Navigating Education Loans: A Comprehensive Review of InCred Financial Services

Securing funding for higher education is a critical step for many students pursuing their academic dreams. Education loans have become an increasingly popular avenue for financing these aspirations. Among the various financial institutions offering education loans, InCred Financial Services Limited (IFSL), previously known as Visu Leasing and Finance Pvt., stands out as a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI). This article aims to provide a comprehensive review of InCred education loans, drawing upon available information and insights to help prospective borrowers make informed decisions.

Overview of InCred Financial Services

Formerly known as Visu Leasing and Finance Pvt., IFSL is a systemically important NBFC that does not accept deposits. As of March 31, 2021, its loan portfolio was Rs. 2,633.66 cr., serving 3,40,264 customers. As of September 30, 2021, the company employed 676 permanent staff and 41 contract employees.

InCred offers a range of financial products, including consumer loans, MSME loans, and education loans. The company leverages technology and data science to streamline the lending process, aiming to make it quick and easy for borrowers.

Financial Performance and Stability

Analyzing the financial performance of a lending institution is crucial for assessing its stability and reliability. For the last three fiscals, on a consolidated basis, IFSL has posted total income/net profits of Rs.326.97 cr. / Rs. 27.72 cr. (FY19), Rs. 332.67 cr. / Rs. 5.16 cr. (FY20) and Rs. 392.48 cr. / Rs. 2.17 cr. (FY21). FY19 earnings include an exceptional item of Rs. 33.17 cr. On a standalone basis, it earned a net profit of Rs. 7.17 cr. on a total income of Rs. 233.82 cr. for the first half of FY22 ended on September 30, 2021. IFSL's debt-equity ratio of 1.62 as of March 31, 2021, was expected to increase to 1.76 after a debt offer.

The Net Worth of the company has doubled as of 30th September 2022 as compared to the net worth of ₹ 1,112 crores as of 31st March 2022 owing to the merger with KKR group. This equity increase will help the company to scale its portfolio in newer geographies. Company, on a standalone basis, has Deferred tax assets of ₹ 533.99 crores and Goodwill of ₹ 207.54 crores as of 30th September 2022. By reducing these intangible assets and others from the net worth, the tangible net worth (TNW) stood at ₹ 1659.54 crores and consequently, the Debt/TNW stood at 2.19x as against the D/E of 1.51x as of 30th September 2022.

Loan Offerings and Features

InCred provides both secured and unsecured education loans, catering to a wide range of students. They offer up to Rs 1 Cr for Secured Loans and Rs 60 Lacs for Unsecured Loans.

Unsecured education loans are designed for students who may not have collateral to offer as security. Instead, a financial co-applicant is typically required. Various lenders in India, including private banks like AXIS, ICICI, and IDFC, also offer unsecured education loans. NBFCs like HDFC Credila, Avanse, Auxilo, and InCred provide unsecured education loans with potentially higher interest rates but more flexible eligibility criteria and a broader list of approved universities and colleges. With NBFCs, one can secure education loans of up to 65 lakh INR.

InCred aims to offer quick loan processing through its online platform and app. The InCred personal loan app, an RBI-registered platform, offers quick loans with responsible lending. The final interest rate for an instant personal loan from InCred will be as per the credit assessment.

Interest Rates and Fees

InCred's processing fees start at 1% + GST, but this may vary depending on the applicant's profile. While specific interest rates may vary based on individual circumstances and market conditions, it's essential for borrowers to compare rates from different lenders to secure the most favorable terms.

Application Process and Documentation

Applying for an InCred education loan involves several steps, starting with checking eligibility. Abroad Cube offers a tool to check eligibility within minutes across more than 10 Banks and NBFCs. The standard documents required for an education loan from InCred or other lenders include PAN, Aadhaar, and bank statements. The bank or NBFC might ask for additional documents or information based on the application to ease the process. The Education Loan documents may vary based on individual applications.

Abroad Cube’s Education Loan Experts provide personalized document checklists and assistance in arranging, sorting, and suggesting alternatives for documents. They ensure that all documents are in order before submission to expedite the application login process. They also choose the best lenders from a pool of 12+ options to get you the best-suited deal and follow up with Lender Relationship Managers for Application Login and further processing.

The lender process includes getting consent, address verification, and a small telephonic interview with the Credit Manager before the final decision. The sanction letter is typically released within 24 hours after paying the processing fee to the bank.

Customer Experiences and Reviews

Customer reviews offer valuable insights into the actual experiences of borrowers. While some reviews highlight positive experiences with quick loan approvals and helpful customer service, others express concerns about the loan process and interest rates.

One reviewer described InCred Financial services as one of the most nightmarish experiences to go through , noting the executives are incompetent and inefficient and the process is tediously long winding . The documentation process is ardous and the kind of documents they want you to furnish is a never ending list, with several different executives repeatedly asking for the same documents over and over again. They also claimed that their rate of interest is exhorbitant.

Some testimonials sourced from Abroad Cube highlight positive experiences with InCred loans facilitated through their platform. These testimonials emphasize the benefits of collateral-free loans, quick approval processes, and expert guidance in managing finances for studying abroad.

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It's important to consider a range of reviews and testimonials to get a balanced understanding of the potential advantages and disadvantages of InCred education loans.

Merger with KKR Group

InCred Financial Service Limited (InCred) is coming up with its public NCD issuance, and they have filed a draft prospectus with SEBI. Subsequently, the company’s board approved the merger of Incred Financial Services Limited with the KKR Group at their meeting on September 3, 2021. Under this merger scheme, InCred Demerged Undertaking comprising the business of retail lending, SME lending, housing finance business and ancillary activities of Pre-demerger InCred was demerged and transferred and vested in the KKR India Financial Services Limited.

Management and Operations

InCred Management and Technology Services Private Limited (IMTSPL) provides a new-age financial services platform that leverages technology and data science to make lending quick and easy. Booth Fintech Private Limited provides financial advice and assists in all financial, costing, accounting internal control and other similar matters. Booth Fintech holds 76% shareholding in mValu Technology Services Private Limited.

Bhupinder Singh, Whole-time Director & Chief Executive Officer is the Founder of the InCred Group. Prior to the InCred, he co-headed the Investment Banking and Securities division of Deutsche Bank for the Asia Pacific region with a USD 3 billion top line. He was also the head of the Corporate Finance division for Deutsche Bank in the Asia Pacific region managing the bank’s corporate coverage, investment banking, capital markets, advisory and treasury solutions businesses.

Diversified Portfolio and Risk Management

Incred has two products, Consumer Finance and Education Loans, which Ugro or Profectus do not offer. The company's diversified portfolio with heterogenous product offerings helps it avoid concentration risk and maintain portfolio quality. As the company started its operation in February 2017, some long-tenure products like Education loans, Secured School Financing, and LAP have yet to achieve seasonality. The future portfolio quality is to be monitored in this portfolio. The Current GNPA in the MSME book stood at 5.68% as of 30th September 2022.

Alternatives to InCred Education Loans

Students seeking education loans should explore various options to find the best fit for their needs. Alternatives to InCred include:

Private Banks: Banks like AXIS, ICICI, and IDFC offer unsecured education loans with competitive interest rates.
NBFCs: Besides InCred, other NBFCs like HDFC Credila, Avanse, and Auxilo provide education loans with flexible eligibility criteria.
Government Schemes: Government-backed education loan schemes may offer subsidized interest rates and other benefits.

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