Best Banks For Education Loan Without Collateral- My mentor usually say this: “If you consider the financial cost before taking a critical decision, you will miss your way by many miles”. This means that you should never let money stop you from doing what you are supposed to do in life. Many young people desire to get good education but some of them cannot because of lack of funds. But with education loan without collateral, nothing should stop you from getting a good education. In this article, you will get to learn about the best banks for education loan without collateral and how to qualify for such loans.
What is Education Loan?
Education loan can be defined as the total money borrowed to finance post-secondary education and other related fees like books, stationeries, etc. There are two types of education loan:
Collateral Education Loan
This is the kind of education loan that requires the borrower to put down a collateral (like house, land, insurance policies, gold, fixed deposits, etc.) as security before the required loan amount is being approved and given out. It is also known as secured education loan.
Non-collateral education loan
This kind of education loan does not require the borrower to pledge any collateral as security before receiving the loan. Borrowers are only required to present a guarantor (or cosigner). It is also known as unsecured education loan.
Education Loans Without Collateral
What is a Collateral?
A collateral can be defined as an asset that is being used by a borrower as a security in order to obtain loan from the bank. Collateral can be in form of physical assets like home equity, vehicles, personal real estate, etc. Cash accounts, investment accounts, pay-checks, jewelries, collectibles or fine arts can also be used as collateral. In the event of the cosigner not being able to pay back the education loan, the lender acquires those assets to make up for the loan.
There are so many banks that gives educational loan without requesting for collateral.
List of Banks For Education Loan Without Collateral
Lenders for loan to study abroad without collateral are categorized into two: public and private banks.
Some of the public banks include Bank of Baroda, SBI
Some of the private banks include Axis Bank, ICICI Bank, HDFC
Some non-banking financial companies like Incred, Leap finance, Auxilo also give education loan without collateral.
Some foreign lenders like Prodigy Finance, etc. These foreign lenders support applicants by giving overseas education loan without collateral. Interest rates are between 10-16%.
1 State Bank of India (SBI)
SBI is one of the leading banks in India and it offers 5 different types of education loans: Scholar loan, Global Ed-vantage Education Loan, Student Loan, Education Loan, Education Loan Take-over scheme.
Scholar loan and Skill loan are for students who wants to study in either a premier institute or a vocational college in India. Global Ed-vantage and Student loan are for students who wants to study abroad. Education Loan Take-over scheme allows graduates to refinance their on-going education loan at a lower rate.
At SBI, Education loan with collateral are for students who want to study abroad. Education loan without collateral are available for only the best colleges with a maximum loan amount of 7.5 lakhs.
2 Bank of Baroda
It is an India-nationalized banking and financial institution with its headquarters in Vadodara.
Their education loan is in different categories and include:
Baroda Vidya: This education loan can be used in any recognized school. Rs.4 lakhs is the maximum loan that can be granted and is repayable in 12 installments after disbursement. This education loan has no age restriction; it is from Nursery to Class XII. No processing charges, no documentation charges.
Baroda Gyan: This loan is given to parents of an Indian national or Foreign student pursuing higher education at a recognized Institute in India. Expenses like purchase of books, computer/laptop, etc. are covered in this loan. There is no processing charge for loans up to Rs.7.50 Lakh and no margin on loans up to 4 lakhs. There are also no documentation charges.
Requirements for Baroda Gyan loan
- KYC of Applicant and Co-Applicant
- Academic Records
- Admission letter
- Entrance Exam Result (where necessary)
- Statement of cost of study
- Proof of income for Co-signer
This is an education loan given for MBA, MCA, MS and other courses that will help create jobs. Applicants must have gained admission into the specified institute. The loan limit for specified institute is Rs.80 lakhs while the loan limits for non-specified institute is Rs.60 lakhs. No collateral and processing charges for loans up to 7.50 lakh. There are also no documentation charges. No margin for loans up to 4 lakhs.
Skill Loan Scheme: This loan is given to students who wants to study technical courses in recognized institutes in India. The loan amount is Rs. 1.50 lakhs which is repayable in 7 years.
Baroda Education loan for Executive development programs: This education loan that is up to Rs.80 lakhs for executive development programs abroad. The student must have gotten an admission into the university and must be employed while applying for the loan. There are processing charges and margin for loans up to 4 lakhs.
This bank offers educational loan without collateral of up to Rs.50 lakhs for selected institutes. Loan repayment can be up to 15 years. The bank also offer education loan with collateral and student can get to secure a loan up to Rs 150 lakh. Some of the collateral options include: Insurance policies, Mutual funds, HDFC Bank fixed deposit, residential building, etc.
4 Axis Bank
The bank offers education loan of up to Rs 40 lakh without any collateral. The loan covers both academic and non-academic fees such as tuition fees and living costs. Education loan at Axis bank has lower interest rates. No margin money is required for loans up to Rs 20 lakh.
5 ICIC (Industrial Credit and Investment Corporation of India)
The bank provides financial support for students desiring to pursue professional higher education in India and overseas. The loan also covers some expenses like laptop, stationeries, students exchange travel expense.
Education loan without collateral is available for both undergraduate students (up to 20 lakhs) and post-graduate students (up to 40 lakhs) in selected institutes.
Other Institutions Giving Education Loan without Collateral.
1 Leap Finance
This financial company is one of top providers of international education loan in India. They provide education loan to students without demanding any collateral. The loan processing is so fast that you can access the loan within three days of applying!
Leap finance is able to provide education loans without collateral because they have a strong credit engine. To be eligible for an education loan on Leap finance, you must be at least 18 years old. You must also be applying or gotten admission into the university. Your credit score, work experience or financial background are not really necessary, only your cosigner will need to present such.
the bank offers collateral free loans up to Rs. 40 Lakhs.
This financial institution gives an education loan that requires no collateral. There is no margin here and 100% of student’s expenses are funded.
The process of obtaining a loan is quite simple. Applicant will be required to fill an online form after which the application will be reviewed by a team from the institution to determine eligibility. After the loan has being approved, candidates will be required to make payment of the processing charges and education loan insurance charges.
How Education Loan Without Collateral Work
This lending model relies on the borrower’s future income and the guarantor’s creditworthiness. For a student to qualify for this loan, he/she must have the academic and professional experience to excel at the course they are applying for. The interest rates on these loans are usually higher since no collateral is required.
Now that you are aware that you don’t need to discard your dreams because of lack of funds, it is time to get back to the drawing board. You can apply to any of the best bank for education loan without collateral listed in this article.
Dream big! Live out that dream!
Frequently Asked Questions
What would happen if I am unable to pay the education loan?
The lenders will start sending notices to remind you and your guarantor of the payment. But if you default, you will have a bad credit score and may not be able to secure any loan in the nearest future.
Are education loans interest free?
No, the education loans come with interest which is charged from the first day of payment of loan until the loan is repaid in full.
Why are the interests’ rates on education loans so high?
This is because, the lender stands a higher risk than other types of loan. Other types of loan will require collateral which can be seized if repayment of loan is defaulted. But most education loans do not require collateral and there would be nothing for the lender to fall back on if loan repayment is defaulted.
What does the education loan cover?
Education loan may cover tuition, housing, books, supplies, transportation, service fees and miscellaneous expenses.
Is education loan a good idea?
Yes. The high cost of higher education makes education loan come in handy. Banks provide education loans for both undergraduate and post-graduate students at an attractive interest rates.