What is collateral?
It can be expensive if you decide to study abroad and go for an education loan. The overall cost that will be incurred including the fees for studying abroad depends a lot on the choice of country. For example, an MS in the USA will typically cost around the US $65,000- $70,000. A number of public sector banks, private banking institutions, and financial corporations offer different kinds of education loans at varied rates of interest. Nationalized Banks offer loans up to 7.5 lakhs without the need for arranging any collateral by the borrower.
However, for a credit limit crossing 7.5 lakhs, most organizations ask for a deposit of any asset as collateral. The collateral is asked to handle the NPAs i.e. the Non-Performing Assets in case the borrower defaults on the loan payments. Collaterals are a risky business, and many get uncomfortable at the thought of taking a loan against their personal assets as security.
Loan without Collateral
Wouldn’t it be great if no collateral is required for loan amounts exceeding 7.5 Lakhs? Good news is that non-banking financial companies (NBFCs) and private lenders can provide collateral-free loans for a higher amount, but the only downside is that the collateral-free loans are sanctioned at a slightly higher interest rate as compared to education loans taken with collateral. Banks generally ask for co-applicant details when you apply for a collateral free loan. Not only this, banks also ask for the income documents such as salary slips or income-tax returns (ITR) of the co-applicant before sanctioning the education loan. Following banks provide education loans without collateral:
Bank of Baroda
Bank of Baroda offers education loans through the Baroda Scholar scheme which is given for MBA, MCA, MS, and other notified courses that help with job creation. To avail this education loan in India, the student must have secured admission to the notified institute and course. The loan limit for specified institutes is Rs. 80 lakhs and for non-specified institutes is Rs. 60 lakhs. However they only offer unsecured loans from 7.5 Lakhs onwards.
Being the country’s leading nationalized lender, SBI offers Global Ed-vantage and Student Loan are for students who want to study abroad. For overseas education, SBI primarily offers education loan with collateral. Unsecured loans, i.e. loans without collateral are available only for the best of the best colleges, and that too up to ₹ 7.5 lakhs only.
Avanse education loan for studying abroad is designed keeping all the student requirements in mind. The Avanse education loan for studies abroad covers 1,626 universities, 1,262 colleges, and more than 6,000 courses across 44 countries. They provide pre-visa disbursement loan, pre-admission loan, bridge loan, fast-track loan, score-based benefits, and ensure that the applicant faces no financial issues while studying abroad in order to elevate their career to the next level. Avanse provides both collateral and non-collateral loans based on student’s profile with no defined limit on the loan amount.They provide maximum upto 50 Lakhs.
Along with tuition fee, Up to 100% of other expenses including living and hostel expenses, travelling expenses, examination fees, library/laboratory fees; purchase of books / equipment’s/instruments/uniforms; passage money for studies into India; purchase of computers / laptops considered necessary for completion of the course as decided by HDFC Credila. Travel fare restricted to one economy class return ticket between India and the country of study. Co‐applicant(s) to provide documentary proof to establish their relationship with the student, to the satisfaction of HDFC Credila. In case the collateral to be provided is not provided by one of the above relatives, then the collateral could be provided by one of the following relatives provided they are brought into the arrangement as Co‐applicants. They provide maximum upto 40 Lakhs
ICICI Bank provides Unsecured loans to leading global Universities. They have a categorised Universities as A1/A2/A3/A4. They provide fixed interest rates between 10% to 11%. The university list is more global compared to its peers. ICICI bank has dedicated RMs from each region and they look to provide you home service. The Bank is very aggressive and for an Unsecured loan you can look at a very economical loan from the Bank.
The FINAL Verdict
All banks have various criteria to look at and secure overseas education loan without Collateral. The overseas unsecured education loan mainly depends on the student profile. Banks generally look at providing unsecured loans to master students those who are studying stem designated programmes. It is very rare for people to provide unsecured loans at the undergraduate level. Further countries like the US have more options compared to other countries like UK Canada Australia when it comes to unsecured overseas loan options. We are Teja loans with over 15 channel partners that can guide you to the most appropriate education loan provider and look forward to help you get the cheapest education loan based on your eligibility.