What are your Non-Collateral Options for an Education Loan?
Educational loans enable you to enroll in a university or college abroad, even with a low budget. Banks and other financial institutions are excellent non-collateral options for education loans. Non-collateral options for education loans are great for students who want to pursue education abroad but cannot present any security. If it weren’t for non-collateral education loans, it would be difficult for students to make it to their dream universities. However, not everyone can get an education abroad with non-collateral education loans, as too many loan applications get rejected frequently by lenders. But if selected, it is the most economically viable option for an education loan. Let us explore the options in non-collateral education loans, but first, understand what it is.
Non-Collateral Education loan
Non-collateral education loans are taken without putting any collateral as a guarantee to the lending institution. That means applicants can take loans without any security. The biggest benefits of collateral education loans are that students can avail themselves of between Rs.7.5 lakh to Rs.40 lakh without pledging any security, borrowers can avail themselves of it before admission, and EMIs are not required to be paid. To secure non-collateral education loans successfully, one must know the documents needed.
Documents required for non-collateral education loan
Non-collateral education loans can cover your tuition fees, living expenses, study materials, and whatnot. Lenders provide hassle-free unsecured education loans once you provide the required documents listed below:
- KYC documents
- passport-size photographs of the applicant
- Bank statements
- Offer letter from the university
- Mark sheets of S.S.C., H.S.C., Bachelor’s degree, and entrance tests like IELTS, TOEFL, and others.
- Income proof of the guarantor
The financial co-applicant is crucial in non-collateral education loans, especially for presenting their earnings. A co-applicant can be salaried or self-employed.
Institutes for giving non-collateral education loan
Non-collateral options for education loans can be categorized into two types – public banks and private banks. Apart from these two, other financial institutions provide education loans without collateral. Private lenders provide a larger sum as non-collateral options for education loans. Let’s look at the key options in non-collateral education loans.
Public banks like SBI, under the credit guarantee fund scheme for education loans, can only provide up to 7.5 lakhs of non-collateral education loans irrespective of the course and the university.
Private banks can offer nearly Rs. 40 lakhs of non-collateral education loans. Private banks have a list of universities for which they approve non-collateral loans. Private banks can allocate up to 40 lakhs for a Master’s program and close to 25 lakhs for a Bachelor’s program.
Non-Banking Financial Institutions
A Non-banking Financial Institution (NBFI) is also an option, as four leading NBFIs provide non-collateral education loans. NBFIs decide the loan amount based on the desired country and can fund up to 60 lakhs with a stipulated interest rate.
Foreign lenders can cover the majority of total expenses. Foreign lender’s interest rate is heavy as they are based on London Interbank Offered Rate (LIBOR), which, converted to Indian Rupee, reaches significantly high, making it the most expensive non-collateral option for education loans.
Non-collateral options for education loans allow students to study at premier universities abroad without presenting any collateral. Under this scheme, co-applicants can borrow educational loans at the stipulated interest rate. Lenders offer such loans at low-interest rates and flexible terms and conditions to qualified applicants. However, the rejection rates are frequently high considering the easy access to funding overseas education. But, with the right counseling, you can access these funds. At EduLoans, our counselors have established a strong network with financial institutions to relieve you from constantly monitoring the loan process. So, what are you waiting for? Reach out to our counselors and start your journey for overseas education today.