Education Loan for Abroad Studies Without Collateral

Updated on: 30 May 2023

Are you a student who dreams to study abroad, but does not have collateral to pledge for a secured education loan? Do not worry. Education loan without collateral for abroad studies is a possible thing. With varying loan limits and conditions, education loans for abroad studies display an array of smart options for students from diverse financial situations. 

The majority of lenders who provide education loans without collateral require a financial co-applicant, as will be discussed later in this blog. However, international lenders like MPOWER Financing and Prodigy Finance can provide education loans even without a financial co-applicant. In addition, there are public banks, private banks, and NBFCs that can also offer education loans without collateral, with varying loan amounts. Therefore, this blog will provide a comparative overview of all these lenders, which will help you make an informed decision. 

Difference between education loan with and without collateral

Let’s start with some basics that is by understanding the difference between loans with collateral and loan without collateral. The difference between them are listed below -
 

Advantages of education loan without collateral

There are several advantages that you would be able to enjoy in case you decide to take an education loan without collateral. The advantages are - 

• Simplified documentation process- Since the collateral is not involved, the documentation process is less than the secured loan. You would only need to submit documents which would be very easy for you to arrange and submit. 
• Flexibility to choose your institution- Generally, you will find that most lender has developed a list of universities/colleges or courses for which they can provide education loans. This used to be a problem earlier but now there are multiple lenders and they have a pervasive list, therefore it has provided you with an opportunity to study wherever you want.
• Co-Applicant act as a viable alternative- No worries about risking collateral if you have an eligible and willing financial co-applicant. The co-applicant must have good creditworthiness that meets your lender's requirements. A perfect co-applicant would act as an alternative to collateral.
• Complete coverage of study-related costs- The amount granted through unsecured loans is often quite impressive. They consider all of your overseas study costs. Almost all the expenses are covered in case your application profile is good and your loan ask is under the maximum loan cap of the lender.

Lenders that provide education loan without collateral

The different lenders that can provide you with education loan without collateral are listed below. The table has been bifurcated into two sections which initial section will provide you with information about the lender that can provide you education loan without collateral but a financial co-applicant is required. The later section will have those lenders that can provide you education loan without collateral and co-applicant.

Eligibility for education loan without collateral

There are certain eligibility requirements that you would have to meet to ensure that you can get an education loan without collateral. The eligibility may differ depending on the lender but some common parameters are -

• Academic profile of client - Since the bank does not demand collateral as security, your academic excellence is one of the primary criteria for an unsecured education loan. The reason behind this is that apart from your co-applicant’s income your estimated earning potential is checked which can differ based on your academic performance in the future. Your academic performance for the future can only be forecasted through your past performances. 
• Co-applicant finances - The co-applicant must have a very good CIBIL score and meet the prescribed requirements. They should also meet the minimum income level as well which can be 30,000 INR - 40,000 INR (without obligations) depending on the lender.
• Chosen country, university, and course - Almost all the lender that is providing you with education loan without collateral has developed a list of universities/colleges and courses. All you have to ensure that your target country, course, and university/college fall in on their lists. 
• Test Scores - The scores you obtained in the English proficiency tests and other standardized tests, like IELTS, TOEFL, GRE, SAT, etc., shall be above average or meet the mark prescribed by your lender.

Documents required for education loan without collateral

Given below is a generalized list of documents required for a study abroad education loan without collateral.

Documents required from the applicant - 

• Loan application form
• Identity proof - PAN Card, Passport, Voter ID card. 
• Address proof - a recent copy of the telephone bill, electricity bill, or water bill. 
• Passport 
• Past academic record - 10th, 12th, undergraduate mark sheet, test scores of entrance tests like GRE, TOEFL, IELTS, etc. 
• Proof of admission - you can submit a conditional offer of admission as well. 
• Statement of expenses - the entire cost of education. 
• Passport-size photographs 
• Loan account statement of one year, if there are any previous loans taken from any lender. 

Documents required from the co-applicant -

• Identity proof 
• Address proof 
• Income proof - the documents for the same will differ depending on the type of employment, such as self-employed or salaried.

Self-employed co-applicants -

• Business address proof 
• Last 2 years IT returns 
• TDS Certificate 
• Certificate of Qualification 
• Bank account statement of the last 6 months 

Salaried co-applicants - 

• Salary slips of last 3 months 
• Copy of Form 16 for the last 2 years or copy of IT Returns for the last 2 years.
• Bank account statement for the last 6 months.

• Education loan 
• Student loan 
• Loan without collateral 
• Loan without security 
• Study abroad 

First published date: 19 Nov 2016