Personal Loans for Students are a vital financial solution for those aspiring to study abroad but facing monetary challenges. Many students struggle with funding their education due to a lack of income or credit history, making loan approvals difficult. While education loans are an option, they often come with strict eligibility criteria.
In this blog, we will explore everything about personal loans for students with no income, including eligibility, alternatives, and tips to secure financing. Stay tuned to learn more!
How to Get a Personal Loan for Students Without Co-signer, Income, or Credit History?
There is no direct way of getting personal loans for students without proper income proof, credit history, or co-signer. Major banks in India or abroad rely on these documents as they prove your creditworthiness, but you can follow any of the options below which can help you in getting a personal loan approved:
Secured Personal Loan for Students: Option 1
Secured personal loans for students can be a safe and considerably easy option to get approved, especially when opting for a secured loan. As mentioned earlier, you will need a collateral asset like an investment portfolio, property, etc., to initiate the process. The advantage of taking a secured loan is that it offers fast approval, low interest rates, and minimal fees, making it easier to obtain than other loans.
Sometimes, you may need a co-signer if the asset value is lower than the borrowed amount, but usually, it is not required.
Enrolling in Government Schemes: Option 2
There are many schemes provided by the Government of India where benefits like Personal Loans for Students, education loans, and student credit cards are offered without the hassles of traditional banks. The process is online, but there are a few drawbacks, such as the requirement of a credit history to assess creditworthiness and the possibility of receiving a lower loan amount than expected.
Lenders Offering Personal Loans for Students: Option 3
Many students face challenges in securing traditional loans due to a lack of income or credit history. Fortunately, some lenders specialize in supporting students’ educational aspirations and provide personal loans for students even without the need for a credit history or income verification.
Here are some lenders that purely focus on students’ educational dreams and sometimes provide loans without a credit history or income:
- HDFC Credila– HDFC Credila is a subsidiary of HDFC Bank and is India’s first dedicated education loan company. HDFC Credila offers personal loans for students to study abroad without income, no credit history, or cosigner up to Rs 45 lakhs but it will be purely based on your merit to get the loan approved.
- SBI Global Ed-Vantage– SBI Global Ed-Vantage is offered by the State Bank of India for Indian students seeking to pursue study programs at foreign colleges or universities. As part of their offerings for personal loans for students, SBI provides a unique feature where the loan can be repaid in up to 15 years, with a repayment holiday of 12 months after the course period. This flexible repayment option makes it an ideal choice for students looking to finance their education abroad.
Also, Read- What is a CIBIL Score for Personal Loan?
Types of Personal Loans for Students
Understanding the different types of personal loans for students is crucial for making informed decisions that align with one’s financial situation and long-term goals. Generally, there are two types of personal loans for students: Secured Personal Loans and Unsecured Personal Loans. Let’s explore both of these loan types in detail.
Secured Personal Loans For Students
Secured personal loans for students are types of loans that require collateral. Collateral can be anything of value and is used to secure the loan. In case you default on the loan, the lender has the right to seize and sell the collateral to recover their losses.
For students, common types of collateral include property, vehicles, or investments. The advantage of secured personal loans is that they typically come with lower interest rates compared to unsecured personal loans as lenders have less risk involved.
Unsecured Personal Loans For Students
Unsecured personal loans for students are the types of loans that do not require any form of collateral. These types of loans are granted based solely on your creditworthiness and ability to repay the loan. As a student with no income or credit history, it can be difficult to qualify for an unsecured personal loan without a cosigner. Additionally, these loans typically come with higher interest rates compared to secured personal loans since lenders are taking on more risk without any collateral.
