Education Loan NBFC for Abroad Studies

According to the Global credit rating agency CRISIL, NBFC education loans are projected to experience a significant growth of up to 40% in the financial year 2023-24. Over 90 percent of the education loans are for studying abroad, with India-based courses accounting for the rest.

What are NBFCs?

Non-Banking Financial Corporations or NBFCs provide financial services and lending options as an alternative to traditional banks. The key distinction between banks and NBFCs is that banks primarily use customer deposits to lend money, whereas NBFCs raise funds from investors, financial institutions, and banks to offer loans to customers. Due to lighter regulations, education loan NBFCs often offer more flexibility to their customers. This blog is designed to help you answer your various queries related to NBFC education loans like which NBFC is best for education loans or the best NBFC for education loans.

Best NBFC in India for Education Loan

HDFC Credila, Avanse, Auxilo, and InCred are the best education loan NBFCs in India. Below is a comparative list of NBFCs providing education loans and highlighting the best NBFC in India for education loan without collateral:

*Repayment during studies for all the NBFCs mentioned above is simple interest or partial simple interest

Explore how education loan NBFC provide abroad education loans without collateral by watching our detailed video.

Features of Education Loans NBFCs

Abroad education loans from NBFC are financial aid designed for students who wish to study abroad. These education loan NBFCs are usually unsecured loans and covers various expenses.

Financial Support for Studying Abroad:

Education loans provided by NBFCs are specifically designed to help students pursuing higher education overseas. Such loans cover expenses like tuition fees, living expenses, travel, and other study-related costs.

Unsecured Loans:

NBFCs primarily offer unsecured education loans, eliminating the need for collateral. However, they may require a co-applicant with a stable income and a good credit history.

Flexible Loan Amounts:

The loan amount offered by NBFCs varies and depends upon various factors such as the profile of the student, course of study, university of enrollment, etc. Some NBFCs even offer loans up to INR 50-80 lakhs for top-ranked universities.

Higher Interest Rates:

Interest rates charged by NBFC are generally higher than those offered by public and private banks. It usually ranges from 10% - 14%, depending on various factors like loan amount, repayment capacity, and co-applicants income.

Quick Approval and Disbursement:

NBFCs have a faster loan processing time compared to traditional banks. Some lenders approve loans within 7-10 days, making them ideal for students who need funds on an urgent basis

Flexible Repayment Options:

Many NBFCs offer flexible repayment options that allow students to start partial repayments during their studies or opt for extended loan tenures of 10-15 years.

Eligibility Criteria of Abroad Education Loans from NBFCs

To be eligible for an education loan NBFC, a student must meet the following criteria:

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  The student must be an Indian citizen
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  The student must be between the ages of 18 and 35 years
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  The student must have a good academic record
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  The student must have secured admission to a recognized university or college abroad
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  The student must have a co-applicant who has a steady source of income and a good credit score
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  The student must have scored decent in pre-requisite exams such as IELTS, TOEFL, and GRE.

Documents Required for NBFC Education Loan 

The documentation required for an education loan NBFC without collateral varies depending on the lender. However, some common documents that are usually required include -

Applicants documents:

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  Identity proof: PAN/ Passport/ Driver’s License/ Voter ID card or government-issued identification document
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  Education loan application form
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  Address proof: recent copy of telephone bill/ electricity bill/water bill/ piped gas bill/ Driving license/ Aadhaar card
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  Past academic record
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  10th standard mark sheet
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  12th standard mark sheet
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  Undergraduate result (semester-wise)
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  Entrance exam results (e.g. GMAT, GRE, TOEFL, etc.)
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  Proof of admission: admission letter (A conditional admission letter is also applicable).
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  Statement of expenses
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  2 passport-size photographs
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  Loan A/C statement of one year (if applicable)
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  Bank account statement of the student (if applicable)

Co-applicant’s documents:

