Private Education Loan without Collateral

Education loans are a widely known financial aid to students who want to pursue studies abroad. Some of the students do not have enough security or collateral to take the loan against. Those students must look into private education loan without collateral and this is also the main topic of our third episode in our ongoing series  “Loanflix- Education loan Simplified” on YouTube.

What Private Education Loan without collateral

The Non-Collateral Loan is a loan that does not require the applicant or co-applicant to place collateral or security in its place. Though, other factors like Co-applicant’s income and candidates earning potential are taken into account.

The Co-applicant can be parents, siblings, parent’s siblings, or cousins in rare cases. Spouses are not eligible as a co-applicant.

Who provides Private Education Loan without collateral

Non-Banking Financial Company commonly referred to as NBFCs are the one who provides education loan without collateral.

The NBFCs operating in India are HDFC Credila, Avanse, Incred, and Auxilo.

We at WeMakeScholars work with all the above NBFCs except Credila.

NBFCs only operate in the major cities of India, hence, it is required that either applicant or co-applicant must be a resident of one of the major cities.

The public banks also offer non-collateral loan but it is a tedious process.

Countries and courses eligible for private education loan without collateral

The NBFCs offer loan for students pursuing any of STEM courses i.e Science, Technology, Engineering and Mathematics courses at the host country.

Host countries eligible for private education loan are US, Canada, Germany, Ireland, and Australia. The top Universities in the countries other than these are only eligible.

Amount of private education loan without collateral offered

The amount of private education loan without collateral offered by NBFCs depends on the education destination:

US: up to Rs. 50 lakhs with an average loan of 35 lakhs to 40 lakhs.

Germany: up to Rs. 20 lakhs.

Australia: up to Rs. 15 lakhs.

Canada: Rs. 25 lakhs to Rs. 30 lakhs.

The Government Banks offers education loan with collateral of up to Rs. 7.5 lakhs. The government banks are very reluctant to provide a non-collateral loan.

Rate of Interest (ROI) for private Education loan without collateral

The Rate of Interest at Government bank is 10.50%

The Rate of Interest at NBFCs is between 10.75% to 14% depending on the profile of the applicant and co-applicant.

Factors considered while reviewing the applicant’s file for private education loan without collateral

Academics:

If the applicant is seeking a loan to pursue MS in US then GRE score of the applicant is of highest priority. A GRE score of 300 and above is most preferred and below this score, the chances of getting a private education loan without collateral become very slim. Other aspects of academics like GPA, TOEFL etc. is also considered for education loan for the US.

If the applicant is seeking a private education loan to pursue abroad education in countries like Canada, Australia, Germany, and Ireland then that applicant’s 10th, 12th, and higher degree GPA and IELTS, TOEFL or equivalent test score is given more importance.

Co-Applicant’s profile:

The Co-applicant’s financial status like their Income, Income-tax return of the last two years, CIBIL score (685 for NBFC, 700 for government banks) are strongly considered.

Advantage of applying for private education loan without collateral through WeMakeScholars

The advantages of applying for private education loan without collateral through WeMakeScholars is that we have helped a lot of people with various types of profile. So, we are bound to come across someone with a similar profile to you. This helps us to pursue the loan with interest rate in mind. This advantage is absent if you do this on your own.

The time taken for the loan application to be processed at NBFCs is 7 to 14 days. There is no particular timeline for a non-collateral loan from government banks with at least 14 to 18 days.

Partially Secured Education loan

If the applicant’s profile is not eligible for private education loan without collateral then they could place security and gain a partially secured loan. The amount of this security can be much lower than the amount of loan the applicant is seeking. This is not a well-known practice but can greatly increase the chance of you getting a loan. For example, the security for Rs. 15 lakhs education loan can be an FD of just Rs. 3 lakhs.

If you have any other questions regarding abroad education loan or any other related topic, feel free to request a call from WeMakeScholars support team to clarify those doubts. We have a very active online presence and would love to answer your comments. So, feel free to leave your comment at the end of this article or on our YouTube page.

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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