5 years, extending it to 7 years may lower it to ₹8,000, but the total interest will be more.
So, compare both options carefully and decide which one fits your situation better.
Step 5 – Keep Paying at Least the Minimum Amount
Even if you can’t pay the full EMI, try to still make partial payments regularly. This will indicate to your lender that you are committed to paying back the loan.
In addition, your credit score will not suffer as much if you make partial payments rather than skipping them altogether. It is always better to be consistent than to pay nothing at all.
Step 6 – Watch Your Credit Health
Your credit rating is similar to a financial behaviour report card. Even small mistakes can bring it down.
Credit score monitoring platforms like Olyv and CRED let you know your score and remind you of payment dates. If you keep a close watch on your credit, you will be able to detect problems early and clear them before they become too difficult.
Step 7 – Avoid Taking New Loans
If you are unable to repay one loan, do not apply for new ones at the same time. Having too many loan applications in a short interval can negatively affect your credit score. Instead, focus on clearing your current debt or negotiating better terms with your existing lender.
Conclusion
Applying for an educational loan extension might be one of the best ways to reduce the financial burden, but only if handled with care. Communication with the lender should be made very early, the loan conditions should be checked, and refinancing should be considered if it is necessary.
By means of digital financial tools such as Olyv, you will be able to follow the scheduled events, take care of your credit health and make smart choices. The combination of being proactive and having discipline can get you through the extension of the loan in a manner that does not affect your credit score for plans.
