Want to study abroad or study at your dream college in India, but worried about not having a property to pledge as collateral? Don't worry! There is one such type of education loan called a Non-Collateral education loan that is designed for students like you. These loans help you fund your education even without property, provided you need to meet their eligibility criteria. Let's take a deep look into it.

What Exactly Is an Education Loan Without Collateral?

An education loan without collateral is a type of loan you get without pledging any property, such as a house, land or fixed deposits. Instead of depending on property, lenders will check your academics and your co-applicant’s financial income and the university or the course to decide whether to approve your loan or not.

Advantages of an Unsecured Loan in an Education Loan

Unsecured education loans come with many advantages, especially to students who do not have property to pledge as collateral. Some of the benefits are:

  • Faster process: Since there is no property valuation to be done, the approval of the loan and disbursement is ideally faster.

  • No Collateral required: To the people who do not want to put their property at risk, this will be the best advantage.

  • Flexible Repayment: These loans offer a range of repayment plans based on the co-applicant's financial background and the loan amount.

Basic Eligibility Criteria You Need to Meet

Before applying for an education loan, make sure you meet these common requirements, which every lender checks for:

  • Citizenship: The student must be an Indian citizen.

  • Age: Should be between 18 to 35 years.

  • Academics: Minimum of 60% in your 10th, 12th and in your degree if you completed.

  • Admission Proof: Should submit a confirmed admission from a recognised university.

  • Course Type: The course that the student selects should be job-oriented, like management, engineering, or even medicine or other professional programs.

  • Co-Applicant: A parent, guardian, working sibling or spouse having a stable income who can support you during your loan repayment.

The Co-applicant’s Role - Why It Matters So Much

Since these types of loans do not require any property to pledge, your co-applicant's financial background becomes an important factor for approval. Their income, job and credit score strongly affect the lender's decision.

What banks usually expect:

  • A co-applicant having a stable income of around 4-6 lakhs per year.

  • A good CIBIL score(ideally 700 or above).

  • Proof of income such as bank statements, salary slips, ITR’s or Form 16.

The stronger the co-applicant's financial income, the higher your chances of getting your loan approved.

The Impact of Your Academic Background and University on Eligibility

  • Your academic history and the standing of the university you intend to attend are two of the most important considerations for lenders when it comes to education loans without collateral.
  •  Unsecured loans mostly depend on your future earning capacity, as opposed to secured loans, which are backed by a property or other asset.
  • Getting into a reputed or top-ranked university immediately gives a boost to the lenders. 
  • Top-ranked universities usually have strong placement criteria, and there are chances of high employability rates. So getting into these universities will get you a placement right after your studies.
  •  For lenders, this will be low risk because you will be securing a job and will repay the loan on time.
  • Academic performance also plays a major role in loan approval.
  • Steady grades during your academic years indicate that you are dedicated, concentrated, and committed to your profession.
  • Lenders will get assurance that you will finish your course successfully and secure a job shortly thereafter.

In short, your university and academic profile together act as a trust signal for lenders.

Income and Credit Score Requirements

Co-Applicants' income stability plays a major role in your education loan approval. Lender's check:

  • Monthly Income and type of job: Checks whether they are salaried or self-employed.

  • Credit Score: Your credit score and your co-applicant’s credit score are checked. Ideally, 700 or above improves your chance for loan approval.

  • Current debts: An excessive number of active loans may limit eligibility.

Therefore, a good credit score and stable income can improve your chances of getting an education loan without collateral.

Maximum Loan Amount You Can Get Without Collateral

Lender Type

Maximum loan amount

Public Bank

Rs 50 lakhs

Private Bank

Up to Rs 1cr 

NBFC’s

Up to Rs 75 lakhs

Documents Required for Unsecured Education Loans

Lender assesses the repayment capacity of the co-applicant based on the financial status, for which the co-applicant is required to submit a few documents requested by the lender. The basic required documents are:

If the Co-Applicant is salaried:

  1. Documents proving the identity of the co-applicant, such as...

  • Aadhar Card
  • PAN Card
  1. The latest 3 months' salary slips from your company to evaluate your income stability

  2. The last 6 months of bank statements

  3. The latest 2 years of ITR or Form 16

If the Co-Applicant is self-employed:

  1. Documents proving the identity of the co-applicant, such as
    • Aadhar Card

    • PAN Card

  2. The last 1-year bank statements

  3. The recent 2-3 years of ITR

  4. The recent 2-3 years of Profit/Loss account and Balance sheet to determine revenue, profit or loss.

  5. Business proof and photographs of the business.

Having all documents organised improves your chances of a quick approval.

How to Improve Your Eligibility for a Non-Collateral Loan

If you are worried about not meeting the lender's eligibility criteria, here are some tips you can follow to get your education loan approval.

  • Choose a co-applicant who has a strong income and a good credit score.

  • Get into a reputed university that offers good placements.

  • Always maintain a good financial record by clearing your payments and monthly credit card bills.

These tips will help build trust with lenders and can increase your chances of getting your education loan approval more easily.