How to Apply for Unsecured Education Loan: An unsecured education loan is a type of loan that does not require collateral or security. Usually, private banks and NBFCs provide collateral-free or unsecured education loans and it comes with a comparatively high rate of interest. You can apply for an unsecured loan through online mode. One of the major benefits of an unsecured loan is that you don’t have to put your hard-earned asset under any kind of risk involved in a loan repayment. Let’s understand how to apply for an unsecured education loan.
Table of contents
Meaning of Unsecured Education Loans
Unsecured Education Loans or collateral-free loans are the type of loans where the customer is not required to pledge any type of tangible or intangible asset to the bank. The loan will be approved based on your income without any collateral. In the case of unsecured loans, the bank takes a high risk as they don’t have the option to recover the money directly if the borrower is not repaying the loan. Due to this, the bank charges a high rate of interest as compared to that of secured loans.
Also Read: Do you know the process of applying for a secured loan? Read this blog on How to Apply for a Secured Education Loan
How to Apply for Unsecured Education Loans?
The application process for an unsecured loan depends on the bank which you have selected as your lender. Most of the banks and NBFCs have an online application process for education loans. You can also apply for education loans on the Vidya Lakshmi portal of the Government of India. Check the steps involved in applying for an unsecured loan.
Select Your Bank or Lender
There are a lot of factors that need to be considered while selecting a bank or financial institution for your education loan. Compare the rate of interest, maximum eligible amount, repayment period, processing charge etc. and then select the bank which is best suited for you as per your requirements.
Fill out the Online Application Form
Visit the official website of the bank which you have selected. Look for loan applications and fill out the online loan application form. You will be required to enter details like name, contact details, required loan amount, course details, university details, cost break for tuition fees and accommodation etc. Fill in every detail carefully and submit the form.
Also Read: Are you aware of the major differences between secured and unsecured education loans? Check out this blog on Secured Vs Unsecured Education Loan
Submit the Documents
After filling out the application, upload all the supporting documents. Some of the basic documents are marksheet of higher secondary, university acceptance letter, visa approval letter, proof of accommodation, PAN, UID card etc. Upload all the documents carefully and make sure that they are visible.
Wait for Verification by the Bank
After successfully applying for the education loan, wait for a few days. The bank will check and verify all the documents, details, and your credit history. If the bank will find you eligible for the loan, the same will be communicated to you. After that, you will know how much loan amount you are getting, what interest rate and for how much duration.
Loan Approval
Once you check and agree with the terms and conditions, the bank will approve your loan. You can ask the bank for a loan sanction letter or a loan approval letter if you require it for the university. After the loan is approved you can start planning for your journey abroad as the bank is ready to pay the loan amount.
Loan Disbursement
Loan disbursement is the final stage of the education loan process. Once the verification process is over the bank will transfer the required amount directly to the university. The disbursement may be done in multiple payments i.e. semester-wise or year on year basis.
FAQs
Yes, government banks do provide unsecured education loans to students based on their income. However, most of the banks offer unsecured education loans up to INR 7.5 lakh only. A loan exceeding INR 7.5 lakh will require collateral.
Unsecured education loans are more risky for the banks as compared to secured loans. In case of non-repayment of the loan, the bank won’t have an option to recover the loan easily. This is why unsecured loans come with a high rate of interest.
Yes. The SBI YONO App is a secure option for online loan applications. It will redirect you to the Vidya Lakshmi portal and you can apply for the loan on the same.
This was all about the application process for an unsecured education loan. Most of the banks have a similar process of applying for a loan. Always read carefully the terms and conditions before applying for any type of loan.
To know more about the loan application process, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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