Education loan for abroad studies without collateral

Education loan without collateral – All you need to know

Education loans without collateral, also known as non-collateralized loans, are obtained without providing collateral to the lender as a guarantee. This implies that the borrower may apply for a loan without providing any form of security, such as a home, a piece of land, or anything else. For their education, students may borrow up to 50 lakhs.

Eligibility criteria to avail of the loan without collateral

The applicant’s academic profile

The goal is to evaluate the applicant’s “potential for employment.” For the 10th, 12th, and degree, a minimum grade of 60% is necessary. Furthermore, students with more than three backlogs might not be eligible for an unsecured education loan.

Financial co-applicant’s income, CIBIL score

This is the most crucial determining criterion for an unsecured school loan since lenders can rest easy knowing that even if a student defaults on the loan, their financial co-applicant will cover the debt.

Course/Degree that an applicant wishes to pursue

Lenders prefer UG and PG STEM courses over those in public administration.

The country

Of course, the location is equally important. Regarding unsecured loans, most lenders concentrate on well-known study-abroad locations like the US, UK, Canada, Australia, Ireland, and Germany. Still, they are wary of lesser-known places like China and Ukraine.

University

Private banks only approve unsecured loans for certain universities from their list of approved institutions.

Documents required

Education loans for international studies can cover your airfare, tuition, living expenses, study materials, and other fees without collateral. The lenders will provide you with quick and simple unsecured school loans as soon as you submit the completed loan application form and all the required supporting documents shown below.

• Valid KYC documents
• Two passport-size photographs (applicant and co-applicants)
• Bank Statement (Last six months)
• Guarantor Form (Optional)
• A copy of the offer letter from the university with the schedule for fees 
• Mark sheets or certificates of completion for S.S.C., H.S.C., degree programs, admission exams like the IETLS or TOEFL, etc.
• Income proof for a guarantor or co-applicant/borrower (i.e., pay slips/ Form 16) 

Banks that provide loans without collateral 

Two different lenders offer unsecured education loans: state banks and private lenders. Private lenders are better able to provide higher amounts as non-collateral education loans.

Public banks

According to their policies, public banks like SBI, BOB, etc., can only offer up to 7.5 lakhs in student loans without collateral, regardless of the course or nation. However, SBI offers unsecured student loans up to 40 lakhs for some of India’s leading universities.

Private banks

Private banks may grant unsecured student loans of up to 40 lakhs for studying abroad. As previously indicated, these banks exclusively approve unsecured loans for a select group of prestigious universities. With an interest rate of 10.5% and more, private banks will lend up to 40 lakhs for graduate and 25 lakhs for undergraduate programs.

NBFCs

Students also have the option of using a Non-Banking Financial Company (NBFC), as four NBFCs offer uncollateralized student loans. NBFCs determine the loan amount based on the country that the student chooses. For example, they can fund up to 60 lakhs in the USA at an interest rate of 11–12%, 35 lakhs in Canada at an interest rate of 12–13%, 45 lakhs in the UK, 20 lakhs in Germany, and 30 lakhs in Australia at an interest rate of 12–13.5%.

Foreign lenders

Leap Finance, Prodigy Finance, and other foreign lenders could pay up to 80% of your overall expenses. Their interest rate is set by the London Interbank Offered Rate (LIBOR) rather than the Marginal Cost of Funds Based Lending Rate (MCLR), making it the most expensive option for unsecured student loans. From 9.25 to 16 percent is the range of their interest rates.

It is now easier to finance higher education thanks to education loans without collateral for studying abroad. Many students hope to be accepted into their preferred university abroad for further education. Many of them opt for jobs in India or further education at Indian institutions due to the complex process of obtaining an education loan for courses overseas. The ideal solution to the issue of financing study abroad is an education loan without collateral.

Key takeaway

• Education loans without collateral, also known as non-collateralized loans, are obtained without providing any collateral to the lender as a guarantee.
• Lenders prefer UG and PG STEM courses over those in public administration.
•  There are documents and limitations of the Education loan without collateral from the lenders that a broorwer has to provide.

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FAQs

Q1. Why is Collateral Usually Required for an Education Loan?

Answer- If a borrower defaults on a student loan, collateral aids the lender in recovering its obligations. For banks and other lenders, student loans are progressively turning into NPAs (Non-Performing Assets).

Q2. What happens if you don’t have collateral?

Answer- Both public and private banks give education loans without collateral. The difference is the loan amount. Public banks provide a maximum of INR 7.5L, while Private banks can lend up to INR 40 Lakhs. Also, there is an option to go with NBFCs which works like private bank.

Q3. Which lenders are the best for non-collateral education loans?

Answer- Public banks like SBI, Bank of Baroda, and others provide applicants with loans of up to 7.5 Lakhs without collateral. Students can borrow up to 40 lakhs from private banks like ICICI Bank, Axis Bank, HDFC, and others without collateral.