Non Collateral Education Loan in India

A non-collateral or unsecured education loan is a loan where you don’t have to give the lender any assets, like property or gold, as security. It is given according to the co-applicant's financial situation, the course and university chosen, and the student's academic profile.

In this article, we will discuss education loans without collateral in India, how they work, and how students can apply for them.

Types of Education Loans

Here are the two types of loans:

Secured Education Loans

A secured loan requires you to provide something valuable, such as a house, land, or fixed deposit, as collateral. Simply put, if you can’t repay the loan, the lender can take the asset. The benefit of a collateralised education loan is that the interest rate is usually lower because the lender has collateral.

Unsecured Education Loans

An education loan without collateral is classified as an unsecured loan. Instead, the loan is given based on

• Your academic performance
• Your future earning potential
• Your co-applicant's financial stability

Since no security is involved, non-collateral loans for education usually have higher interest rates than secured loans.

What is a Collateral (Unsecured) Loan?

Collateral is something valuable that you give as a guarantee when taking a loan. If you own a house or land, you can use it to secure an education loan. This helps the lender feel safe while lending you the funds.

Collateral can be:

• A house or apartment (Residential property)
• A fixed deposit (Savings locked for a set time in a bank)
• Non-agricultural land (Open land with clear boundaries)

Documents Required for Non-Collateral Education Loan

To apply for a non-collateral education loan, you need to submit a few important documents. Below is a simple checklist to help you prepare:

For Students:

• KYC Documents: Aadhaar, PAN, or any government-approved ID
• Course & Fee Details: Information about your course and total fees
• Passport-Sized Photos: Two recent colour photos
• Academic Records: Mark sheets, certificates, and other educational documents
• University Acceptance Letter: Proof of admission in a recognised university
• Fee Structure: Official document showing tuition and other expenses

For Co-Applicant (If Salaried):

• Income Proof: Form 16, salary slips, or income tax returns
• Bank Statements: Last 8 months' bank account statements
• Relationship Proof: A Document showing the co-applicants' relation to the student

For Co-Applicant (If Self-Employed):

• Business Registration Proof: GST certificate or business license
• Company Documents: Partnership Deed, Memorandum of Association (MOA), or Articles of Association (AOA)
• Company Registration Certificate: Proof of company establishment
• Financial Statements: Business income details for the last six months

How to Apply for a Collateral-Free Education Loan?

If you need money to study abroad but don’t have property or assets to give as security, you can apply for an education loan without collateral. Follow these simple steps to apply:

Look for the best non-collateral education loan that fits your needs. Check the loan amount, interest rate, and repayment period.

Read all the details about the loan carefully, including but not limited to:

• The moratorium period varies by lender; check loan terms to see if a grace period applies.
• Interest rate (The interest rate is the percentage cost charged by lenders for borrowing money.)
• Are there any special rules by the Indian government for education loans for abroad studies without collateral

Go to the official website of the lender offering the loan.

Complete the online application form with correct details like your name, course details, and financial information.

Scan and upload documents such as

• Your admission letter from the university
• Your academic records (mark sheets and certificates)
• Your financial documents, like bank statements

After filling in all the details and uploading the documents, submit the form online.

The lender will check your details and inform you if your non-collateral education loan is approved. This may take a few days to a few weeks.

Conclusion

Non-collateral education loans do not require assets or property to be offered as collateral.

Disclaimer

As of March 31, 2024. T&C apply.

Credila Financial Services Limited (Formerly known as HDFC Credila Financial Services Limited)

The education loan facility provided by Credila Financial Services Limited ('The Company') will be at the sole discretion of the Company and within the Company's prescribed credit and underwriting norms/guidelines prevailing at the time of processing and disbursing the education loan. The Company maintains the right to change the interest rate at any time and at its sole discretion, without prior notice.