Must Read: Secured vs Unsecured Education Loans
Important Factors of Getting a Personal Loan for Students
Understanding the factors involved in securing a personal loan for students is crucial to increasing their chances of approval and ensuring them to make a smart financial choice. Let’s explore the important considerations to keep in mind when applying for a personal loan as a student. Here are some:
- It’s usually tough to get a loan approved without proper income proof, and credit history but there is a probability of getting a secured loan with some kind of collateral equivalent to the amount borrowed
- Even if you have a credit history and your credit score is low, the probability of getting a personal loan is low and banks may charge a high-interest rate
- Your age and your credit history age can also influence the chances of getting a loan
- If the purpose of taking the loan is education, then your merit and academic records will play a vital role in getting the personal loan approved
Also, Read- Education Loan Scheme by Narendra Modi
Documents Required for a Personal Loan for Students
When applying for a personal loan as a student, having the right documents in place is essential to streamline the approval process. Lenders typically require specific paperwork to assess your eligibility, verify your financial situation, and ensure that you meet the criteria for the loan.
Here are some documents that may come in handy while applying for a personal loan for students:
- Identity proof such as passport, Aadhaar card, PAN card, etc
- Address proof like utility bills or rent agreement
- Academic records such as mark sheets, certificates, transcripts
- Offer Letter of the Foreign University
- Bank statements for the last six months
- Income tax returns of the last two years (if applicable)
Eligibility Criteria for Personal Loan for Students
Before applying for a personal loan, students need to meet certain eligibility criteria set by lenders. These requirements help determine whether you qualify for a loan and can affect the approval process. Understanding the eligibility criteria is essential to ensure that you have everything in place before applying. Take a look at them mentioned below:
- You must be a citizen of India and have supporting documents as proof
- You must be enrolled in a full-time undergraduate or graduate program at an accredited institution
- You need to maintain a good academic record
- You must have a valid passport
- You need to provide a valid document that proves the ownership of the collateral (if provided)
- An active bank account in the name of the borrower is also necessary
Tips While Taking a Personal Loan for Students
To ensure you make the best choice, there are several key tips that can help guide you in securing a loan that fits your needs and financial situation. Here are some tips you should keep in mind while opting for a personal loan for students:
- Compare the interest rates offered by different lenders to find the best deal
- Consider the fees charged by different lenders, such as origination fees and prepayment penalties
- Choose a lender that you trust and that has a good reputation
- Avoid any kind of loan with high-interest rates and high penalty charges
- Check if there are any hidden charges or high processing fee
Relevant Read- Education Loan without Collateral
FAQs
While it’s challenging to get a personal loan without a co-signer, income, or credit history, there are options such as secured loans or government-backed schemes that may be available to students.
A secured personal loan requires collateral, such as property or investments, which reduces the lender’s risk and can help students secure the loan despite lacking income or credit history.
The government of India offers schemes like education loans and student credit cards, which may not require income proof or a credit history. However, these loans might come with limitations such as lower loan amounts.
Yes, HDFC Credila specializes in education loans for students and offers personal loans without requiring income or a credit history. However, the loan approval depends on your academic merit.
Secured loans typically offer faster approval, lower interest rates, and minimal fees compared to unsecured loans, making them an easier option for students without income or credit history.
Lenders may assess eligibility based on academic performance, collateral offered (for secured loans), and other criteria such as age and enrollment in an accredited institution.
Unsecured loans typically come with higher interest rates due to the higher risk to the lender. Without income proof or a credit history, it may be more difficult to qualify for this type of loan.
It may be more difficult to secure a personal loan without collateral, but some lenders like SBI Global Ed-Vantage may offer education loans based on merit, even without collateral.
Eligibility criteria typically include being an Indian citizen, being enrolled in a full-time course at an accredited institution, maintaining a good academic record, and possibly offering collateral for secured loans.
Before applying, consider the loan amount, interest rates, repayment terms, lender fees, and any potential penalties. It’s also crucial to ensure that you understand the loan’s impact on your long-term financial situation.
Yes, and one of the major and significant differences is, education loans offer lower interest rates compared to personal loans.
Yes, a relative or a friend can be a cosigner for your personal loan but this also means that they need to take full responsibility if you are unable to repay the loan in the future.
For getting a personal loan approved your minimum age should be 18 years, but for some major banks, the minimum age should be 21 years.
This was everything related to personal loans for students. Reach out to Fly Finance for all finance-related concerns to simplify your study abroad experience with zero hindrances.
