Student loans serve as prominent financial aid for students aspiring to study abroad without burdening their parents or guardians. If it weren’t for education loans the dreams of several students longing to pursue international education would have crumbled before taking flight.
Collateral loans for pursuing higher education or education abroad have been prevalent for a long time. It is a secured loan in which the borrower is required to pledge an asset against the loan amount. The asset typically is a property, piece of land, gold, fixed deposits, or anything valuable.
So, have you ever wondered how to get an education loan for abroad studies without collateral?
Well, if you are wanting to pursue education in a foreign land without seeking any kind of help from your parents, you can opt for collateral-free loans!
If this piece of information has piqued your interest, keep reading to learn in detail how to get an education loan for abroad studies without collateral, eligibility criteria, procedures, a list of banks offering a student loan without collateral, and other critical details.
Types of education loans based on collateral
Before we delve deeper into the topic under discussion, it is important to learn about the two types of education loans based on collateral.
1.Collateral education loan
A collateral education loan is also known as a secured loan, as the borrower is required to pledge an asset as collateral for the lender’s security, in case of insolvency. The assets could be immovable property such as a piece of land, home, gold, fixed deposits (FDs), mutual funds, life insurance policies, or government securities.
Collateral education loans usually get approved in no time as banks just have to verify relevant documents pertaining to the pledged asset. Also, there are many advantages of applying for secured loans, such as lower interest rates, no repayment during the study period, and longer repayment periods.
Please note: The repayment period and other key clauses regarding the secured loan vary from bank to bank.
2. Education loan without collateral
An education loan with collateral is also known as an unsecured loan or non-collateral education loan. As the name suggests, a non-collateral loan implies that you don’t have to pledge any asset against the loan amount. So, what’s the catch?
It is important to note that unsecured loans typically have a higher interest rate as compared to secured loans, are more difficult to get approved, and have shorter repayment periods.
In case of a loan without collateral, you might even need to make certain repayments during the study period itself. Additionally, it is mandatory to have a co-applicant with a good CIBIL(Credit Information Bureau India Limited) score, fulfill certain eligibility criteria, and submit proper documentation for this loan to get approved.
Benefits of education loans without collateral
After going through the aforementioned details on seeking loans with and without collateral, many of you could be in two minds regarding what type of loan is better for you. So, here’s making the decision easy for you!
If you do not have an asset to be pledged as collateral, or if you do not wish to burden your parents with further liabilities, if you have an excellent academic track record and you trust your abilities, opting for an education loan without collateral makes a prudent choice.
The following are listed the key benefits of education loans without collateral in brief. Skimming through these advantages will help you get a clearer picture of this loan type.
- Numerous reputed banks in India provide non-collateral loans for studying abroad.
- Collateral-free loans include a range of courses offered by several reputed colleges and universities across the globe.
- You may apply for this loan if you have an earning co-applicant.
- You can avail of a loan between INR 40 lakh and INR 50 lakh without pledging any asset as security.
- The range of interest for non-collateral loans isn’t unthinkable; it is typically between 10.5% to 14%.
- Unsecured loans can be obtained before admission to remain stress-free and focus on other critical admission procedures.
- You can get 100% finance for pursuing higher education.
- Top-up loans are also available for students fulfilling the eligibility requirements.
- There is no need to pay EMIs during the moratorium period, and no prepayment penalty as well.
- It is a quick, paperless process with easy and convenient repayment options.
Eligibility criteria for applying for a collateral-free student loan
If you have made up your mind to apply for a student loan without collateral, you need to fulfill the eligibility criteria as mentioned below.
- Academic profile
A minimum of 60% is required in 10th, 12th, and degree to ascertain employability potential. Also, applicants with more than 3 backlogs might not qualify for collateral-free loans.
Students aspiring to study in the USA must have a GRE score of more than 300. Also, for studying abroad, an IELTS score above 6 or 6.5 bands may be required to apply for unsecured loans.
- Financial co-applicant
Financial co-applicants need to have a stable income along with a good CIBIL score(700 or above).
- Choice of the course
UG or PG courses like STEM disciplines are usually preferred over courses like Aviation, Public policy, etc. Also, courses like Ph.D., tailoring, theology, etc. might not get approved for unsecured loans.
- Choice of the country
The choice of study-abroad destination is an important factor when applying for unsecured loans. The lenders granting loans without collateral tend to trust countries like the UK, the USA, Canada, Australia, Germany, and Ireland more over countries like Ukraine, Belarus, North Korea, Iran, and so on.
- Choice of the university
The lenders offering unsecured loans do not approve of all foreign universities even if you meet the course and country requirements. So, check the list of approved universities in advance.
