If you are a student who is looking forward to applying for an overseas education loan but are confused about which bank or institution to opt for. Relax as we have got you all covered. There are multiple ways through which you can fund your overseas education. Out of which, in this blog, we are going to talk about one of those i.e. Unsecured Overseas Education Loan that is also termed as Collateral Free Education Loan.
Let us understand the term Unsecured Overseas Education Loan
Unsecured Overseas Education Loan/ Non-Collateral Loan is a type of loan that is given by any private or nationalized bank without pleading any security.
Eligibility criteria to apply for Collateral Free Education Loan for abroad studies
We have listed below some of the common conditions that should be considered while applying for collateral free education loan.
- Student should be applying for science, technology, engineering, or management (STEM) related courses for their higher education.
- Student should have a good academic profile throughout with eligible IELTS/GRE and TOELF score.
- Student should be less than 28 years of age.
- Student’s parents’ income should be more than 35,000 excluding other expenses and liabilities.
- Student’s parents’ CIBIL score should be above 700 with strong credit history.
- Student should possess own house.
Collateral Free Education Loan is offered by:
This type of loan is offered by private banks, nationalized banks, and non-bank financial institutions (NBFC). Nationalized banks offer unsecured loans up to 7.5 lakhs as private banks and NBFCs offer loan amount up to 45 lakhs.
Rate of Interest provided by NBFCs and banks
Though the rate of interest offered by nationalized bank varies from one bank to another however the general rate of interest is 9.30% per annum.
For NBFCs, the rate of interest depends on the country that a candidate is planning to go to. ROI begins from 12% and it can go up to 14% per annum.
For private banks, the rate of interest is between 10-13% per annum.
What is the processing time of Collateral Free Education Loan?
For NBFCs, an average time taken is of 7-10 days whereas for nationalised banks, the processing time is unpredictable. For private banks, the time taken for the processing of loan is of three weeks.
An unsecured loan is much quicker and convenient as it does not involve the procedure of legal verification and property valuation.
Benefits of availing Collateral Free Education Loan
Other than being a hassle-free and a smooth process, Collateral Free Education Loan has multiple benefits. Read below to know.
- This type of loan provides 100% funding option without providing any third-party guarantee.
- Collateral Free Education Loan covers all your expenses.
- There are no pre-closure charges after six months.
- The amount is disbursed in the student’s or parents’ saving account once the loan is sanctioned.
- Doorstep services are offered by the vendors.
- Availing unsecured loan makes it easy to fulfil visa conditions.
Other factors to be considered while applying for an unsecured loan via NBFCs
NBFCs do not operate in smaller cities and conflicted areas like J&K and the North-East regions of India however for exceptional cases where student’s profile fits all criteria for an unsecured loan, NBFCs agree to approve an unsecured loan provided that someone who stays in one of the metro cities is ready to act as guarantor to the candidate. So, this was a brief information about Collateral Free Education Loan for abroad studies. We hope this will be helpful for you in choosing a viable funding option for your foreign education loan.
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