Give Wings to Your Study Abroad Dream with Collateral Loan

Are you keen on pursuing your higher education from one of the prestigious universities across the globe? Are you determined to fulfill your childhood dream of studying abroad? If the answer is yes, then what is it that is holding you back? 

Finances! Well, if that is the case, then we have got you all covered. Studying abroad surely is an expensive choice but with the quality of education and global exposure, spending lakh on the world-class education is totally worth it. 

According to the Ministry of Human Resource Development, India is the second-largest country with 7.8 lakh students moving overseas in 2018 and 6.2 lakh in 2019 for their higher education.  

But with the increasing cost of higher education, it is becoming challenging and unaffordable for deserving aspirants to pursue their dreams of studying abroad. However, there are numerous ways of funding their studies. Today we are going to know about one of them, Education Loan with Collateral that is also called as Secured Loan. This type of education loan is provided by Nationalized Banks (NBs), Private Banks, Co-operative Banks and NBFC’s in India. 

Let us understand the term - Education Loan with Collateral

An Education Loan with Collateral is a type of loan where the applicant attaches security with loan application. The security can be movable asset like a fixed deposit, LIC Policy, Govt. Bonds or immovable asset like a flat, individual house, land (non-agricultural), shop, provided the immovable asset should be located in the urban area. The security pledged against a loan is termed as collateral.  

Although Secured Loans take a longer time in sanctioning as compared to that of unsecured loans, but it has numerous benefits.

Why do Public Sector Banks require Collateral?

Public Sector Banks (PSBs) require collateral to lower the risk involved in the credit. As the applicant has not begun to earn yet, the bank is unsure about the applicant’s future income. If the applicant fails to repay the education loan, in such circumstances, bank recovers the dues by selling the pledged security. 

Benefits of getting an Education Loan with Collateral

Paying hefty amount for overseas education surely digs a hole in the pocket but there are few ways that help students to avail added benefits. 

• Aspirants can get high loan amount up to 1.5 Cr sanctioned from PSBs at the lowest interest rates of 8% onwards. 
  

• Aspirants who have taken an education loan for overseas education can avail the tax deduction under Section 80E of the Income Tax Act, 1961. 
  

• Repayment tenure of the loan is of 15 years and flexible repayment terms. 
  

• If the aspirant is a girl then she is applicable to get concession of 0.50%. 
  

• There is no compulsion of serving simple interest during moratorium period.
  

• If the applicant wants to repay the loan in less than stipulated time-period, there will be no pre-payment and pre-closure charges applicable.
  

• Collateral loans are accepted by almost all the countries and are available for all the courses at UG and PG level.
  

• There are no strict criteria for co-applicant’s financial profile hence there are higher chances of loan approval. 
  

• Student can get loan amount up to 80-90% of the property valuation
  

What are the expenses covered in Education Loan with Collateral?

While sanctioning of loan from the bank, student is required to mention about all the required expenses in the cost project in order to get it sanctioned.

List of expenses covered in education loan: 

• Tuition fees, examination fees, library charges, lab fees, almost everything is covered.


• Fees of on-campus or off-campus accommodation (hostel + mess expenses).
  


• Air ticket. 
  


• Applicant’s overseas health insurance. 
  


• Purchase amount of study materials, equipments if any, uniform and laptop.
  


• Other required expenses needed for completion of the course, study tours, project work.
  

Common eligibility criteria for applying for an Education Loan with Collateral

In order to be eligible for availing an Education Loan with Collateral, aspirants need to fulfill the following criteria: 

• The applicant must possess all the collateral documents of the security attached. 

• The applicant must be an Indian national. NRIs holding Indian passport can avail education loans too. Overseas Citizenship of India (OCI) students can get a loan to study in India but not for foreign education as they are no more Indian citizens. 

• The applicant must have secured admission in the university as banks ask for a copy of the acceptance letter with the loan application. 

• The applicant must have had a good academic history as banks ask the applicant to attach relevant mark sheets with the loan application.  

• A good CIBIL score is a desirable criterion of most PSBs while sanctioning an education loan. 

Why should the aspirants do a comparative analysis of Nationalized Banks, Private Banks and NBFC’s before processing for the loan?

There are a majority of banks and financial institutions that provide education loans to overseas aspirants. It gives an option of comparing and analyzing the various bank criteria that helps in taking an informed decision. 

Public and private-sector banks and NBFCs provide education loan with collateral to Indian students. Let us understand the condition that needs to be taken into consideration while applying for a loan.

Documents to keep handy while securing an Education Loan with Collateral