If you do not repay the education loan on time, both the student and the guarantor may face legal and financial problems. First of all the bank or financial institution sends a notice for the due amount, even after which if payment is not made then property can be attached and legal action can also be taken. This process is serious not only for the student but also for the guarantor, as both have a negative impact on their credit score.
If the student is unable to make the payment due to financial difficulties, a change in repayment terms or deferment may be requested from the bank. With such a plan, default can be avoided and legal proceedings can be avoided. But if payment is not made intentionally or fraudulently then strict action is possible under Section 420 of the Indian Penal Code. Additionally, check bounce cases may also attract criminal charges that can lead to jail time or fines.
Such defaults have a direct impact on the financial reputation of both the student and the guarantor, making it difficult to take a loan or obtain a credit card in the future. Therefore, it is extremely important for both the student taking the education loan and his/her guarantor to make timely payments and maintain communication with the bank so as to avoid financial crisis and benefit in the long run.
If you are facing any financial problem then the best step would be to seek legal advice and seek a solution openly from the bank. This precaution reduces future financial risks and ensures your financial security.