Know About Education Loan Without Collateral

Studying in a foreign country is one of the most empowering experiences of a student’s life. It gives an opportunity to acquire a world-class education while experiencing different cultures and making international friends. But many times, students take a step back due to the hefty expenses attached to it. However, this should not be the case.

We at Elan believes that, if a student is willing to study abroad, he/she should be provided with all the required assistance to fulfill the dream. With early planning and proper financial guidance, studying overseas is possible. How? That’s what we are here to tell you.

One of the most preferred ways of funding an overseas education is via education loans. Education loans are of two types, Secured Education loans and Unsecured Education loans.

In the previous article, we discussed all the factors related to Secured Education Loan. In this article, we are going to discuss important characteristics of an Unsecured Education Loan which is also called a collateral free abroad education loan.

But let us first understand the term - Education Loan without Collateral

An education loan without Collateral is a type of loan where the applicant is not required to attach any security against the loan amount. Isn’t that great news? Although banks, non-banking financial corporations (NBFCs) and international lenders sanction collateral-free education loans at a slightly higher interest rate, they are one of the preferred ways of funding overseas education.

Factors diverting students for education loan without collateral:

Let us know about the factors that divert students to unsecured overseas education loans from secured overseas education loans.

Banks usually reject the loan application of students having poor academic record due to the reasons like academic gap, number of backlogs, or below-average score.
To avail a secured education loan from banks, students need to submit a list of required documents. When students are not able to submit those documents, their loan application is rejected by the banks. Complications in the property documents is one of the reasons for students diverting to an education loan without collateral.
A credit score or CIBIL score that depicts the creditworthiness of the co-applicant is required to be more than 650 in order to avail of a secured overseas education loan. But if in case, the co-applicant has a poor credit score, the bank outrightly rejects the loan application.

Other than the above-mentioned factors, there are some benefits as well that leads students to unsecured overseas education loans.

Let us know what those benefits are!

Students can avail up to 40-45 lakhs without pledging any security.
Pre-Admission Loan
Pre-visa disbursal of loan for all the countries.
Students are not required to pay EMIs in the moratorium period. Only small touch payments to be made.
100% education finance.
Top-up loans available
Flexible repayment options with no pre-payment penalty.
Fast and paperless process with doorstep service available.

Now that you know about the benefits of availing an unsecured overseas education loan, let us see the expenses that are covered in a collateral-free education loan.

Expenses Covered in an Unsecured Education Loan for Abroad

While sanctioning the loan, students are required to mention all the required expenses in the cost project.

Here is a list of expenses covered in an education loan:

Tuition fees, examination fees, lab fees, and library charges.
Fees of on-campus or off-campus accommodation. This will include hostel and mess expenses.
Air ticket Fare
Overseas health insurance of students.
Purchase amount of the study materials, equipments, uniform and laptop.
Any other required expenses needed for completion of the course like study tours and project work.

Common eligibility criteria for applying for an Education Loan without Collateral

To be eligible for availing an Education Loan without Collateral, students need to fulfill the following criteria:

Loan for masters degree/ PG /graduate diploma, certificate courses in STEM or management field
Annual income should be more than 4 lakhs after all liabilities and expenses
A CIBIL score of the co-applicant should be more than 700
GRE score should be 300 + for the USA
IELTS score should be more than 6 or 6.5 bands for all countries
Parents should have their own residential house
No loan for Pathway / Foundation courses / Integrated courses
No loan for UG Degree or certificate courses
No loan for MBBS degree and Pilot Aviation programs

Which bank gives education loan without collateral for abroad?

Banks, NBFCs and International lenders provide education loan without collateral to the aspiring students. A thorough research and comparative analysis help them in taking a well-informed decision.

Let us understand the condition that needs to be taken into consideration while applying for an unsecured education loan.

