Education loans as a financial aid have recently become quite prevalent in the Indian study abroad market. Be it easy accessibility or the high number of Indian students willing to study abroad, education loans are gaining a lot of attention and demand. An education loan for abroad studies without collateral is even more attractive, as it does not require any form of security when applying for an education loan. There are numerous banks in India offering an abroad education loan without collateral. Want to discover more? Keep reading, as this blog will answer all your questions on an abroad education loan without security, and all the related details!
Types of Education Loans
Before moving on to an abroad education loan without collateral, let us understand the two broad categories of education loans available to international students willing to study abroad:
Collateral Education Loan
As the name suggests, a collateral education loan requires the borrower to pledge collateral (house, property, gold, insurance policies, land, fixed deposits, etc) as security in order to get the required loan amount.
Non-Collateral Education Loan
Unlike the collateral education loan, an education loan for abroad studies without collateral, does not require the borrower to pledge collateral as security. In the case of an education loan without collateral for abroad, borrowers are required to submit documentation, and fulfil relevant requirements, and eligibility criteria.
Overview of Education Loan without Collateral
In order to understand more about an education loan for study abroad without collateral, let us first know what a collateral is.
So what actually is a collateral?
A collateral is an asset which can be used by borrowers to pledge against the loan amount as security. Collateral can be any asset like property, fixed deposit, agricultural land, gold, etc.
There are several banks in India that offer a study abroad loan without collateral, upto a particular sum or amount, thereby making it easier for study abroad students to pursue their studies at best universities across the globe. It has also been observed that a study abroad loan without collateral has a tad bit higher rate of interest, and a shorter repayment period.
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Top Lenders to Apply for Education Loan without Collateral
Lenders available for a loan without collateral to study abroad can be categorised into public and private lenders. Some prominent lenders include:
- Public banks like SBI, Bank of Baroda, etc offer applicants with a loan of upto 7.5 Lakhs without collateral.
- Private banks like Axis Bank, ICICI Bank, HDFC, etc offer students a loan amount upto 40 lakhs without collateral. Private banks also have a repayment period of around 10-12 years, and an interest rate between 10-12%.
- Other lenders include NBFCs (Non banking financial companies) like Incred and Auxilo, which offer students with an abroad study loan without security of upto 40 lakhs, with a rate of interest between 10-18%.
- There are also some foreign lenders available like Leap Finance, Prodigy Finance, etc. these lenders support applicants by offering an overseas education loan without collateral of upto 80% of the total expenses. The interest rates are observed to lie between the range of 10-16%.
Know more about: HDFC Credila Education Loan
This video talks about the various types of education loans- with collateral and without collateral, along with the most prevalent lenders in the market!
Eligibility and Documents Required to Apply for Abroad Education Loan without Collateral
A loan without collateral for study abroad requires applicants to meet specific eligibility criteria like:
- Minimum score of 60% in high school in order to assure the employability potential
- Financial co-applicant’s income
- Degree program that the applicant wishes to pursue
- Country that the applicant wishes to apply for
- University that the applicant is applying to
There are some private banks that cater to only particular countries, and specific degree programs.
Let us now move onto the documentation which performs a very crucial part when applying for a government student loan for study abroad. In order to apply for an education loan for abroad studies without collateral security. It is necessary to submit some required documents that have been listed below:
- Application form for the loan
- Income proof for the family (income tax returns, property proof, etc)
- Standardised test scores
- Academic transcripts
- Aadhar card (KYC documents)
- Birth certificate
- Bank statements for the past 6 months
- PAN Card
- Residential proof
- Acceptance letter from university abroad
- Self declaration
Suggested: Important Education Loan Terms and Conditions
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When applying for an overseas education loan without collateral security, a financial co-applicant, and specifically his/ her income plays a very crucial role. The financial co-applicant’s income is a deciding factor for receiving a study abroad loan without collateral. |
Application Procedure to Apply for Education Loan without Collateral
Let us now discuss the application process to apply for an education loan for abroad studies without collateral:
- Choose an overseas education loan without collateral secrity, which is the most suitable for you
- Check all information including moratorium period, repayment tenure, education loan for abroad studies by Indian government interest rate, etc
- Visit the official website for the education loan you’ve chosen
- Fill in the application form
- Scan and upload the required documents
- Wait for the decision
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An education loan for abroad studies without collateral can be easy to get hold of provided you fulfil all the requirements and submit all the relevant documents. It also becomes very important for an international student like you, to understand the terms and conditions, pertaining to the abroad study loan without collateral that you choose. You can even connect with our Yocket Loan Assistance program to know in detail about a study abroad loan without collateral!
Frequently Asked Questions about Education Loan without Collateral
Ques. What are some top lenders to apply for a loan without collateral for abroad education?
Ans. Some of the best lenders to apply for an education loan without collateral for abroad are:
- Public banks like SBI, Bank of Baroda
- Private banks like ICICI Bank, HDFC Bank
- NBFCs like Incred, Auxilo
- Foreign lenders like Leap finance, Prodigy finance
Ques. What is the minimum percentage required to apply for an education loan for study abroad without collateral?
Ans. While the percentage might differ with different education loan schemes, for a majority of loans, the minimum required percentage is usually observed to be 60%.
Ques. What are the documents required for applying to a study abroad loan without collateral?
Ans. The documents required to apply for a loan without collateral for study abroad are:
- Application form for the loan
- Income proof for the family (income tax returns, property proof, etc)
- Standardised test scores
- Academic transcripts
- Aadhar card
- Birth certificate
- Bank statements
- PAN Card
- Residential proof
- Acceptance letter from university abroad
- Self declaration
Ques. Can I apply for an education loan for MBBS abroad without collateral?
Ans. Yes, you can apply for an education loan for MBBS abroad without collateral.
Ques. Will I be charged a processing fee?
Ans. Public banks do not charge a processing fee for a loan without collateral for abroad education, but private banks are observed to charge upto 1% of the loan amount plus GST.
Ques. What are the advantages of applying for an abroad study loan without security?
Ans. Two prominent advantages of applying for a loan without collateral for abroad education are:
- Faster processing time
- Hasslefree paperwork
Ques. What are some reasons for rejection for a study abroad loan without collateral?
Ans. Some reasons for rejection are:
- Applying for a UG program, as a PG program is of a short duration
- Age of the applicant or co-applicant
- FOIR or fixed obligation to income ratio (When co-applicant’s EMIs are higher than affordability)