How Do Unsecured Education Loans Facilitate Your Study Abroad Dreams?
Education Loan

How Do Unsecured Education Loans Facilitate Your Study Abroad Dreams?

How Do Unsecured Education Loans Facilitate Your Study Abroad Dreams?

On this Page:

Explore how unsecured education loans can open doors to your international education dreams with Study Overseas Help. Dive into our guide to understand eligibility, rates, and how to secure your loan without collateral.

GyanDhan
Anam Shams
Updated on:  21 Mar 2024  | Reviewed By: 
Aman 
| 307 | 8  min read

With the expansion of globalisation, the aspiration to gain international education has risen quite sharply. Students from the third world countries now want to study in prestigious universities across the globe. To facilitate this journey, a student loan becomes a perfect opportunity to finance your global education endeavours. However, many students face the difficulty of deciding whether to opt for a formal channel of banking or look for an unsecured loan to fund their studies abroad. Let us first understand, what are secured and unsecured loans?.

Explore difference between secured vs unsecured education loan

Sprinkles

Factors to Consider: Unsecured Education Loans

Unsecured loans are granted based on the borrower's creditworthiness and the lender's faith in the borrower's ability to repay the loan. On the other hand, secured loans are based on the security provided by the borrower against the loan they seek for. There are several factors which must be taken into consideration:

  1. list items An unsecured loan or education loan without collateral is approved mostly depending upon the borrower's credit history and score. A higher credit score reduces the risk for the lender and increases the chances for a borrower to get a loan. It also helps a borrower to get a loan for a bigger amount up to 40-50 lakhs and at lower interest rates.
  2. list items As these loans are not backed by any security, the interest rate is usually higher than secured loans which are available less interest rates ranging between 10.50% to 14%.
  3. list items For unsecured loans the repayment terms can vary depending on the lender's policies, the borrower's creditworthiness, and other factors. 
  4. list items In many cases, unsecured loans come with a moratorium period during which the borrower is not required to make regular repayments.

Check Your Education Loan Eligibility

Sprinkles

What are the Types of Unsecured Loans Available in India?

Revolving Loan: Imagine a revolving loan like a reusable credit line. The bank sets a maximum amount you can borrow. You are free to use all or part of this amount. Once you pay back what you have borrowed, you can use it again. It's like having a pool of funds you can dip into, repay, and then dip into again, multiple times.

Term Loan: A term loan is when you borrow a big chunk of money all at once. It is usually at a set interest rate. You will pay it back in equal payments over a scheduled period. This is helpful for buying big-ticket items that need a lot of cash up front.

Consolidate Loan: If you are overwhelmed by multiple debts, a consolidate loan can be a lifesaver. It combines all your debts into one, often reducing your interest burden and making it easier to manage payments. It is a way to simplify your finances and get out of debt faster.

 

Looking for an abroad Education Loan?
By entering my phone number, I give consent to override NCPR and recieve WhatsApp messages.
Sprinkles

Which Bank is best for Unsecured Education Loan for Abroad?

Both private and public sector banks in India provide education loans without security for foreign education. A brief about the top lenders is as follows:

Bank Foreign Education Loan Amount security Requirement Interest Rate

State Bank of India (SBI)

Up to Rs.1.5 crore

No security for loans up to Rs.7.5 lakh

10.65-11.50%

Punjab and Sind Bank

Up to Rs.20 lakh

No security for loans up to Rs.4 lakh

9.3-11.6%

IDBI Bank

Up to Rs.20 lakh

No security for loans up to Rs.4 lakh

8.50-11.10%

ICICI Bank

Up to Rs.1 crore

No security for loans up to Rs.20 lakh (UG) and Rs.40 lakh (PG)

9.4-14%

Bank of India

Up to Rs.20 lakh

No security for loans up to Rs.7.50 lakh

10.95-11.75%

Study Overseas Help has on-boarded esteemed banking organisations such as AXIS Bank, IDFC FIRST Bank, YES BANK, Union Bank, ICICI Bank, Bank of Baroda, and Bank of Maharashtra, as partners.

In addition to these, several NBFCs (non-bank financial companies) have been constituted which mainly focus on lending education loans. Some of the top lenders include:

Loan Parameter Avanse Incred Auxilo Credila

Loan Amount

Up to 1 Cr

Up to 60 lacs

Up to 75 lacs

Up to 75 lacs

Interest Rate

Starting from 11.5%

Starting from 11.5%

Starting from 11.5%

Starting from 11%

Processing Fee

1-1.5% of loan amount

1-1.5% of loan amount

1-1.5% of loan amount

1-1.5% of loan amount

Moratorium Period

Course duration + 6 months

Course duration + 6 months

Course duration + 6 months

Course duration + 6 months to 12 months

Repayment Duration

15 years

10 years

10 years

15 years

Loan Insurance

2% or more

2% or more

2% or more

1-1.2% or more

Study Overseas Help has partnered with distinguished NBFCs like Auxilo, HDFC Credila, Tata Capital, Avanse, InCred, Prodigy Finance, and MPOWER financing to offer innovative and competitive lending options.

