Non-Collateral Education Loan for Abroad: How to Apply

Non-collateral education loans are a lending source in which a candidate doesn’t need any assets to pledge as proof for getting the loan amount. These non-collateral education loans will ensure that the co-signers (Who stand on your behalf) and borrowers' future income will be capable of repaying the whole amount. People also face problems as they don’t have significant assets to submit as proof, even if this is the case, financial institutions sanction loans for abroad. However, Non-collateral education loans usually come with a little higher rate of interest compared to secured loans.

A non-collateral education loan has a lot of benefits as the borrower is not required to pledge any form of security, such as property, land, or gold. Unlike traditional loans, which typically require collateral to secure the loan amount, non-collateral loans are based on the borrower’s creditworthiness, academic potential, and future repayment ability. These loans are designed to make higher education accessible to students who do not have assets that can be pledged for collateral. Following are some benefits associated with Non-collateral education loans for abroad.

• No Collateral Risk: These loans do not ask for any valuable assets, making it a viable option to safely hold your assets with you.‍
• Higher Loan Amounts: Non-collateral loans offer loan amounts that will cover all your costs associated with studying abroad.‍
• Co-signer Flexibility: Secured loans often require an immediate family member for loan approval. However Non-collateral loans may permit distant relatives to serve as co-signers.‍
• Flexible Repayment Terms: These loans often come with flexible repayment options ensuring you focus on your studies without worrying about the repayment.
• ‍Overdraft facility: Some financial institutions offer overdraft facilities on your loan to meet some unexpected situations.

Many Indian banks offer education loans with competitive interest rates and flexible repayment options, making it easier for students to finance their studies abroad. These loans are tailored to meet various needs, helping to ease the financial burden of tuition and living expenses, while offering manageable repayment terms. It's important to compare different offers to secure the best deal.

Here are some top banks providing non-collateral loans for education.

1. IDFC Bank
2. INCRED
3. BOB Bank
4. ICICI Bank
5. AVANSE
6. Union Bank of India
7. AUXILO
8. Canara Bank
9. HDFC Credila 
10. Federal Bank
11. Axis Bank
12. Punjab National Bank (PNB)
13. IDBI Bank
14. State Bank of India (SBI)

Although Non-collateral loans are a helpful source for candidates to study abroad without any collaterals, there are certain eligibility criteria that a candidate needs to fulfill as the risk involved is higher in this type of loan. Here is a common eligibility criteria that everyone needs to fulfill, however, some banks may ask for other requirements.

• Nationality: The candidate must be a citizen of India.

• Age: 18 - 35 years while applying for a loan.

• Admission Letter: Admission letter from the university confirming your admission.

• Credit history: While no collateral is required, the student or co-applicants credit score plays a vital role in determining the approval of the loan.
• ‍Course Eligibility: The course should be recognized by the lender, typically postgraduate or professional courses in areas such as engineering, medicine, business, law, or sciences.

Note: Loan Calculator

Step 1: Check Eligibility

Ensure your eligibility for getting an education loan is perfect to avoid your loan rejection.

Step 2: Loan Enquiry

You should begin by inquiring with various lenders about the loan options available.

Step 3: Loan Application

Once a lender is selected, you need to fill out the loan application form and submit the necessary documents.

Step 4: Loan Processing

The lender will assess the applicant’s eligibility and loan requirements. They will conduct a background check, evaluate the academic performance, and assess the co-applicant's (usually a parent’s or guardian’s) creditworthiness.

Step 5: Approval

If the loan application is approved, the loan amount is disbursed either in full or in installments.

Step 6: Disbursement

The loan amount is typically disbursed directly to the university or institution in the case of tuition fees, and the remaining balance is disbursed to the student for living expenses and other costs.

Although different banks demand additional documents, The following documents are typically required for a non-collateral education loan application:

• Proof of Identity: Aadhaar card, Passport, Voter ID, etc.

• Proof of Residence: Utility bills, rent agreement, etc.

• Academic Documents: Mark sheets, degree certificates, Exam scores of IELTS or TOEFL, etc.

• Proof of Admission: Admission letter from the international institution.

• Co-applicant’s Income Proof: Salary slips, IT returns, bank statements, etc.

Considering the high percentage of interest rates, students should compare between different options to choose the best among those options. Here are some tips to follow to get your education loan approved.

• Maintain a Good Credit Score: A high credit score increases your chances of getting the loan approved with better terms.

• Secure Admission to a Reputed University: Getting admission to a top university increases your chances of securing a larger loan amount with lower interest rates.

• Prepare Financial Documents in Advance: Have all your financial documents ready, including those of the co-applicant, to speed up the loan approval process.

• Choose the Right Loan Provider: Compare different lenders in terms of interest rates, processing fees, loan amount, and repayment flexibility before applying.

• Opt Shorter Tenure: Opt for a shorter tenure as the interest rates for non-collateral education loans are higher compared to secured loans.

Non-collateral education loans are a fantastic option for students looking to pursue higher studies abroad without the burden of securing a loan with valuable assets. These loans not only cover all your educational expenses but also offer flexibility and ease of application. However, it’s crucial to understand the eligibility criteria, interest rates, and loan terms before making a decision. By following the right approach and preparing adequately, you can secure the necessary funds to fulfill your dream of studying abroad.

1. What is a Non-Collateral Education Loan?

A non-collateral education loan is a type of lending option where candidates can get the loan approved without submitting any proof of assets.

2. Can I Get an Education Loan for a 0% Interest Rate?

It is not possible to get an education for a loan with a 0% interest rate, however, you can get a lower rate of interest based on your credit score and several other factors.

3. Do We Require a CIBIL Score for an Education Loan?

Yes, banks check your credit history to ensure your creditworthiness. So it is important to maintain a good CIBIL score.

4. Can I Get a 1 cr Education Loan?

Yes, many institutions offer loans upto 3 cr based on your academic history and your collateral.

5. Are there any Hidden Charges in an Education Loan?

Yes, there can be processing fees, late payment charges, and prepayment penalties. Always read the loan agreement carefully.