Top lenders providing education loans without collateral
Here are listed some top lenders providing collateral-free loans for pursuing higher education. Most banks grant education loans without collateral up to a certain amount only.
So check the following details carefully and select the bank that matches your requirements the best.
| Bank name | The maximum loan amount for domestic education | The maximum loan amount for international education | Collateral details | Interest rate (p.a.) | Processing fee | Processing time |
| HDFC Bank | Up to INR 30 lakh | Up to INR 45 lakh | No collateral required up to INR 7.5 lakh | 9 to 14.1% | Up to 1.5% of the loan amount | 7-10 days |
| State Bank of India (SBI) | Up to INR 15 lakh | Up to INR1.5 crore | No collateral required up to INR 7.5 lakh | 8.2% – 11.15% | INR 10,000 (plus taxes) for a loan above INR 20 lakh | 7-10 days |
| Punjab National Bank | INR 10 lakh | INR 20 lakh | No collateral required up to INR 7.5 lakh | 8.85% to 10.75% | INR 5000 for loans above INR 4 lakh | 7-10 days |
| HSBC Bank | Up to INR 30 lakh | Upto INR 30 lakh | No collateral required up to INR 5 lakh | 9.25% to 15.5% | 2% of the loan amount | 5-7 days |
| IDBI Bank | 25 lakh to 40 lakh | 30 lakh to 75 lakh | No collateral required up to INR 4 Lakh | 11% to 13% | 1% of the loan amount | 7-10 days |
| ICICI Bank | Up to INR 50 lakh | Up to INR 1 crore | No collateral is required for loans up to INR 20 lakh (UG) and INR 40 lakh (PG) | 9.5 to 14.3% | Up to 2% of the loan amount + GST | 5-7 days |
| Axis Bank | Up to INR 50 lakh | Up to INR 50 lakh | No collateral required up to INR 7.5 lakh
* no collateral required up to INR 40 lakh in case of premiere institutes |
11% – 11.50% | 1%-2% of the loan amount | 2-7 days |
| Union Bank of India | Up to INR 40 lakhs | Up to INR 40 lakhs | No collateral required up to INR 7.5 lakh | 12-14% | Up to INR 5,000 | 7-8 days |
Documents required for education loan without collateral
Here’s a list of key documents required to apply for an education loan without collateral.
- University offer letter (mentioning tuition fees)
- Academic documents
- KYC documents of both applicant and co-applicant
- Employment documents
- Address proof along with the latest electric bill
- Applicant’s saving account details
Salaried co-applicants will need to submit the following documents pertaining to income proof:
- ITR (Income Tax Return)
- Form 16
- Salary slip
- Salary account details
Business owners will need to submit the following documents pertaining to income proof:
- ITR
- Balance sheet
- Profit & loss account
- Business registration certificate
- Business current account
Step-by-step application procedure for a non-collateral loan
Online process
The following is a step-by-step procedure to apply for an education loan without collateral online for studying abroad.
Step 1: Select the most appropriate education loan without collateral security as per your requirements. Check if the loan entails any special provisions offered by the Indian government for studying abroad.
Step 2: Review all the loan information, including the interest rates, moratorium period, repayment tenure, etc.
Step 3: Visit the official website of the chosen lender providing the education loan, and fill out the application form with utmost precision.
Step 4: Scan and upload the requisite documents as specified by the lender. These documents are likely to include the admission letter, academic records, financial statements, etc.
Step 5: Ensure that you have filled out the application form correctly and uploaded the required documents, and then submit the form.
After this process, you will need to wait for a couple of days for the lender’s response. If you have submitted all the required documents properly, the approval won’t take too long.
Offline process
You can implement the process in the offline mode as well either by directly visiting the bank. However, to ensure a seamless process, you should call the lender first, make a note of the key details, and then visit the bank.
Even in the offline mode, you will need to follow the same process as mentioned in the ‘Online process’ section, just that you will be working with a pen and paper!
The bottom line
If you are determined to study abroad by relying on your own abilities, without overburdening your parents or guardians, MSM Unify can help you achieve your dreams by helping you apply for an education loan without collateral.
It doesn’t stop here!
MSM Unify can provide end-to-end guidance on selecting the right course at the right university by adhering to your career goals, exploring scholarship opportunities, ensuring that the course and university are acceptable for education loans without collateral, and helping you with the entire admission process, and even later.
So, get ready to give flight to your study-abroad dreams by exploring MSM Unify today itself!
This post first appeared on Agent-Institution Relationship Best Practices | MSM Unify, please read the originial post: here
