Education Loan Without Collateral for Abroad Studies

Are you a student who dreams of studying abroad, but having no collateral raises a self-doubt ‘Can we get study loan without collateral?’ Do not worry. Education loan for abroad studies without collateral is a possible thing. With varying loan limits and conditions, education loans for abroad studies display an array of smart options for students from diverse financial situations.

The majority of lenders who provide non-collateral education loan for abroad require a financial co-applicant, as will be discussed later in this blog. However, international lenders like MPOWER Financing and Prodigy Finance can provide education loans even without a financial co-applicant. In addition, there are public banks, private banks, and NBFCs that can also offer study loan without collateral, with varying loan amounts. Therefore, this blog will provide a comparative overview of all these lenders, which will help you make an informed decision.

What is an Education Loan Without Collateral?

A non-collateral education loan for abroad is a type of loan provided to students for their higher education expenses without requiring any security or guarantor. These loans are offered based on the applicant's academic record, admission to a recognized institution, and future earning potential. They are generally unsecured education loans, meaning borrowers do not need to pledge assets like property or shares. Interest rates may be higher compared to secured loans, and the loan amount can vary based on the lender's policy and the borrower's profile.

Education Loan With Collateral Vs Without Collateral

Let’s start with some basics that is by understanding the difference between abroad education loan without collateral and with collateral.

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Lenders Offering Abroad Education Loan Without Collateral

The different lenders that can provide you with collateral free education loan for abroad are listed below.

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  Public sector banks - SBI and UBI.

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  Private sector banks - Axis Bank, ICICI Bank, and IDFC FIRST Bank.

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  NBFCs - HDFC Credilla, Avanse, Auxilo, and Incred.

Now that you have the answer to the question ‘Can we get student loan without security?’ let’s have a look at different lender’s education loan amounts and interest rates. The table below provides you with information about lenders that can provide you with education loan for abroad studies without collateral but a financial co-applicant is required.

Thinking about studying abroad but worried about collateral for an education loan? Watch our video to discover how you can secure funding without collateral or a co-applicant!

Lenders Offering Abroad Education Loan Without Collateral And Co-Applicant

Many of you often ask one question, in particular, i.e. Can I get education loan without guarantor? The table below mentions international lenders that can provide you with education loan for abroad studies without collateral and co-applicant / guarantor.

Abroad Education Loan Without Collateral: Eligibility

There are certain eligibility requirements that you would have to meet to ensure that you can get a non-collateral education loan for abroad. The eligibility may differ depending on the lender but some common parameters are-

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  Academic profile of the client
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  Co-applicant finances
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  Chosen country, university, and course
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  Test scores

Let’s discuss the eligibility for foreign education loan without collateral in detail:

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  Academic profile of client: Since the bank does not demand collateral as security for your study loan without collateral, your academic excellence is one of the primary criteria for an unsecured education loan. The reason behind this is that apart from your co-applicant’s income your estimated earning potential is checked which can differ based on your academic performance in the future. Your academic performance for the future can only be forecasted through your past performances.

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  Co-applicant finances: The co-applicant must have a very good CIBIL score and meet the prescribed requirements in order to get study loan without collateral. They should also meet the minimum income level as well which can be 30,000 INR - 40,000 INR (without obligations) depending on the lender.

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  Chosen country, university, and course: Almost all the lender that is providing you with non-collateral education loan for abroad has developed a list of universities/colleges and courses. All you have to ensure that your target country, course, and university/college fall in on their lists.

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  Test scores: The scores you obtained in the English proficiency tests and other standardized tests, like IELTS, TOEFL, GRE, SAT, etc., shall be above average or meet the mark prescribed by your lender.

Abroad Education Loan Without Collateral: Documents Required

Given below is a generalized list of documents required for getting an education loan to study abroad without collateral.

