Pursuing higher education usually requires a lot of funds especially when you are planning to pursue a course from high-ranked universities and colleges. If you are facing a financial crunch and aren’t able to secure a scholarship then an education loan can become a saviour of your dreams. The catch here is that banks ask for collateral in return for sanctioning loan amount and it is not easy to arrange an asset to pledge.
In such a case, you can go for an education loan in which banks or other financial institutions rely on your previous academic performance and creditworthiness to get assurance for repayment.
While applying for an unsecured education loan banks ask for certain documents from the borrower for verification. Therefore, to ensure your smooth application process we have created this blog where we have covered documents for unsecured education loans. Keep reading further to know more!
Table of contents
What is an Unsecured Education Loan?
To apply for an unsecured loan the borrower does not have to pledge any collateral in return. This means that instead of getting assurance through asset security, the lender relies on the creditworthiness and the future employability potential of the borrower. It is important to know that the interest rate levied on an unsecured loan is usually higher as compared to interest rates charged on secured loans. Also, the repayment period is shorter when compared to a secured loan and the borrower in some cases also needs to pay partial payments during their study period.
An unsecured loan usually relies on the income of a co-applicant for repayment assurance therefore a borrower needs to mention a co-applicant with good income and CIBIL score.
Also Read: Secured vs Unsecured Education Loan – Which One to Choose and Why?
What are the Documents Required for an Unsecured Education Loan?
Having prior knowledge of the documents for unsecured education loans can ensure a smooth application process. Therefore, we have listed some of the general documents required from the applicant and co-applicant by banks or other financial institutions.
List of Documents Required From the Borrower
When you apply for an unsecured education loan, the lender will ask for general documents from the student for verification purposes.
- High school academic transcripts of their 10th and 12th class.
- Degree certificates of the student if in case they have just completed their graduation and are still waiting for the final degree certificate then they can give their previous semester transcripts.
- Scorecards of the standardised test they have sat for like IELTS, TOEFL, PTE, GMAT, GRE, SAT, etc.
- Admission letter from the university you have applied for.
If the student is a working professional meaning they have work experience then they need to provide the general documents mentioned below:
- ITR documents for at least three years or of the duration they have worked.
- Salary slips of three months.
- Work experience letter.
Also Read: How to Take an Education Loan in India?
List of Documents Required in Case of Self-Employed Co-Applicant
If the co-applicant is a self-employed individual then they need to provide the following documents for the education loan:
- Bank account statement for the previous six months.
- Business proof (if applicable) – (Service Tax Registration, Gomasta License, Registration Certificate, Address Proof).
- Previous three-year ITR documents.
- Qualification Certificate (in case the individual is a professional like a CA, Doctor, etc.).
Must Read: 5 Things to Keep in Mind to Apply for an Education Loan
List of Documents Required in Case of Salaried Co-Applicant
In the case of salaried co-applicant, the documents mentioned below need to be submitted for income proof:
- Copy of last 2 years IT returns duly acknowledged by the IT department and Form 16.
- Previous 3 months’ salary slips
- Bank Account Statement of their salaried account for the last 6 months.
Documents to be Submitted by the Applicant and Co-Applicant for an Education Loan
Both the applicant and co-applicant need to submit some general documents when applying for an education loan. A list of these documents is mentioned below:
- KYC (Know Your Customer) related documents to be submitted at NBFCs
- Aadhar card copy
- Passport size photograph
- PAN card copy
- A copy of the loan applicant’s passport
Also Read: Documents Required for Education Loan
FAQs
For a loan amount of up to INR 7.5 Lakh, there is no collateral required. Also, if you get into high-ranked institutions like IIMs the banks will not ask for collateral for high amount loans.
Yes, banks can reject an education loan application if you do not have a good academic record. The reason behind this is that banks will not get assurance of your future employability potential.
Compared to other banks Bank of Baroda usually approves education loans faster.
We hope you find this blog informative which covers documents for unsecured education loans! To know more about the loan application process, and the best bank accounts for students or international money transfers, subscribe to Fly.Finance or reach out to our experts to help ease your study abroad experience.
