Education Loan for Abroad Studies without Collateral

Education Loan for Abroad Studies without Collateral

The desire to pursue education abroad has become a common aspiration among students. Financing an overseas education is an aspect that appears to be the most challenging in this direction. It includes securing funds for tuition fees, travel costs, living expenses, and other associated expenditures.

We understand this significant hurdle and are here to guide you through it. Read further to explore the concept of collateral-free loans and how you can avail of an education loan for abroad studies without collateral.

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What is an Education Loan Without Collateral

Generally, loans are backed by some security or guarantee, that the lender can seize in case the borrower fails to repay the loan.

But, as the name suggests, education loans for abroad studies without collateral do not require any security to be furnished to access the funds. 

Many students and families may not possess assets or a guarantor or may not be willing to put them at risk. Education loan for abroad studies without collateral eliminate this barrier and make it easier for students to get loans and pursue their dream education abroad.

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Differences in Education Loans: With Collateral vs. Without Collateral

Confused between education loans for abroad studies without collateral and with collateral ? Refer to the comparison below and know how they difference

CriteriaEducation Loan with CollateralEducation Loan without Collateral
Requirement of CollateralRequirement for pledging an asset for securityNo requirement for any collateral,
Co-applicant RequirementMay not require a co-applicant if collateral sufficesMay require a financial co-applicant
Loan AmountComparatively higher (depending upon the collateral value)Comparatively lower
Interest RatesGenerally low rate of interest (due to security pledged) High rate of interest (due to the absence of collateral)
Eligibility CriteriaMore lenient due to low risk for the lenderStricter due to no collateral and dependency on academic performance and future employment potential.
Approval TimeLonger, due to collateral evaluation and suitability checkFaster, mostly focuses on the student’s credentials 
Risk to BorrowerHigher risk since assets are pledgedLower risk since no assets at stake
Repayment TermsMore flexibleStandard terms with limited flexibility

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Lenders that Provide Education Loan for Abroad Studies without Collateral 

Want to borrow a education loan for abroad studies without collateral and think about where to start? 

The following international lenders do not even need a co-applicant and have a very streamlined process. Read further to know more about the process and the benefits:

LenderAPRLending AmountBenefits
MPower Financing13.98% before discount0.25% discount for signing up for autopay
13.72% after discount
Minimum 2001 USD Maximum 100,000 USD-Fixed Interest rate
– No co-signer or collateral
– No Prepayment penalty
– Free Visa support letter
Prodigy Finance13.5%Minimum 10,001 USD Maximum is dependent on cost of attendance– Loan based on your potential
– No Prepayment Penalty
– No requirement for co-signer

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Benefits of Education Loan for Abroad Studies Without Collateral

Education Loan for Abroad studies without collateral come with several significant benefits. Here are some of the key points:

  • Lower Financial Risk: It is the best alternative for families or students who do not possess assets that they can pledge or are not willing to pledge the assets they have. Since no valuables are pledged, there is no risk of losing them in case of non-repayment.
  • Broader Accessibility: It is the most significant advantage of education loans without collateral. Students with high academic credentials and calibre do not need to worry about assets to get loans.
  • Simplified Application Process: As compared to traditional loans, collateral-free loans have a simpler application process. Since no assets are involved, funds are made available quickly due to the absence of asset valuation and other related processes.
  • Encouragement for higher education: Collateral-free loans encourage students to pursue higher education, irrespective of their financial background. This not only supports the students with high calibre but also uplifts the society as a whole.
  • Repayment Terms: Generally repayment terms of collateral-free loans are very flexible. Interest rates are comparatively lower, making it easier for borrowers to repay. 
  • Top-up Facility: Most of the lenders provide facility top-up loans which borrowers can avail of in need.

Read More : Study Abroad Scholarships for Indian Students

Eligibility Criteria for Abroad Education Loan without Collateral

While every lender has a different set of eligibility criteria, here are some common points that are considered by every lender while providing collateral-free loans.

  • Academic Profile of the Student: The academic record of the student is the primary consideration while providing collateral-free loans. Since no backing of assets is present, (other than your co-applicant, if any) all they rely on is the student’s academic future and his/her potential earnings. Hence, the student’s academic record and his/her academic profile remain of utmost importance while determining eligibility.
  • Co-applicant Finances: For lenders who require a co-applicant while determining eligibility, the financial background of the said co-applicant is considered. They should have a very good CIBIL Score and proven financial stability. 
  • Country, University, Course: Every lender has a specific list of courses, universities and countries which they can provide collateral-free loans for. Ensure that your target country, university and course are on their list. 
  • Test Scores: Every student who wishes to study abroad has to pass certain tests or exams to be eligible to pursue education there. These exams may include but are not limited to IELTS, TOEFL, GRE, SAT, etc. 