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  Identity proof: PAN/ Passport/ Driver’s license/ Voter ID card or government-issued identification document
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  Address proof: recent copy of telephone bill/ electricity, water, piped gas bill or copy of Driving license/ Aadhaar card
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  2 passport-size photographs
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  Co-borrowers bank account statement for the last 6 months
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  In case of another ongoing loan, then the loan A/C statement of 1 year

Income proof for salaried co-applicant/guarantor:

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  Salary slips for the last 3 months
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  Copy of Form 16 of the last 2 years or copy
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  Bank account statement for the last 6 months (Salary account)
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  A brief statement of assets & liabilities of parent/ guardian/ other co-borrower

Income proof for self-employed co-applicant/guarantor:

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  Business address proof
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  Last 2 years IT returns ( If IT Payee)
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  TDS certificate (Form 16A, if applicable)
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  Certificate of qualification (for C.A./ doctor and other professionals)
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  Brief statement of assets & liabilities of parent/ guardian/ other co-borrower
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  Bank account statement for the last 6 months

Factors to Consider While Taking NBFC Education Loans

There are various factors that you should consider before finally applying for an education loan from NBFCs. These factors will help you to get the best loan terms that align with your financial needs. Below are some of the factors that you should consider.

Loan Amount:

This is one of the major factors that the borrower should take into account as it will help you to finance your various educational expenses ranging from tuition fees to living expenses and many more. The loan amount further depends on the profile of the student, course, country, and university of enrollment, as well as the NBFC from which you are taking an education loan. You must ensure that the sanctioned loan amount covers all the cost of your education. 

Interest Rates:

This is another crucial factor that depends on the course and university of enrollment, your credit score, and the loan amount. Interest rates from NBFCs are usually high ranging somewhere between 10% to 16%. You must compare all the loan options and interest rates since this factor majorly affects the cost of an education loan.

Repayment Terms:

This factor allows you to choose from various repayment options since NBFCs provide options such as part payments, step-up EMIs, or one-time repayment. 

Collateral Requirements:

If you are willing to secure a loan above a certain limit, then certain NBFCs require the collateral to be pledged such as property, FD, etc. NBFCs also offer collateral-free loans that are solely based on the profile of the student and the financial strength of the co-applicant to mitigate the risk of default. 

Expenses Covered:

It is crucial on your part to consider what are the expenses that are being covered by the loan amount. You should ensure that your loan amount covers the essential expenses of your education loan so that you do not have to stress about the funds during your course of study.

Processing Fee:

NBFCs generally charge a processing fee that ranges from 0.5% to 2% of the loan amount. Compare various options to get the best loan terms.

Processing Time:

NBFCs are known for their quick processing times compared to traditional banks.

Prepayment and Foreclosure Policies:

Many NBFCs allow early repayment but may impose prepayment penalties or foreclosure charges. Ensure that you read all the terms related to the loan and compare prepayment policies to reduce the overall burden of interest costs in the future. 

Advantages of Abroad Education Loan NBFC

Disadvantages of Abroad Education Loan NBFCs

Pro Tip: Situations where NBFCs are a perfect option for an education loan

NBFC education loans offer an alternative financing option for students pursuing higher education. These loans cater to the needs of individuals who may not qualify for traditional bank loans or government-sponsored educational funding. While exploring education loan options, it is essential to consider the terms and conditions associated with education loan NBFC.

This includes being aware of additional charges such as processing fees, prepayment charges, and penalty fees. Properly understanding and comparing these factors will empower borrowers to make informed decisions and choose the loan that best suits their needs.

Education Loan from NBFCs via GyanDhan. 

When considering education loan NBFC, GyanDhan offers a seamless and transparent process, making the entire loan application and disbursement journey hassle-free. The expert education loan counselors at GyanDhan compare the loan products of different lenders to identify the most suitable loan option for your needs. This involves comparing the interest rates, loan amounts, repayment terms, processing fees, and other features of different lenders.

We bring the best NBFC for education loans for you. Best of all? We do not charge any kind of fees or commissions from the applicants at all. To start your education loan journey today, check your loan eligibility now!

Frequently Asked Questions