Non Collateral Education Loan Process: Common Issues & Their Solutions

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education loan processA non collateral education loan is preferred by many students who wish to fund their higher studies with an education loan that does not involve the pledging of assets as collateral security. The education loan process for non collateral loans is pretty simple and straight-forward, as it involves very little paperwork. This is hugely beneficial for candidates who require an education loan within a short period of time or those who do not possess assets of a valuable market price.

Although the unsecured foreign education loan process sounds like it is going to be a cakewalk, the reality is somewhat different. When students actually set out to borrow an unsecured abroad education loan, they happen to come across a lot of hurdles. This article aims to highlight some of the most common issues faced by candidates in their non collateral education loan process. These issues have been divided into different categories for the ease of understanding. The issues and their possible solutions are written in the form of FAQs so students could relate better to each of them.

Non Collateral Education Loan Process: CIBIL Score Issues

Most NBFCs and private banks consider several aspects of a co-applicant’s financial profile. However, they are extremely rigid regarding one in particular, the CIBIL score. The very first category of issues will help you understand how CIBIL score of a co-applicant plays a significant role in the non collateral education loan process. 

What is a CIBIL Score? How is it calculated?

CIBIL (Credit Information Bureau of India Ltd.) is an organization that keeps a track on an individual’s credit information. The CIBIL calculates a score based on an individual’s credit history. This score is often used by most NBFC education loan lenders to determine the reliability of the loan applicants. A CIBIL score is generally calculated based on the loan transactions made by candidates. A good CIBIL score is one of the most important factors for candidates to get an education loan without any problems.

Under what circumstances will my CIBIL score be affected?

Your CIBIL score is never stable. This score keeps varying depending on the credit transactions conducted by you. When an individual borrows a loan (personal, car, education), their CIBIL score is affected. It reduces when you borrow a loan and, according to the pattern of your loan repayment, can increase or decrease. Failure to repay your pending loans will lead to a bad CIBIL score. This can ruin your chances of getting unsecured education loans for foreign studies. 

What is the benchmark CIBIL score that a candidate needs to maintain in order to qualify for a non collateral education loan?

In the unsecured abroad education loan process, the individuals having a CIBIL score of 700 and above are mostly given preference by lenders. Both co-applicants, as well as loan applicants are required to maintain this score in order to undergo their education loan process without a lot of issues. 

  1. If your CIBIL score is low because you failed to pay your credit card dues, this issue can be resolved within no time and your CIBIL score will be back to normal.
  2. If you have had remarks such as ‘Loan write off’ or ‘loan settled’ written on you or your co-applicant’s income profile, or if the cheques issued by you or your co-applicant have bounced in the past, it is difficult for you to get an abroad education loan from any NBFC or private bank.

Will a low CIBIL score hamper my chances of getting an education loan?

Yes. There are chances that your low CIBIL score may affect your chances of getting an education loan without security. In order to have a hassle-free education loan process, it is necessary that you meet the CIBIL score benchmark set by the lending institution.

This point marks the end of the FAQs related to CIBIL score issues in the unsecured foreign education loan process. The financial team of WeMakeScholars has been helping many students having significant CIBIL related issues in their unsecured education loan process since quite some time. Hence, if you are facing any of the above issues, do not hesitate to register a callback with the team for support and assistance.

Moving on, let us address some of the most common concerns voiced by students with respect to their unsecured education loan disbursement process.

Read about How does CIBIL score affect your education loan?

abroad education loan

Non Collateral Education Loan Process: Education Loan Disbursement Issues

What is a pre-visa disbursement?

When banks release a portion of the education loan to students in order to help them fulfill certain financial prerequisites before their visa process, it is called a pre-visa disbursement. Apart from certain universities in the USA, the immigration rules Germany and Canada  require students to deposit a certain amount of money in order to qualify for their student visas. The Blocked Account requirements for Germany, the GIC account requirement for Canada are a few examples. Most lenders who are involved in the unsecured education loan process are well aware of such financial prerequisites. Hence, you can be rest assured that a pre-visa disbursement can be easily approved to students who need one.