Check Your Education Loan Eligibility

Sprinkles

Eligibility Requirements for an Unsecured Education Loan

  • list items For an unsecured education loan, since there's no security involved, your academic achievements play a crucial role in the loan approval process. The lender also evaluates your co-applicant's income and your future income potential. Your past academic performance is used to predict your future success.
  • list items Your co-applicant needs to have a strong CIBIL score and fulfil the lender's specified criteria, including a minimum income requirement, which could range from 30,000 INR to 40,000 INR per month, depending on the lender, without any financial obligations.
  • list items Lenders offering non-security education loans for studying abroad have compiled lists of approved institutions and programs. It's important to ensure that your chosen destination, program, and institution are included in these approved lists.
  • list items Additionally, your scores from English proficiency and other standardized tests like IELTS, TOEFL, GRE, SAT, etc., should be above average or at least meet the minimum requirements set by your lender.
Sprinkles

Documents You Need for an Unsecured Education Loan Application

The following is the list of documents required to avail an unsecured education loan:

  • list items University offer letter mentioning tuition fees.
  • list items Academic and employment documents.
  • list items KYC documents of both applicant and co-applicant.
  • list items Address proof along with electric bill.
  • list items For salaried co-applicant, income proofs to be provided are as follows: ITR, Form 16, Salary slip, Salary account detail.
  • list items For business owners, income proof to be provided are as follows: ITR, profit & loss account, balance sheet, business registration certificate, business current account.
  • list items Applicant’s saving account details.

Calculate your Education Loan EMI

Sprinkles

How to Successfully Apply for an Unsecured Education Loan?

When you are about to apply for an unsecured education loan for foreign education, keep the following things in your mind:

  • list items Pick the right unsecured education loan that fits your study abroad needs.
  • list items Carefully go over the loan details like the break period before repayments start, how long you have to pay back the loan, interest rates, and any benefits the Indian government might offer for overseas education loans.
  • list items Complete the online application form with accurate and full details as required.
  • list items Prepare and upload the documents asked by the lender. It will include your school records, offer letter from the college, your financial details, and other required paperwork.
  • list items After submission, await the lender's verdict on your request. The time it takes to process can vary by lender, but they will usually let you know their decision within a set timeframe.

Read Also

Sprinkles

What Happens if Unsecured Loan is Not Paid?

It is advisable to be financially prudent and make repayments for your loan on time. If you don't pay back an unsecured loan in India, here’s what could happen:

  • list items The lender will add late fees to what you already owe to them. These charges differ among lenders and can significantly add to your debt.
  • list items If you miss payments, it can greatly lower your credit score, making it hard to get loans in the future.
  • list items If you often miss payments, your lender might increase your loan's interest rate, making it even harder to pay off.
  • list items Lender may take legal action, which might lead to a court ordering you to pay the debt. In severe cases, your other assets might be sold off to settle the loan.
  • list items If the lender can't get the money back from you, they might hire debt collectors. This can lead to stressful and uncomfortable situations.

If you’re struggling with loan repayment, try these strategies:

  • list items Let your lender know about your financial struggles. They might offer solutions like changing your loan terms or pausing your payments for a while.
  • list items Combining multiple debts into one loan with a lower interest rate can make your payments more manageable.
  • list items Moving your loan to another lender with better terms might help, but watch out for extra fees.
  • list items Look for ways to make more money or spend less to keep up with loan payments.
  • list items A financial advisor or credit counsellor can help you make a plan to manage your debt.
  • list items In extreme cases, selling off assets like investments or property can help pay off your loan.
Sprinkles

Applying for an Unsecured Loan with Study Overseas Help Made Easy

Study Overseas Help in partnership with GyanDhan will be your trusted partner in securing unsecured education loans without the hassle of security. They have a streamlined process that allows you to focus on what truly matters - your education. Let us guide you through each step, from filling out the online application to submitting the required documents. Our 14 esteemed partners are dedicated to supporting your financial journey every step of the way. With our expertise, the path to securing your education financing is clear and straightforward. Apply now and take the first step towards your dream of studying abroad.

Check Your Education Loan Eligibility


Sprinkles

Have More Questions on This Topic?

Ask from a community of 10K+ peers, alumni and experts