Difference Between Credila’s Secured and Unsecured Education Loans

People who are thinking of taking educational loans from Credila encounter one of the major decisions of choosing between a secured and an unsecured loan. The main difference between these two types of loans lies in the requirement of collateral, which affects the interest rate, eligibility criteria. In this blog, we will talk about the differences between Credila’s secured and unsecured loan interest rates to help you decide on your education loan.

An Overview of Credila Education Loan

Credila provides education loans for students pursuing advanced studies overseas. It offers secured and unsecured loans for programs like undergraduate, graduate, MBA, MBBS, and several others. The most unique feature of Credila’s education loan is its ability to customise its loan services to meet the students' needs.

Credila Education Loan Interest Rate

Generally, the interest rates of the Credila education loan are changeable. It is based on the Credila Benchmark Lending Rate (CBLR). At present, it is set at 13.80% per annum, but it can change over time. Besides CBLR, an additional margin is also applied based on these factors:

• The course and university. 

• Career options linked to your course.

• The country where you plan to study.

The ultimate interest rate is determined by combining the CBLR and the spread, which changes according to the risk profile of each situation.

Why is Collateral Important for Interest Rates?

To minimise the lender’s risk, students provide valuable assets such as a house, a flat, non-agricultural land or even fixed deposits. In case the students are unable to repay the loan, they will have their property will be held.

Without collateral, similar to unsecured loans, the lender assumes greater risk. To compensate for this, they impose high interest rates.

How Credila Calculates Interest Rates on Secured Loans

Credila typically provides interest rates for secured loans starting from 10%. The specific rate may fluctuate, but since you're offering collateral, it is typically lower.

Benefits:

• Low Interest Rates: Since the property is pledged, the lenders give a lower rate of interest.

• Higher Loan Amounts: If the student is going with a secured loan, most lenders will offer higher loan amounts.

• Repayment Duration: Secured loans generally come with a 10 to 15-year repayment duration. 

• Higher chance of Approval: There is a higher chance of approval, since the property is pledged.

How Credila Calculates Interest Rates on Unsecured Loans

Generally, for unsecured loans, the interest rates will start between 13% to 15% but that depends on your profile. Now you will have a question: “Why the higher interest rates?”

It's because the student is not pledging any property, so the lenders are taking more risk. To even that out, they charge a slightly higher rate of interest.

Benefits:

• No Collateral Required: If the student does not have property to provide but is worried about securing an education loan, this will be the best choice.

• Rapid Approval: Since there's no property to pledge, unsecured loans usually get approvals more quickly.

• Reduced Documentation: Since there is no property, only a few documents have to be submitted. 

• Increased Risk for Lenders: Because the lender is taking is risk as you are not pledging any collateral, they charge higher interest rates

Factors Affecting Education Loan Interest Rate?

Secured Loans:

• Collateral Worth: The greater the worth of your collateral, the reduced the interest rate.

• Loan Amount and Duration: Higher loan amounts or extended repayment terms might carry marginally higher interest rates, yet they will remain below those of unsecured loans.

• Market Conditions: Factors such as modifications in the RBI repo rate can also impact interest rates.

Unsecured Loans:

• Credit Score: A good credit score frequently results in reduced interest rates.

• Income Consistency: Lenders will see your capability you repay your loan. Therefore, a stable job or income is beneficial.

• Loan Amount: Bigger loans could have increased interest rates.

• Lender’s Risk: Since there is no collateral to pledge, the lenders are taking a risk. To cover that, they impose a high rate of interest.

Comparison between Secured and Unsecured Loans from Credila

Which Loan Suits You Best?

Secured loans are perfect for individuals who:

• If you have valuable property to pledge.

• Require a higher loan amount.

Unsecured Loans are ideal for individuals who:

• Do not have collateral or choose not to provide collateral.

• Require a loan amount urgently.

• Are you okay with high interest rates and reduced repayment duration?

Advantages of Securing a Credila Education Loan via WeMakeScholars

The loan application process is a tedious task. Students face difficulties in so many factors, such as several visits to the bank, a lack of banking terms, complicated paperwork, lack of customer support. That's where Wemakescholars comes into the picture.

We offer:

• Assistance: We will assist you in the entire loan process. Our team make sure to continue our support through disbursement and even in your repayment.
• Short Processing Time: Unsecured education loans are usually approved in 7 days, while secured loans take about 15-20 days.
• Negotiation Assistance: If you feel that the interest rate or processing fees are too much, our team makes sure to negotiate with the bank. The maximum the student will get is 0.5% - 2%.
• Digital Procedure: Without going to banks multiple times, your entire education loan procedure will be digital.

Apply For Credila Education Loan Through WeMakeScholars

The process of applying online with WeMakeScholars includes these steps:

• Step 1:Start your process by filling in your basic details in the education loan application form on our website. Once you are done with submitting your details, one of our Financial Officers will get in touch with you within 48 hours.
• Step 2: After you receive a callback, speak with one of our financial officers and go over all the details of your education loan.
• Step 3: Based on your academic background, the co-applicant's financial status and other details, our Financial Officer will help you to give the best education loan option. If Credila looks fine in your situation, then we will log in your file through Wemakescholars. You can track your application here.
• Step 4: After this, you can start uploading your documents directly to our website.
• Step 5: Your dedicated Financial Officer will work with the Credila team and make sure your loan process is going smoothly.
• Step 6: Once you submit all the required documents, the bank will give you a loan sanction letter.