There is a defined limit by the lender that the student should score in these exams to avail of collateral-free loans. 

The above-mentioned eligibility criteria can vary depending on the specific lender and the prevailing circumstances. Check with your lender beforehand for any specific requirements, if any.

Read More : How to Transfer Money from India to UK

Documents Required for Education Loan for Abroad Studies Without Collateral

Although every lender may demand some specific documents, below mentioned documents are required by almost every lender to process educational loan for abroad studies without collateral:

  • Identity Proof: Passport, Voter ID, PAN Card
  • Proof of Address: Document with your name and full residential address. It may include a copy of the electricity bill, water bill, telephone bill, or bank document.
  • Proof of Admission: A document or e-mail from your school displaying your name, school, course and indication that you’ve been admitted. It may also include a conditional offer of admission.
  • Credit Report: Loan account statement for the previous year, if any
  • Statement of Expenses: Along with your loan application form, you need to submit the entire cost of education, including your tuition fees, living expenses etc.
  • Pre-Study or Post-Study Salary: For students who are currently employed, 3 months’ salary slips, dated within the last six months along with corresponding bank statements are required.

For post-study, any job offer confirming your future employment, in the form of a signed employment contract is required. 

Find-Your-Ideal-Education-Loan-in-Minutes

How to Apply for an Education Loan without Collateral

Follow the given steps to apply for an education loan for abroad studies without collateral:

  1. Research and Choose the Right Lender: Look for banks, NBFCs or other lenders that provide collateral-free education loans. Compare the interest, and other terms and conditions and choose the one that works best for you.
  1. Check Eligibility Criteria: Ensure that you meet the eligibility criteria set by the lender such as your academic record, course and institution, etc.
  1. Gather Required Documents: Manage and collect all the required documents like identity proof, address proof, academic record, bank statements and other documents specified and required by the lender.
  1. Fill out the Loan Application: Obtain the loan application form. Carefully read and fill out the form with all the necessary and accurate information.
  1. Attend the Personal Discussion: Some lenders may require you to attend a personal discussion to discuss your educational plans, career goals, and prospects.
  1. Wait for Loan Approval: Once you’ve submitted your form and documents, the lender may take time to review and process your application.
  1. Loan Sanction and Disbursement: If approved, you’ll receive a sanction letter detailing the loan amount, and other terms and conditions.

Calculate-Your-Education-Loan-EMI

Conclusion

Education is the most powerful tool that can transform a student’s life and society as a whole. Lack of finance should never be a barrier to a person’s academic aspirations and career. Collateral-free loans are designed to empower students to pursue higher education without worrying about securing assets to back their education loan for abroad studies without collateral.

Applying for an education loan for abroad studies without collateral requires careful planning and preparation. With HiwiPay by your side, you are free to embark on your educational journey with confidence without hustling about finance. Visit our website to know more about us and soar to new heights.

FAQs on Education Loan for abroad studies without Collateral

What are the different types of education loans that are provided?

Depending upon the type of education programmes, different types of education loans are provided. 
On the basis of location: domestic or study-abroad education loans
On the basis of type of course: Graduate, undergraduate or professional education loans
On the basis of security: Against deposits, against property or collateral-free loans.

What are the factors that are considered when providing an education loan for abroad studies without collateral?

The lender considers multiple factors including the academic performance of the client, the course and institution the student has enrolled with, the future earning potential of the student, the income of the co-applicant, if any, the loan amount applied for, etc.

Are the interest rates higher for education loans without collateral?

Interest rates for education loans are comparatively higher than loans with collateral due to the absence of security against the loan granted.

What are the factors on which collateral values depend?

Collateral value depends on multiple factors including the type and condition of the asset, its current market value, economic conditions, ease of liquidation, depreciation rate, etc.

I want to pursue an MBBS abroad. Can I apply for a collateral-free education loan?

Yes! Many lenders in the country provide collateral-free education loans for MBBS. Research in advance that the institute you’re studying with is on the approved list of the lender.

What is a collateral education loan?

A collateral education loan is a loan which is granted by pledging some valuable asset against it. The asset serves as security in case of non-repayment.

What are the documents needed to apply for a collateral-free education loan?

Common documents required are identity proof, address proof, bank statements, proof of admission and statement of expenses. Some lenders may require some specific documents also.

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