Quality education is the only way to make any country a world leader. This education usually comes with a cost that people often don’t have. To plug this need educational loans come into play. But as we all know that taking a loan needs some security against which loan can be raised. Many bright scholars failed to get admission due to this. Today, we will tell you, how you can get a collateral-free education loan.
What is a collateral free education loan?
Like any normal loan, banks also ask for collateral for an education loan as security of the amount, so that if the loan payment is stopped due to any reason, then these collateral can be used by the company to recover the amount. Collateral includes several assets such as property, land, fixed deposit and insurance corpus etc.
Education Loan Without Collateral is such a loan, in which students get loans even they do not have assets to offer in collateral. With this, it becomes easy for students from economically weaker sections to take education loans. It is also good for those students who have got offers from good universities around the world, but they do not have the sum to go there to study.
However, the interest rates of such loans are very high and the repayment process is very strict.
What do existing guidelines say on collateral-free loans?
Education loans are given under the Model Education Loan Scheme of the Indian Banks Association (IBA). Such loans are guaranteed under the Credit Guarantee Fund for Education Loan (CGFEL) scheme. Under the scheme, you can get a loan of up to Rs 7.5 lakh without a guarantee.
No margin is required for applying for a loan within this limit from a scheduled commercial bank under the CGFEL scheme. This means that if the loan amount is up to Rs 7.5 lakh, then banks can give 100% of the loan amount without any security.
Those who want to take a loan of more than Rs 7.5 lakh, will have to turn to NBFCs. Some of these institutions give education loans without collateral up to 50 lakh rupees.
Where you can get a collateral free education loan?
From HDFC Credila Education loan of less than Rs 20 lakh can be taken. HDFC Credila is an HDFC Limited Company, which is one of the first few education loan companies in India. It gives 100% loan cover with no margin money. It also comes with a 10-year payout period and other conveniences.
KC Mahindra Scholarships for Postgraduate Studies Abroad
This is a competitive scholarship scheme run by KC Mahindra Education Trust for postgraduate students. As an award, those students get interest free loan scholarships, who have got admission to a foreign university.
GyanDhan is a mediation platform, which acts as a market for students and their associated lenders. They also have partnerships with many financial institutions. For students seeking education loans without collateral, GyanDhan helps in assessing the factors like interest rate charges, repayment structure, margin money, hidden fees. It does not charge for any service.
Avanse is an education-focused Non-Banking Financial Company, which provides education loans without collateral to students to study in more than 100 universities in 40 countries around the world. The loan amount covers tuition fee coverage, accommodation and partial travel expenses to the students. However, these loans are thoroughly scrutinized before approving them.
Prodigy Finance is an international education financing company that provides loans to students for pursuing master’s education abroad. It takes into account the admission offer and future earning potential to calculate the loan.
Incred Financial Services is a Non-Banking Financial Company registered with the Reserve Bank of India. This institution gives education loans up to Rs 40 lakh without collateral. It covers 700 universities in many countries such as Canada, France, Netherlands, USA, Germany, Singapore, Ireland and Australia.
Auxilo provides loans for studying abroad according to the need of the applicant. This unsecured loan is assessed on the basis of the student’s skill and ability. Factors like university admission, past records and test scores etc. are assessed. Notably, there are no conditions placed by the company regarding the upper limit of the loan and the expenses.