How to apply for an education loan without collateral? A complete guide
In today's high-stakes environment, education is often pricey. While educational loans can provide an effective means of financing, many parents or students are worried about the collateral requirements.
Luckily, many Indian banks and commercial institutions offer education loans without collateral to aid students meet their aspirations without putting family property at risk. Nonetheless, what should you know and how do you apply for one? Let's explore all aspects below.
An unsecured education loan, which is also called collateral-free education loan, is a loan where the lender will not require that their borrower pledge collateral--typically in the form of real estate, fixed deposits or any other tangible asset.
Commonly, the lender will evaluate combinations of the applicant's academic track record, academic program, institution ranking, and co-applicant income and credit score before approving these loans.
Most lenders offer loans without collateral for the following: Postgraduate and undergraduate programs
Professional degrees like MBBS, MS, MBA, etc.
Recognised institutions in India and globally
Approval rates of unsecured loans are higher for reputable colleges and programs with outstanding placement. Indian students who have been accepted to a respected institutions Students aged between 18 and 35 years old Co-applicants with a steady income level - usually parents or guardians For international schooling, certain lenders may ask students to have a good academic track record or exam scores.
1. Shortlist suitable lenders: Look into unsecured education loans from banks or NBFCs, or government-backed organisations.
2. Check loan limits: Depending on the borrower profile and institution, for many loans for Domestic studies, most banks provide up to ₹ 7.5 lakh with no collateral; maximum amount for international courses can reach ₹ 40 lakh.
3. Gather documentation: Typical documents include; A letter of admission from the institution
Certificates and transcripts, with entrance exam results
Income proof and IT returns of the co-applicant
KYC documents for co-applicant & the applicant
University fee and handbook/rules
4. Apply online or visit a branch: Many banks allow you to apply for loans online and you can fill out the form, upload supporting docs, and continue with verification. If you want face to face help you can visit the branch nearest to you.
5. Loan assessment & approval: The bank will assess your financial and intellectual credentials. An approval letter will be issued if you are successful and funds will be dispersed in line with the university fee schedule.
Lenders
Loan amount (without collateral)
Interest rate range
Public Bank
Up to 7.5 lakhs
-
Private Banks
Up to 40 lakhs
10% - 12%
NBFCs
Up to 40 lakhs
10% - 18%
Note: Readers are advised to check the relevant bank's website for the latest updates as interest rates, fees & charges are subjected to change.
In conclusion, for a great number of learners, a non-collateral education loan will provide access to advanced education. However, be careful in selection of lenders, documenting, and the loans you obtain. With proper planning and assistance, your educational goals can significantly elevate your life—all while protecting the financial wealth of your family!
Disclaimer: Mint has a tie-up with fin-techs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
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