With study loans emerging as one of the most convenient ways for students to pursue their education abroad, financial companies in India have started offering education loans without the need for security or collateral. By excluding the need for security in education loans, all leading banks and financial companies aim to make the study loan process easier and more accessible for students. However, these lenders check the credit scores and academic performance of students before giving out abroad education loans without collateral. Also referred to as an unsecured education loan, a non-collateral study loan is a boon for students looking for financial support for their abroad education without any compulsion to provide collateral.

What is an Education Loan without collateral?

An education loan without collateral is a loan type given to students for their study-related expenses abroad without requiring them to offer any security against the loan. These loans are given to students based on their academic performance, accomplishments, expected income, and admission status in a renowned international college or university. These loan types tend to have a little higher interest rate as compared to secured education loans, and the amount depends on the policies of the specific companies and the credit profile of the loan applicant. Collateral can be tangible, like a home or plot, or intangible, such as a fixed deposit. Some common types of collaterals are: 

• Non-agricultural land with a clear boundary

• Residential property like a house or an apartment 

• Fixed deposit by any registered and reliable deposit-taking organization

Eligibility Criteria for Non-Collateral Education Loans

While eligibility criteria for education loans may vary from bank to bank, some basic requirements need to be met to be eligible for the loan. These include:

For Students

• Students must be an Indian citizen

• They should be 18 or older

• Have a co-borrower who has an income in India

• Have proof of confirmed admission before the final disbursal of the loan

For Co-Applicant

• Must be an Indian citizen and should be a blood relative of students - a parent, sibling, legal guardian, etc.

• They need to have a bank account in India that permits them to sign cheques.

• Must be the primary debtor

Document Required for Loan Application

The applicants must be well aware of the documents required to apply for an education loan abroad. Remember, the unavailability of the important documents set by the banks and financial providers can lead to the rejection of the loan application. Students need to provide the following documents to apply for an education loan for their studies abroad.

General Documents

• Duly filled application form with photographs

• Student KYC

• Details regarding the course and fees

• 2 colour passport-sized photos

• Photo ID

• University acceptance letter

• Fee Structure

For Co-Applicant (salaried)

• Income proof

• Relationship Proof

• 8-month bank statement

For Co-Applicant (self-employed)

• GST registration proof

• Certificate of Incorporation or Registration Certificate

• Partnership deed or Memorandum of Association (MOA) and Articles of Association (AOA)

• Financial statements of the business for the last six months

A collateral-free loan for education abroad is the best way for students to pursue higher studies and take proper steps to find more opportunities. Financial companies, such as Avanse Global Financial Services, offer hyper-personalised loans for education to help students plan higher education without any stress.