Are you a student dreaming of studying abroad but lacking collateral for a secured education loan? Don’t worry; obtaining a non-collateral education loan for international studies is possible. With various limits and conditions, lenders like MPOWER Financing and Prodigy Finance, along with public and private banks, offer solutions without requiring collateral. This blog provides a comparative overview of these options to help you make an informed decision.
What is Collateral?
Collateral is a financial term that pertains to an asset or property that a borrower pledges to a lender as a security measure when obtaining a loan. This pledge is made to provide assurance to the lender that, in the event, the borrower is unable to fulfill their repayment obligations, the lender has the legal right to seize and liquidate the collateral to recover the outstanding amount. Essentially, collateral serves as a form of protection for the lender, acting as a tangible guarantee that mitigates the financial risk associated with extending a loan.
The types of assets accepted as collateral can vary and may include real estate, vehicles, valuable personal belongings, or other assets with an ascertainable monetary value. The process of offering collateral adds an additional layer of assurance for the lender, increasing their confidence in the borrower’s ability to repay the loan. In many lending scenarios, the presence of collateral can positively impact the terms and conditions of the loan, potentially leading to more favorable interest rates or higher loan amounts. Understanding the concept of collateral is crucial for both borrowers and lenders as it plays a pivotal role in shaping the dynamics of the lending relationship.
Lenders Providing Education Loan Without Collateral
Below are various lenders that provide education loan without collateral:
- Public Sector Banks:
- State Bank of India (SBI)
- United Bank of India (UBI)
- Private Sector Banks:
- Axis Bank
- ICICI Bank
- IDFC FIRST Bank
- HDFC Credilla
While these lenders provide non-collateral education loans, it’s essential to note that a financial co-applicant is typically required. To make an informed decision, the table below offers details on the education loan amounts and interest rates provided by these lenders for studying abroad without the need for collateral.
|Maximum Loan Amount
|Rate of Interest
|Up to 7.5 Lakh INR
|10.15% – 10.65% (males)10.65% – 11.15% (females)
|Up to 40 Lakh INR
|9.25% – 9.75%
|Up to 75 Lakh INR
|9.90% – 11.50%
|Up to 1 Cr INR
|9.50% – 11.25%
|IDFC FIRST Bank
|Up to 70 Lakhs INR
|9.75% – 12.25%
|Up to 60 Lakhs INR
|10.50% – 12.25%
|Up to 50 Lakhs INR
|10.50% – 12.75%
|Up to 50 Lakhs INR
|10.50% – 12.95%
|Up to 50 Lakhs INR
|10.50% – 13.50%
|Up to 100,000 USD
|12.99% – 15.99%
|Up to 100% cost to study
|12% – 14%
Eligibility of Education Loan Without Collateral
To secure a non-collateral education loan for studying abroad, specific eligibility requirements must be met. While these criteria can vary among lenders, some common parameters include:
- Academic Profile of the Client: Your academic excellence is a primary criterion for an unsecured education loan, as the bank doesn’t require collateral. Future earning potential is assessed based on past academic performance, making a strong academic profile essential.
- Co-applicant Finances: The co-applicant, often a parent or guardian, must possess a robust CIBIL score and meet prescribed requirements. Additionally, meeting a minimum income level, typically ranging from 30,000 INR to 40,000 INR (without obligations), is often a prerequisite for the loan.
- Chosen Country, University, and Course: Ensure that your desired country, university/college, and course align with the list provided by the lender. Many lenders offering non-collateral education loans have specific lists of approved institutions and courses.
- Test Scores: Scores from English proficiency tests (e.g., IELTS, TOEFL) and other standardized tests (e.g., GRE, SAT) should be above average or meet the criteria set by the lender. These scores play a crucial role in assessing your eligibility for the loan.
Benefits of Education Loan Without Collateral
Here are the different benefits that are associated with education loans without collateral –
- Accessible Funding: Non-collateral education loans provide accessible financial support without the need for pledging valuable assets.
- No Asset Risk: Borrowers face no risk of losing personal assets in case of non-repayment, enhancing financial security.
- Streamlined Application Process: The absence of extensive asset evaluation often results in a simpler and quicker loan application process.
- Global Study Opportunities: Students can explore global study opportunities with the financial support of non-collateral education loans.
In conclusion, non-collateral education loans present a promising avenue for students dreaming of international education without the need to pledge assets. The overview of lenders, including public and private banks, along with NBFCs, showcases a diverse range of options. While academic excellence, co-applicant finances, and standardized test scores are crucial eligibility factors, these loans offer competitive interest rates and substantial maximum loan amounts.
The absence of asset risk, a streamlined application process, and the prospect of global study opportunities make non-collateral education loans an attractive choice.By alleviating the financial burden associated with collateral, these loans empower students to pursue academic excellence abroad. In essence, they not only provide accessible funding but also serve as catalysts for fulfilling educational aspirations without compromising financial security.
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