How To Get An Education Loan to Study Abroad Without Collateral?
Without providing any collateral as a guarantee to the lender, an education loan for abroad studies without collateral, or a non-collateral education loan, can be obtained. That implies that borrowers can obtain loans without providing any form of security, such as a home, a piece of land, or anything else. In this blog, you will gain insights into non-collateral loans, including eligibility requirements, procedures, and some additional reasons why lenders might have rejected loan applications.
We will also review all the required information before applying for a non-collateralised education loan for international studies. In recent years, the study-abroad market has seen a significant increase in the use of education loans to study abroad as financial aid. Education loans are becoming more popular and in demand, whether it's due to their ease of accessibility or the large number of students who want to study overseas. As there is no need for security when applying for an education loan, a loan for study abroad without collateral is even more alluring.
What is a Collateral Loan?
There are two sorts of educational loans. A secured loan is one that includes collateral, whereas an unsecured loan does not. A collateral loan is one in which the borrower provides the lender with a specific value, asset, or piece of property as security for the amount borrowed. This helps the borrower acquire a loan at a cheap interest rate for the long term while protecting the lender's interest in the event that the borrower is unable to repay the loan amount.
A collateral is a piece of property that borrowers can use to secure the loan amount. Any asset, including real estate, fixed deposits, farmland, gold, etc., can be used as collateral. Numerous banks provide study abroad loans without collateral up to a specific quantity or amount, making it simpler for international students to continue their education at the top colleges throughout the world. Additionally, it has been shown that unsecured study-abroad loans have slightly higher interest rates and shorter repayment terms.
Benefits of Education Loan without Collateral
An education loan without collateral makes it easier for students to pursue their dream of studying abroad. It reduces financial pressure on families and speeds up the loan process. To help you understand it better, here are the Benefits of Eductaion Loan without Collateral:
- Includes a broad range of courses and colleges in several nations
- The typical range of interest rates for unsecured student loans is 10.50% to 14%.
- Students may apply for this loan with a cosigner
- These loans have no grace period.
- Loans are available before admission, and the moratorium period's EMI payments are not necessary.
- 100% of the cost of higher education is covered.
- Top-up loans are also available to students.
- No early payment fee
- Flexible options for repayment
- A speedy and paperless procedure
Types of Education Loan without Collateral
There are different types of education loans available without collateral, designed to suit the varied needs of students. These loans may differ based on the lender, course level, destination, and repayment terms. To help you udnerstand here are the different types of Education Loan without Collateral to study abroad:
● Unsecured Education Loans - Loans without collateral
An education loan for international studies without collateral does not require the borrower to pledge any collateral as security, in contrast to an education loan with collateral. Borrowers who are applying for an education loan for abroad studies without collateral must provide supporting documentation and meet all qualifying standards. They are only approved for applicants and co-signers who have a solid credit history and the academic and professional credentials to succeed financially following upskilling at the master's programme they have applied to. Because the lender does not require any security, these loans typically have higher interest rates. However, lenders with strong financial foundations and credit engines can provide borrowers with cheaper interest rates.
● Secured Education Loans - Loans with collateral
Collateral is a pledge of an asset as security to the lender for the repayment of your student loan. Personal real estate, home equity, and personal automobiles are examples of tangible assets that can be used as collateral. An education loan can be secured with pay stubs, cash or savings accounts, investment accounts, paper investments, fine art, jewels, or collectables. If you and your co-signer are unable to repay your student loan, the lender may seize these assets to make up for the loss they suffer.
What are the eligibility criteria for an abroad education loan without collateral?
A loan without collateral for study abroad requires applicants to meet specific eligibility criteria, like:
- A high school GPA of at least 60% is required to ensure employability
- Income of the financial co-applicant
- Degree course of study that the applicant hopes to enrol in
- Country of the applicant's choice, Institution to which the applicant is applying
- Some private banks only offer services to certain nations and academic specialisations.
Let's move on to the documentation, which is particularly important when requesting the best education loan for abroad studies. to apply for a student loan without collateral for studying abroad. A few relevant documents, which are stated below, must be submitted:
- Application form for the loan
- Income proof for the family (income tax returns, property proof, etc.)
- Standardised test scores
- Academic transcripts
- Aadhar card (KYC documents)
- Birth certificate
- Bank statements for the past 6 months
- PAN Card
- Residential proof
- Acceptance letter from a university abroad
- Self-declaration
Application Procedure to Apply for Education Loan without Collateral
There are several ways of applying for a student loan:
- Apply Online:
Step 1: This is the quickest and most practical method of application. There are two ways to submit an online application. The first is a simple online application form that you fill out, attach the required paperwork, and submit.
Step 2: In the second step, you apply by supplying all the necessary information. The lender will then contact you to go through the loan's terms before moving forward with the application.
- Offline
Step 1: Go to a Branch: To apply for a loan, go to your local branch with the required paperwork, speak with a representative about the terms of the loan, fill out the application in person, and submit it.
Step 2: Call the Lender: You can call the lender or, by expressing your interest, ask for a callback. After that, you can discuss the loan's terms and submit an application.
Documents Required for Education Loan without Collateral
The following is the list of documents required to avail of an education loan without collateral:
- University offer or admission letter showing tuition fees
- Academic transcripts and certificates
- Standardised test scores (if required)
- Applicant’s identity documents (passport or national ID)
- Proof of address
- Co-applicant or guarantor identity documents
- Co-applicant income proof
- Bank statements (usually last 6–12 months)
- Applicant’s savings or financial statements
- Employment documents of co-applicant (if salaried)
- Business registration and financial statements (if co-applicant is self-employed)
- Completed loan application form
An education loan is a key step for students eyeing to study abroad, and understanding collateral can simplify the process. While this is just a brief description of how the non-collateral loans work for international students studying abroad. The details may vary depending on the bank provider, country, and other factors. For better understanding, speak to an AECC counsellor today.