What steps should I follow to get my pre-visa disbursement faster? 

The education loan disbursement process of most NBFCs and private banks is a hassle-free process. When they reach this phase of the education loan process, students simply need to submit the relevant documents which justify their need for a pre-visa disbursement. Once they complete this formality, they may easily avail of their education loan sanction letter or a pre-visa disbursement, whichever is required by candidates. 
How do NBFCs disburse unsecured education loans? What is the procedure followed by them for the same?

The education loan disbursement process of most NBFCs and private banks is pretty simple and easy to understand. The university tuition fees can be disbursed according to the payment requirements laid down by the candidate’s respective university/college. The living expenses are directly sent to the co-applicant’s personal savings account. The disbursement process followed by major NBFCs and private banks for unsecured education loans is similar.

I am facing an issue related to the disbursement of my living expenses, how can this be resolved?

Candidates who register for the unsecured education loan process with the help and assistance of the financial team of WeMakeScholars can simply get in touch with their relationship managers for any assistance regarding their disbursement process. If you had borrowed your NBFC education loan directly from the lender, you may approach their customer care section for assistance.

Non Collateral Education Loan Process: FAQ’s Related to Income Issues


I plan to name my father as my co-applicant. However, he is going to retire in 2 years. Will I face any issues regarding the same?

Most NBFCs encourage candidates to name a close family member with a strong financial profile as a financial co-applicant in the non collateral education loan process. When students directly approach NBFCs with such a request, most of them would simply dismiss them stating that this does not agree with their policy regarding an education loan without collateral. This is where the support and assistance of the WeMakeScholars team comes into the picture. If you feel that this factor may cause hurdles in your unsecured education loan process, do not hesitate to contact the WeMakeScholars team.

What are the mandatory financial documents my co-applicant needs to provide for an abroad education loan?

Documents to be submitted by salaried co-applicants:

  1. Latest Salary slips (of the last 3 months)
  2. Form 16 of the last 2 yrs.
  3. Employers ID card
  4. ITR of last 2 yrs

Documents to be submitted by self-employed co-applicants:

  1. ITR of last 3 yrs
  2. Last 3 yrs Balance sheet and Profit & Loss account (only if self-employed)
  3. Proof of Business address

If you are facing any issues related to the ITR filing of your co-applicant’s finances, feel free to discuss such issues with our team.

My co-applicant has not filed his ITR. Will this affect my chances of getting an education loan?

Ideally, the co-applicant’s ITR of the past two years is a compulsory document required by NBFCs in the non collateral education loan process. Hence, there is a high chance that your assigned loan officer of the lending NBFC or private bank may disagree to process your loan application. 

My father does not have any income source. Whom can I name as my financial co-applicant?

In the education loan process, most lenders of NBFC education loans accept parents, siblings, parents-in-law only as financial co-applicants in such scenarios. If you find yourself in a similar situation before beginning your unsecured education loan process, get in touch with the WeMakeScholars team at the earliest opportunity.

Also Read About Abroad Education Loan Interest Rate of Different Lenders

abroad education loan

Non Collateral Education Loan Process: Bank branch related issues

I need an abroad education loan to fund my higher studies but I do not reside within India. Is it still possible for me to avail of an education loan?

The basic eligibility criteria for students who wish to borrow an education loan without security state that they need to be Indian residents in order to avail an education loan from any NBFC or private bank in India. However, if your co-applicant is an Indian resident, you should not face any issues. 

It is possible for NRI students with Indian co-applicants to secure an education loan without collateral. The process may lengthen the overall education loan procedure by a few days. However, this can definitely be done without a lot of hurdles.

This article lists some of the issues/FAQs most commonly listed/asked by a lot of students who had registered for education loan without collateral with the financial team of WeMakeScholars. Do keep reading our blog to gain more insight into the education loan process.

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s at free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others

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Bibliophile, wanderer, major foodie. I write too :)


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