Table of Contents
- What is an education loan without collateral?
- Who offers collateral-free education loans in India?
- Pros and cons of education loans without collateral
- Expenses covered in an unsecured education loan for abroad
- Countries accepting unsecured education loans for abroad studies
- Eligibility criteria
- Loan repayment terms
- How to apply for an unsecured education loan
- Tips for getting approval for your education loan without collateral
- Final thoughts
- Frequently asked questions
Studying abroad is a great choice if you're seeking quality education and a promising global career. However, it might be expensive for most students due to the higher cost of education and living expenses in the foreign country. If you’re planning to study abroad, you’ll probably require financial support to meet these expenses and avoid unnecessary financial stress. That’s where an education loan comes in as a valuable support!
Many students like you prefer to go for educational loans that offer flexible, student-friendly terms. Among these, education loans without collateral are often the first choice due to the numerous benefits they offer.
If you’re wondering what these loans are and whether you can secure a loan, we can guide you. In this article, we’ll take you through everything you need to know about education loans without collateral for studying abroad, including how to apply and secure the loan.
Key takeaways
- Studying abroad comes with high tuition fees and living costs that require financial support. Education loans without collateral are student-friendly and ideal to fund your study abroad dreams.
- Education loans without collateral, or unsecured loans, don't require any financial security. It’s ideal for students who don't have any assets to offer as security. However, interest rates might be 2 to 4% higher than secured loans.
- Non-collateral loans are approved based on your course, academic record, and co-applicant’s credit history.
- Banks like SBI, ICICI, HDFC, and IDBI offer unsecured loans which cover your tuition fee, living expenses, study materials, and travel.
- Most lending institutions give a moratorium that covers your course duration plus 6 to 12 months. During this period, you don't have to pay any EMI and can focus on your studies.
What is an education loan without collateral?
An education loan without collateral, or an unsecured loan, is a helpful option if you want to study abroad but don't have any assets to offer as collateral. In a traditional secured loan, you’ll have to pledge assets such as a house or land, which puts stress on you and increases your repayment burden. Non-collateral loans allow you to pursue your study abroad dreams without the stress of pledging an asset. As a result, these loans are emerging as a popular choice among study abroad aspirants.
When you take a loan without collateral, you don't have to provide any assets as security to the lender. Instead, the lender will evaluate other important factors such as your academic record, career prospects, the course you're pursuing, and, in some cases, the credit history of your co-applicant.
If these factors are strong and convincing, you can secure an education loan without the need to provide any collateral.
Curious to know more about education loans without collateral for study abroad? Talk to our expert!
Who offers collateral-free education loans in India?
Below are the lending institutions that offer education loans without collateral in India for studying abroad:
| Bank/institution | Unsecured loan amount | Interest rates | Loan processing time | Highlights |
|---|---|---|---|---|
| Credila | Up to INR 40 lakh | Starts from 11.25% | 2 to 3 working days | The loan provides up to 100% financing. The repayment tenure is provided for up to 15 years. |
| Bank of India | Up to INR 20 lakh | 1 year RBLR+1.70% to 1 year RBLR+2.50% | 15 to 20 days | A moratorium is allowed for the course duration and an additional 1 year. The repayment period is up to a maximum of 15 years. |
| HSBC | Up to INR 5 lakh | 6% to 7% | 2 to 5 working days | A moratorium is allowed for the course duration and an additional 6 months to 1 year. The repayment period is up to 5 years. |
| State Bank of India | Up to INR 1.5 crore | 9.15% to 10.15% | 15 working days | The repayment period and other terms vary based on the borrower and the scheme. |
| ICICI Bank | Up to INR 1 crore | 11.25% to 12.50% | 5 to 10 working days | The loan is repayment tenure is provided for up to 15 years. |
| Punjab and Sind Bank | Up to INR 20 lakh | 9.40 to 10.35% | 15 to 20 days | The repayment period is provided for a maximum of 15 years. There’s no prepayment penalty. |
| Non-Banking Financial Companies (NBFCs) | Up to INR 40 lakhs | 11% to 14% | 7 to 10 days | The loan terms and repayment period vary based on your profile and the lending institution’s scheme. |
Pros and cons of education loans without collateral
Pros
- You can secure the loan even if you don’t have any big assets. This makes the loan accessible with funding up to INR 40-45 lakhs.
- The approval process is faster, as there is no need to evaluate collateral. You'll be able to secure the loan on time within the admission deadline.
- Approvals are based on your merit and earning potential.
- You don't have to pay EMIs during the moratorium period. This allows you to focus on your studies without worrying about the repayment.
- You can also avail of top-up loans. It will help you cover additional expenses that might arise during the course.
Cons
- The interest rates are usually higher compared to those that require collateral. It can often be up to 2 to 4% higher. This can significantly increase the total cost of your loan.
- Many lenders provide non-collateral loans only for pre-approved universities and courses. So, if your university is not on their list, your loan may not be approved by the lender.
- Non-collateral loans are often provided only for postgraduate programmes. If you're an undergraduate student, you might find it difficult to access these loans.
- Some lenders might charge an origination fee upfront. This will increase your initial expenses.
Expenses covered in an unsecured education loan for abroad
Non-collateral education loans primarily cover your tuition fees as required by the institution you're joining. They also cover the living expenses, such as food, accommodation, and transport. In addition, miscellaneous expenses like visa fees, resident permit charges, and library fees will also be covered.
