International Education Loan Without Collateral: Interest Rates, Eligibility and Process

    Updated on: 17 Aug 2022


    In the last decade, India has been second only to China in terms of international student mobility. And with the relatively easy availability of an education loan, this number has only risen in recent years. In fact, the education loan market in India has seen a high in spite of the Covid-19 pandemic looming large on all of us. CRIF High Mark data suggests that in the period between September 2019 - September 2020, education loan lenders in India have disbursed INR 11000 crores in international education loans alone. This number is proof enough of the high demand for education loans by Indian students who see it as the bridge that helps them make their study abroad dream a reality. 

    Introduced in 1995 by The State Bank of India, the education loan market in India today has multiple lenders. These include public sector banks, private banks as well as NBFCs, and other international lenders; all of whom are vying for their share in the education loan pie. As such, each of them is trying to attract prospective education loan seekers with different products and schemes. The number of education loan products available in the segment often confuses first-time education loan seekers, especially when it comes to terms like secured education loans or unsecured education loans. If you too are someone who is getting confused and would like to know the A to Z of education loans without collateral, then read this blog and get answers to all your doubts. 

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    What is collateral and why do banks ask for collateral when sanctioning a loan?

    Collateral is an asset ( immovable property, FDs, Mutual Funds, Bonds, etc) that is pledged by the borrower when taking an education loan with collateral. The bank makes use of this collateral to raise money in case the education loan becomes an NPA. The collateral acts as a security for the loan amount. The value of the collateral being pledged should be equal to or greater than the loan amount being requested. Most nationalized banks, private banks, and NBFCs ask for collateral when sanctioning loans above INR 7.5 lakhs. 

    What if a student does not have any collateral to pledge or is uncomfortable pledging family assets as collateral for an education loan?

    A large number of students do not have collateral that they can pledge for a secured education loan. In such a case, their best bet is an unsecured education loan. 

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    What is an international education loan without collateral?

    Also called an unsecured education loan, these do not need the borrower to pledge any collateral when applying for an education loan. Some salient features of an international education loan without collateral are as follows:

    • These loans have a slightly higher rate of interest. Depending on the lender, the RoI can be higher by 1.5% to 4% than a secured education loan. 
    • A co-applicant, preferably a parent with an income, is required when applying for this loan. 
    • These have a shorter repayment duration than secured education loans.
    • The borrower has to make some form of repayment - either partial or full - during the period of study. 
    • These loans are riskier for the lenders and thus are more difficult to get approved when compared to a secured education loan. 
    • However, since there are no collateral documents that need to be verified by the lender, they are also sanctioned faster than secured education loans.  


    Which banks can you apply for an international education loan without collateral? 

    There are a few private banks and NBFCs that offer education loans without collateral for loan amounts higher than INR 7.5 lakhs. Some of them are as follows:

    • Axis Bank - This private bank offers international education loans without collateral for up to INR 40 lakhs. The unsecured education loan from Axis Bank has an interest rate between 11.25% to 13%. The loan tenure for unsecured loans is 20 years. 
    • ICICI Bank - This is another leading private bank that offers education loans without collateral for up to INR 40 lakhs for selected programs and institutes. The rate of interest for unsecured education loans from ICICI Bank starts at 10.75%. The loan tenure is between 10 to 12 years for a post-graduate program. 
    • Avansea leading NBFC, also sanctions international education loans without collateral. It provides international education loans without collateral for amounts up to INR 40 lakhs with a loan tenure of 10 years. Depending on the student profile, this amount can also go up. The rate of interest for this loan is between 12.65% to 16%. 
    • InCred- another top NBFC, also gives unsecured education loans up to INR 40 lakhs. Here too, the loan amount can be increased depending on the profile of the borrower. The rate of interest at InCred is between 11.75% and 16% and the loan tenure is 10 years. 
    • HDFC Credila- too offers unsecured education loans up to INR 40 lakhs at an interest of 12.05%. The borrower has to repay the loan in 10 years. 
    • Auxilo- is another NBFC that provides unsecured education loans up to INR 40 lakhs. Exceptions can be made on the maximum loan amount on case to case basis. The rate of interest for the unsecured education loan is between 12.70% to 18% and the loan tenure is 10 years. 

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    It should be noted here that all the above-mentioned lenders charge some processing fee for an unsecured education loan. For example, Axis Bank does not charge any processing fee for loans up to INR 20 lakhs. However, it charges a processing fee of 0.75% per lakh + GST. Most NBFCs charge a processing fee between 1% to 2% of the loan amount. Prodigy Finance is the only NBFC that charges a higher processing fee, between 2.5% to 4%, on unsecured education loans. 

    Procedure for applying for an international education loan without collateral 

    The procedure for applying to the above-mentioned private banks and NBFCs is simple on paper. All that a borrower needs to do is have an earning co-applicant and he can apply for an international education loan without collateral directly to the lender. However, things are a little difficult in reality as the approval policies and application procedure is not very clear and has numerous pitfalls that may end in the loan application getting rejected. It is at this stage that GyanDhan comes to the rescue of borrowers and helps them get an international education loan without collateral at the most favourable terms and conditions. 

    We at GyanDhan have partnered with private banks and NBFCs and help students get unsecured education loans at interest rates that are as low as 11%. Our dedicated loan counselor assesses the profile of each borrower and then helps them choose the best product according to the profile. Our entire process is very transparent and quick and we do all this for free! 

    Get in touch with us now and start your loan application for an international education loan without collateral. 

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