One of the most empowering experiences in a student’s life is studying abroad. It offers the chance to receive a top-notch education while experiencing various cultures and making friends from around the world. But frequently, students defer their plans because of the high costs involved. This shouldn’t be the case, though.
Education loans are one of the most popular methods for paying for international education. Secured education loans and Unsecured education loans are the two categories of student loans.
We covered every aspect of secured education loans in the previous essay. In this post, we’ll go over some key aspects of unsecured education loans, commonly known as loans for education without collateral.
Education loan without collateral
With an education loan without collateral, the borrower is not obliged to provide any security to secure the loan’s principal. What wonderful news, right? Even though collateral-free education loans are sanctioned by banks, non-banking financial companies (NBFCs), and foreign lenders at a somewhat higher education loan interest rate, they are one of the most popular methods of financing international education.
Factors that steer students toward unsecured education loans:
Tell us what causes students to choose unsecured foreign education loans versus secured education student loans.
- Banks typically turn down loan requests from students with bad academic records because of factors like academic gaps, a high number of backlogs, or below-average test scores.
- Students must provide a list of necessary documents in order to apply for a bank-backed secured education loan. The banks reject student loan applications when they are unable to provide that documentation. One of the reasons why students choose an education loan without collateral is complications with property documentation.
- To be eligible for a secured loan for overseas education, a co-applicant must have a credit score or CIBIL score that is greater than 650. But the bank would flatly reject the loan application if the co-applicant has a low credit score.
In addition to the reasons outlined above, there are other incentives that encourage students to take out unsecured loans for their studies abroad.
Benefits
- Without putting up any security, students may borrow up to 40–45 lakhs.
- Loan Before Admission
- Pre-visa loan disbursement for all nations.
- EMI payments from students are not required during the moratorium. There will only be minor touch payments.
- 100% funding for education.
- Top-up loans are offered.
- possibilities for flexible payments without a prepayment fee.
With available doorstep service, the procedure is quick and paperless.
Now that you are aware of the advantages of obtaining an unsecured loan for an abroad education, let’s look at the costs that are covered by a loan with no collateral.
Things to keep in mind before applying for an education loan without collateral
A possible option is to apply for an unsecured loan for international education, but there are a few considerations to make. Let’s examine those.
- Based on the student’s potential for employment, the lender organization offers unsecured school loans. This is determined by looking at the applicant’s overall academic performance, university ranking, GRE/GMAT/IELTS score, and the co-financial applicant’s situation.
- It is crucial to plan for the repayment of an education loan along with the interest amount if the student is unable to find employment because the interest rate for an unsecured overseas education loan is higher than that of a secured overseas education loan.
- While co-applicants do not automatically qualify for the tax benefits under Section 80E for unsecured foreign education loans, they do for secured loans.
- It is necessary to serve simple interest or partial interest.
As long as you meet all the conditions and present all the necessary paperwork, it should be simple to obtain an education loan for international studies without collateral. Understanding the terms and conditions of the abroad study loan without collateral that you select also becomes crucial for you as an international student.