Your education loan also takes care of the additional expenses you might incur for study materials like a laptop, books, and other course-related items. Apart from these, the loan will also cover the travel costs, including air tickets, and provide coverage for health and travel insurance.
Check out 'Funds' on our app for a pre-approved student loan in just 3 days!
Related articles
Countries accepting unsecured education loans for abroad studies
Here are the top countries that accept education loans without collateral, along with the lending institutions you can approach for studying in these countries:
| Country | Lending institutions |
|---|---|
| United States | SBI, Credila, UBI, ICICI Bank, MPOWER Financing |
| United Kingdom | SBI, ICICI Bank, UBI, Axis Bank |
| Canada | SBI, HDFC Credila, ICICI Bank |
| Germany | SBI, HDFC Credila, ICICI Bank, Axis Bank |
| Australia | SBI, HDFC Credila, ICICI Bank |
| New Zealand | SBI, Axis Bank, ICICI Bank |
Eligibility criteria
Education loans without collateral are offered only to those who are Indian nationals above 18 years. If you’re below 18 years, you can apply only if your parent or guardian is a co-applicant.
Your academic record and future potential are crucial for securing the loan. You must have secured admission to a foreign university and should provide proof of admission to the lender.
Some lenders also assess the creditworthiness of the co-applicants. Typically, your parent, guardian, or spouse with a stable income and a good CIBIL score is required as a co-applicant. This will build confidence in your repayment ability.
Note: A good academic record can improve the chances of securing the loan.
Loan repayment terms
Education loans come with a moratorium period. During this period, banks offer flexible repayment options that allow you to align the loan repayment with your financial needs.
- Public banks usually offer a moratorium period that covers the entire duration of the course plus 6 to 12 months. During this time, you don't have to make any payments to the bank.
- Private banks offer a moratorium period covering the course duration plus 6 months. However, during the moratorium period, you're required to pay simple interest. The instalment payments will start only after the moratorium period.
- NBFCs offer a moratorium period for the entire course duration plus 12 months. You'll have to pay simple interest or partial interest during this period. There could also be instalment payments that include part of the principal amount.
How to apply for an unsecured education loan
Below are the steps for applying for an education loan without collateral
- Choose the education loan without collateral that aligns with your needs.
- Review the loan information in detail, such as the moratorium period, interest rates, and repayment tenure.
- Visit the lender’s website and access the application form.
- Complete the application form accurately.
- Upload the required documents, such as the admission letter, academic records, identity proof, passport-size photos, and financial statements.
- Submit the application form. The lender will process the application and provide a response on the status.
Tips for getting approval for your education loan without collateral
Securing an education loan without collateral can be easy if you keep certain factors in mind. Most lenders assess various criteria before approving the loan, since these loans are unsecured and are offered completely based on your potential.
Apply for the loan well in advance, since you need time to arrange the documents and meet the lender's requirements. Don’t wait for the last minute, as this might cause delays in your course admission or visa processing.
Maintain a good credit score, as this improves your chances of securing the loan at lower interest rates. Being a student, you might not have a credit score. In such cases, lenders will consider your co-applicant’s credit score. Hence, it’s recommended to choose a co-applicant with a strong credit history and financial background.
Before you apply, reduce any existing debts that you or your co-applicant has. Further, choose a realistic loan amount based on your actual educational needs. Calculate the EMIs and ensure that it is well within your repayment capacity. If the EMIs are higher than your possible repayment capacity, there are chances that lenders will consider you a risky borrower and reject the application.
You can seek guidance from education loan advisors if you need support. They can handle the process efficiently and ensure that you get the right student loan.
Final thoughts
Applying for an education loan without collateral can support your study abroad journey significantly. These loans help you secure financial support without having to pledge any assets as security. Many lending institutions offer education loans without collateral based on your academic record, admission to a reputed course, and employment potential.
These loans often come with student-friendly repayment terms. Most of the lending institutions allow a moratorium period during which you don't have to make any payments. Overall, education loans without collateral are an ideal option to support your academic dreams of studying abroad without worrying about your finances.
That’s where we come in to support you, right from choosing and applying to universities, to assisting with loans. Want to study abroad with financial support? Connect with us and begin your journey.
Right from your loan application to disbursement, we help you achieve your study-abroad dreams. Check out 'Funds' on our app for a pre-approved student loan in just 3 days!
We offer end-to-end assistance throughout the study-abroad process, including university selection assistance, application guidance, funding advice, visa application support, and more. Discover the perfect course and university to boost your education.
Let us guide you in securing an education loan without collateral!
Get started with your journey and talk to one of our counsellors today!
Frequently asked questions
Can I study abroad on a 100% loan?
Yes, it’s possible to get a 100% loan for studying abroad. Many lending institutions provide loans that cover your full expenses. But the approval depends on your academic record and employment potential. It might be easier to secure a 100% loan if you're applying for low-cost courses or countries with lower expenses.
Can I get an education loan to study abroad without collateral?
You can apply for an education loan to study abroad without collateral based on your academic record and future career prospects. Lending institutions provide loans to cover your tuition fee, living expenses, and travel costs. However, most lending institutions require that you include co-applicants with a good credit history.
What is the maximum loan amount I can get without collateral?
The maximum loan amount that is provided without collateral varies based on the lender and the course you're pursuing. You can usually borrow up to INR 40-50 lakhs without collateral. If the loan amount is below INR 7.5 lakh, lending institutions will provide the loan without much hassle, with a parent or guardian as co-applicant.