Documents required from the applicant for study abroad loan without collateral:

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  Loan application form
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  Identity proof - PAN Card, Passport, Voter ID card.
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  Address proof - a recent copy of the telephone bill, electricity bill, or water bill.
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  Past academic record - 10th, 12th, undergraduate mark sheet, test scores of entrance tests like GRE, TOEFL, IELTS, etc. 
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  Proof of admission - you can submit a conditional offer of admission as well.
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  Statement of expenses - the entire cost of education.
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  Passport-size photographs
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  Loan account statement of one year, if there are any previous loans taken from any lender.

Documents required from the co-applicant for study abroad loan without collateral:

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  Identity proof 
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  Address proof 
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  Income proof - the documents for the same will differ depending on the type of employment, such as self-employed or salaried.

Self-employed co-applicants:

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  Business address proof
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  Last 2 years IT returns
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  TDS Certificate 
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  Certificate of Qualification 
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  Bank account statement of the last 6 months

Salaried co-applicants:

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  Salary slips of last 3 months
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  Copy of Form 16 for the last 2 years or copy of IT Returns for the last 2 years.
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  Bank account statement for the last 6 months.

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Expenses Covered in an Unsecured Education Loan for Abroad

This section will guide you about the expenses that are been covered in abroad loan for students without collateral. However, the expenses covered may vary depending on the country, course, and specific schemes of these education loans. Here are the expenses which are covered in the education loan.

Tuition Fee:

Full or partial coverage of tuition fees, depending on the loan amount approved.

Accommodation:

Under foreign education loan without collateral, costs of on-campus or off-campus housing are also included.

Travel Expense:

Travel costs include flight tickets and other transportation expenses.

Study Materials:

Study material expenses could be expenses for books, e-resources, and academic tools. Costs for laptops or other necessary equipment may also be included under this category.

Health Insurance:

Health insurance is a mandatory requirement by universities or countries. Health insurance is also covered under foreign education loan without collateral.

Examination and Application Fees:

Study abroad education loan without collateral also cover additional costs like examination costs and other miscellaneous expenses.

How to Get Education Loan for Abroad Studies Without Collateral?

The process of starting a loan application without collateral is quite simple. All you need to do is follow the below-mentioned steps.

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  Check Eligibility: Visit GyanDhan's website or use the loan eligibility form to determine if you qualify for a study abroad loan without collateral. Criteria include academic qualifications, admission to a recognized foreign institution, and creditworthiness.

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  Apply and Consult: An Education Loan Counselor (ELC) from GyanDhan will guide you through the process, providing a tailored checklist. Submit your application, and the system will match you with two suitable lenders.

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  Submit and Verify Documents: Gather and submit required documents, including academic and income records. Lenders verify your application, reviewing admission details, financials, and more.

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  Loan Approval: Upon lender approval, you receive a notification with the approved amount. If satisfied, you can finalize by signing the agreement, leading to the disbursal of the required funds.

Benefits of Student Loan Without Collateral

There are several benefits of abroad education loan without collateral. Few of them are listed below -

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  Wider access to education: Study loan without collateral democratize access to higher education, especially for students who may not have significant assets but possess strong academic credentials and potential.

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  No asset risk: Since these loans do not require collateral, students and their families do not risk losing assets in case of financial difficulties or inability to repay the loan.

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  Encourages academic excellence: Often, eligibility for an unsecured education loan is based on academic performance, motivating students to maintain high grades and perform well.

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  Simplified loan approval process: The absence of collateral speeds up the loan approval process, making funds available more quickly and efficiently than secured loans, which require asset valuation.

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  Flexible repayment terms: Many lenders offer flexible repayment terms, including grace periods during the study and low-interest rates, making repayment more manageable for students once they graduate and start working.

If you have any further questions about education loan without collateral, please visit our YouTube channel. We have a detailed video that explains the topic thoroughly.

Countries Accepting Unsecured Education Loans for Abroad Studies

Unsecured education loans are widely accepted in many countries for students pursuing higher education. These loans provide financial support without requiring collateral, making them a popular choice for students. This section will provide you with the top countries where unsecured education loans are generally accepted.

