Every year, thousands of Indian students dream of studying abroad but struggle to manage the rising costs of tuition, accommodation, and travel. Education expenses can very well be more than ₹40–50 lakhs, and that is when loans come into the picture. Knowing the difference between secured and unsecured education loans can save you thousands in interest and stress.
What Is a Secured Education Loan?
A secured and unsecured education loan offers two distinct routes. The secured option requires collateral such as property, fixed deposits, or insurance. The secured one needs a security like a property, fixed deposits, or insurance. You get lower interest rates, higher loan amounts, and longer tenures since the lender’s risk is lower. However, there is a property evaluation and documentation involved in the procedure, thus the approval can take longer.
What Is an Unsecured Education Loan?
On the other hand, an unsecured education loan for USA or other countries requires no collateral. The bank evaluates your co-applicant’s income, academic profile, and the reputation of your chosen university. While processing is quicker, interest rates are higher and loan limits smaller. It’s a convenient choice for students without assets but confident in future earnings.
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SBI Secured and Unsecured Education Loan
An SBI secured and unsecured education loan allows students to borrow up to ₹1.5 crore with collateral or ₹7.5 lakh without it. Secured loans offer lower interest rates, typically 1–2% less than unsecured ones and flexible repayment terms. For students heading abroad, SBI’s Global Ed-Vantage loan provides attractive rates and moratorium benefits.
Axis Bank Secured and Unsecured Education Loan
With the Axis Bank secured and unsecured education loan, borrowers can access higher loan amounts if they pledge assets. For unsecured loans, Axis focuses on the applicant’s academic record and the co-borrower’s creditworthiness. Even if it is a bit more expensive, it is quicker and therefore suitable for admission in a hurry or when there is a lack of collateral.
ICICI Bank Secured and Unsecured Education Loan A Balanced Choice
The ICICI Bank secured and unsecured education loan offers flexibility for both secured and collateral-free borrowers. As a result, secured loans have lower EMIs, while unsecured loans guarantee speedy approval and are less paper-intensive. Besides, for some international universities, ICICI gives the facility of pre-visa disbursement to make the admission process simple for students who want to go abroad for their studies.
Key Differences at a Glance
- Collateral: Required for secured; not for unsecured.
- Interest Rate: Lower for secured (8.5–9.5%); higher for unsecured (10–12%).
- Loan Limit: Up to ₹1.5 crore (secured); up to ₹50 lakh (unsecured).
- Processing Time: Longer for secured; faster for unsecured.
Conclusion
Whether you choose a SBI education loan, ICICI education loan, or Axis Bank education loan, the right decision depends on your assets and repayment capacity. Secured loans help in decreasing the interest rate, while unsecured loans are good for being quick and having the option to change. Carefully consider the alternatives only, as your tomorrow is dependent on it.
If you’re ready to begin your study-abroad journey, reach out to Eduloans. Their expert team simplifies comparisons, paperwork, and approvals, helping you secure the perfect education loan with confidence and ease.
Yes, a few banks permit refinancing if you provide collateral at a later stage.
Most likely, yes, as their income is the guarantee of repayment capacity.
Typically, the approval for an unsecured loan is quicker as it requires fewer documents.
Yes, you may, but only one will be allowed for the fund withdrawal.
Sure, secured loans may go up to 15 years, while unsecured ones are generally limited to 10 years.