Particulars	Nationalized Banks	NBFCs	Private Banks	International Lenders
Lender Company	State Bank of India + Bank of Baroda + Bank of India	Auxilo, Avanse, lncred, Credila, Credenc	Axis Bank, ICICI Bank, IDFC First Bank	Mpower Finance, Prodigy Finance
Loan Amount	7.5 lakhs	45 lakhs for USA & 25 lakhs for other countries	Prime A - 40 lakhs Prime B - 25 / 20 lakhs	$ 50,000 - $ 75,000
Rate of Interest	SBI:9.30% BOB: 8.1% - 8.85%	11.50% to 13% (USA), 13% to l5% (Other countries)	11.0% to 12.75%(USA), 13% to l5% (Other countries)	8%-11%
Margin	85 + 15%	100% funding	85 + 15%	100% funding
Loan Tenure	15 years	10 years	15 years	10 years
Processing Fees	10,000	1.5 -2% of the loan amount	15,000	2-5% of the loan amount
Disbursement	Remittance to the university account	Remittance to the university account or student account	Remittance to the university account. Living expenses transfer in Axis or ICICI bank Forex card	Remittance to the university account for tuition fees and living expenses
Repayment	Optional to pay simple interest	Compulsory to pay simple interest or partial interest, once the loan is disbursed	Compulsory to pay simple interest, once the loan is disbursed	Compulsory to pay simple interest, once the loan is disbursed
Moratorium Period	Course duration + job search period of 6/12 months	Course duration + job search period of 12 months	Course duration + job search period of 6 months	Course duration + job search period of 6/12 months

Countries accepting Unsecured Education Loan

Due to an increase in the cases of fraudulent documentation, some countries have restricted a particular type of education loan. Hence, it is advisable to check the immigration norms of that particular country before applying to any financial institution.

Countries	Loan Type	Lender Company
USA	SL & UL	NB, PB, NBFCs, International Lenders
Canada	SL & UL	NB, PB, NBFCs
Germany	SL & UL	NB, PB, NBFCs
Ireland	SL & UL	NB, PB, NBFCs
Netherlands	SL & UL	NB, PB, NBFCs
Australia	SL & UL	NB, PB, Credila*
New Zealand	SL & UL	NB, PB
Sweden UL	SL & UL	NBFCs
United Kingdom	SL & UL	NB, PB

(Note: NB: Nationalized Bank, PB: Private Bank, NBFC: Non-Banking Financial Corporation, SL: Secured Loan, UL: Unsecured Loan)

Documents required for availing of an Education Loan without collateral

Offer letter of the university stating tuition fees
Academic documents of the applicant
Employment documents of the applicant
KYC documents of the applicant and the co-applicant
Electric bill with address proof
For salaried co-applicant, income proof documents like ITR, form 16, salary slips and salary account details.
For a business owner, income proof documents like ITR, balance sheet, profit & loss account, business current account, business registration certificate.
Saving account details of the applicant

Understand the process of securing an Education Loan without Collateral in 5 simple steps:

Application Process – Credit check & verification – Decision and Sanction process – Loan Agreement - Get the Money

Things to keep in mind while applying for an education loan without collateral:

Applying for an unsecured overseas education loan is also a viable option but there are few things that should be kept in mind. Let us understand those.

Lender company provides unsecured education loans based on the employability potential of the students. This is assessed based on the applicant’s overall academic record, University ranking, GRE/GMAT/IELTS score and the financial profile of the co-applicant.
The interest rate for an unsecured overseas education loan is higher than that of a secured overseas education loan hence it becomes very important to plan for the repayment of an education loan with the interest amount if in case the student fails to secure any job.
For secured overseas education loans, co-applicants become directly eligible for the tax benefits under Section 80E however for unsecured overseas education loans, that is not the case.
Serving Partial interest or Simple Interest is mandatory.

Our Banking Partners in India providing unsecured loan services

ELAN has tied up with lender companies to simplify the process of availing education loans. Let us know what those are.

State Bank of India
Bank of Baroda
Axis Bank
ICICI Bank
Avanse
HDFC Credila
Auxilo
InCred
MPower Finance
Bank of India
Credenc
Prodigy Finance

What is Elan and How it will simplify the process?

ELAN is an exclusive platform aiming to provide end-to-end assistance for overseas education loans to students across India and South East Asia.

A list of services that we provide for free:

Our Education counsellors assesses the financial profile of students and recommends the perfect solution for their education loan.
We arrange a meeting of students with the branch manager or concerned person of the lender company.
We also coordinate with the lender company that accelerates the process of loan sanctioning and assist the students in the process of pre-visa disbursement.

A student should apply for an education loan without collateral or not completely depends on his/her academic and financial profile.

We at ELAN helps students understand that. So, without further ado, Book an appointment with us right now and allow us to simplify this tedious process as you step towards fulfilling your dream of studying overseas.