Loan Repayment Options and Moratorium Periods

You can explore various options for international education loan without collateral that offers flexible repayment options that align with your financial needs. Many lenders also provide the option of a moratorium period that generally covers the course duration plus 6 to 12 months, allowing students to focus on their studies without the stress of repayment. This section will provide you with an understanding of foreign education loan without collateral repayment options and which bank is the best bank for education loan without collateral that aligns with your needs.

Common Challenges and How to Overcome Them

This section will guide you through some of the common challenges often faced by students while applying for foreign education loan without collateral as they encounter various questions like “how to get unsecured education loan” and many more such questions. 

Strict Co-Applicant Requirements:

Students generally struggle to meet the co-applicant requirements as many lenders require a co-applicant with a stable income and good credit history to approve the loan. However, you must explore lenders that offer non-co-applicant loans or those that consider alternative income proofs for loan approval.

Delays Due to Missing or Incorrect Documents:

Missing or incorrect documents can delay or reject your loan applications. Hence, you must first create a checklist of required documents, including identity proof, admission letter, fee structure, etc to avoid any delays in the approval process.

Higher Interest Rates on Unsecured Loans:

Unsecured loans generally have higher interest rates compared to secured loans leading to more financial burden of repayment. Always compare lenders that suit your financial needs and negotiate rates.

Loan Amount May Not Cover Full Expenses:

Some lenders approve amounts that do not cover the full cost of education and living expenses, making students struggle to arrange more funds. However, you should choose lenders that provide higher loan amounts. You must also explore education loan schemes by the Indian government that offer additional financial support.

Limited Loan Options Based on University or Course:

Lenders may limit loans to certain universities, countries, or courses. Lenders generally offer high loan amounts to students flying for top study-abroad destinations and universities with good QS rankings. Hence, always research and apply to lenders with flexible loan policies. 

How can GyanDhan Help You Get a Study Abroad Loan Without Collateral?

GyanDhan simplifies the process of securing an education loan without collateral for students who are aiming to study abroad. With their expertise, you can access a wide range of options from various lenders, ensuring you get the best deal based on your needs. Here's how GyanDhan can assist you in obtaining an unsecured loan for your education:

Multiple Options:

We have partnered with several lenders in the market. Thus, we would be able to provide you with multiple options in one place when it comes to lending options.

Personalized Suggestions:

We evaluate your details and suggest the lender that will best serve your purpose and needs. Our Education Loan Counselors will discuss the loan options with you and help you apply for the loan.

Quick Resolution to Problem:

If any problem arises, it is quickly resolved by contacting the concerned official so that your loan application is processed quickly and smoothly.

Free of Cost:

All these services from GyanDhan in relation to your education loan are provided free of cost to you.

Which is the Best Lender for Education Loans to Study Abroad Without Collateral?

As a study abroad candidate, your main priority should be finding education loans with lower interest rates and the necessary funding. From the perspective of a student, we recognize that selecting the right option for student loan unsecured is challenging due to the choices available. Thus we are providing you with an overview of how to choose the best lender.

Public Sector Banks > Private Banks > NBFC > International Lenders

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  Your first priority should be public banks as they can provide you with very good interest rates. However, the loan amount that you can get from them is low for unsecured education loans.
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  Private banks should be your next priority as the loan amount provided by them can go upto 50 Lakhs INR and they will be able to provide you with reasonable interest rates. Therefore if you have a question “Can I get 50 Lakhs education loan without collateral” then you have your answer now.
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  In case you need a loan above 50 Lakhs INR then you can go for NBFCs, their interest rate may be higher than private banks but the loan amount can go up to 70 Lakhs INR.
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  International lenders will be a great last option especially when you do not have a proper co-applicant. They can provide you with loans upto 100,000 USD but the interest rate will be higher as compared to all the other lenders.

Now that you have all the information related to getting an education loan to study abroad without collateral, you will be able to make an informed decision and choose the best lender for you. Do not worry if you are still confused, let GyanDhan Financial Services Pvt. Ltd. help you in choosing the best lender. All you have to do is check your loan eligibility.

Frequently Asked Questions