Many Indian students aspire to pursue international studies but may face challenges in securing education loans due to a lack of collateral. However, it is crucial to remain committed to your dreams and investigate lenders that provide education loans without requiring collateral. Several financial institutions, including private banks and non-banking financial companies (NBFCs), offer such loans. This article aims to provide a comprehensive overview of this alternative financing option.
Lending Options Without Collateral
There are mainly two types of lenders that offer loans for international students without cosigner:
- Option 1: Lenders that necessitate a co-signer, including private banks and NBFCs.
- Option 2: Lenders providing student loans without the need for a co-signer.
Let’s explore each of these categories to gain a better understanding of their differences.
Lending Options with Co-signer
- Private banks in India (e.g., ICICI Bank, Axis Bank, IDFC FIRST Bank) offer unsecured education loans but require a co-signer.
- Loan amount approval depends on factors like chosen country, course, applicant’s profile, and co-signer’s financial standing.
- Private banks generally have higher interest rates than government banks but are more competitive than NBFCs and international lenders, starting at an annual Rate of Interest (ROI) of 11%.
- Tax benefits under Section 80E are available for education loans from private banks.
- Processing times for private banks are generally quicker than for government banks.
- NBFCs like HDFC Credila, Avanse, InCred, and Auxilo also require a co-signer for education loan approval.
- The sanctioned amount depends on factors similar to private banks, and NBFC interest rates range from 11.50% to 13.75% per annum.
- Processing times for NBFCs are notably shorter than those of government and private banks.
- Unlike private banks, NBFC education loans do not provide tax benefits under Section 80E.
Lending Options Without Co-signer
- Some global lenders extend education loans to Indian students studying abroad without necessitating a co-signer.
- Unlike Indian banks and NBFCs, international lenders like MPOWER Financing and Prodigy Finance offer loans without the co-signer requirement.
- It’s important to acknowledge that the eligibility criteria for colleges and countries are somewhat limited with these international lenders.
- MPOWER Financing and Prodigy Finance, among others, disburse loan amounts in foreign currencies based on the chosen study destination.
- These loans are specifically designed for a select list of colleges and countries, ensuring a targeted approach to financing education for ambitious students.
- Key players in this category include MPOWER Financing and Prodigy Finance.
Lending Criteria
Qualifying for an education loan without collateral may vary across lenders, but certain common factors come into play. One significant consideration is the co-applicant criteria, where your co-applicant must possess a favorable credit score (often referred to as CIBIL), meet specific income conditions (typically around 30,000 INR to 40,000 INR without existing financial commitments), and adhere to the lender’s established standards. Another critical factor in securing approval for non-collateral education loans is your performance in English proficiency and standardized exams such as IELTS, TOEFL, GRE, SAT, etc. Achieving scores that either meet or surpass the benchmarks set by the lender is crucial.
Furthermore, your academic record assumes a pivotal role in non-collateral education loans. These loans place reliance on your past academic achievements, as collateral is not a prerequisite. When selecting the country, university, and course for your education, it is imperative to ensure that your choices align with the lender’s approved list for non-collateral education loans. For the application process, specific documents are indispensable for both the applicant and co-applicant. The following is a comprehensive list covering the documentation requirements for both parties involved.
Document Required
When seeking a non-collateral education loan, you are required to furnish a set of documents as part of the application process. The applicant’s documentation includes the loan application form, identity proof (such as PAN Card, Passport, Voter ID), address proof (recent utility bill), passport, academic records (10th, 12th, undergraduate mark sheets, entrance test scores), proof of admission (conditional offer accepted), statement of expenses (indicating the total cost of education), passport-size photographs, and the loan account statement of the last year if applicable.
On the other hand, the co-applicant must provide specific documents for the application, including identity and address proof, as well as income proof, which varies based on whether the co-applicant is self-employed or salaried. For self-employed individuals, this involves presenting business address proof, the last two years of income tax returns, TDS Certificate, Certificate of Qualification, and the bank account statement for the last six months. For salaried co-applicants, documentation includes salary slips for the last three months, Form 16 or income tax returns for the last two years, and the bank account statement for the last six months.
How to Apply?
Begin the process by checking your eligibility, evaluating factors such as academic history, admission to a recognized foreign institution, and financial standing. Once you’ve assessed your eligibility, take the next step by applying and seeking guidance from a GyanDhan Education Loan Counselor, who will provide personalized assistance. Through this system, you will be connected with two lenders tailored to your specific situation. Following this, proceed with document submission, providing necessary records such as academic and financial documents for the lenders’ review. Upon approval, you will be notified of the sanctioned loan amount. If the terms align with your preferences, proceed to sign the agreement, and the required funds will be disbursed for your overseas education, ensuring compliance with the lender’s criteria.
Choosing a non-collateral education loan for overseas studies offers numerous advantages, including simplified documentation, the flexibility to choose institutions, the availability of a co-applicant, and comprehensive coverage of educational expenses. If you have any questions or uncertainties during the loan application process, feel free to contact GyanDhan. Their committed support is ready to help you at every step, ensuring you connect with the ideal lender customized to your unique situation. Simply evaluate your loan eligibility with them, and they will guide you through each stage, addressing any inquiries or concerns you might have.
