As per RBI guidelines on education loans, study abroad aspirants can easily avail of education loans without collateral. They let you pursue higher education abroad without pledging assets as security. You can easily apply for the same with most Indian banks and NBFCs. The standard limit for collateral-free loans with public-sector banks is set at INR 4 lakhs. However, you can avail of unsecured loans of higher amounts with private banks and NBFCs. They require a strong financial background and excellent credit history. Let’s explore major details on education loans without collateral and check the best banks offering competitive interest rates.
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Major Highlights on Education Loans without Collateral
An education loan without collateral is a financial assistance that doesn’t require you to pledge/ mortgage assets with the lender. This means you can cover all expenses related to higher education without risking your property or land as security for the loan. This is the best option for students who want to study abroad but do not have a significant asset to use as collateral. Check out the important details you must know about getting an education loan without collateral-
- Even if you’re not required to provide collateral, lenders still assess your creditworthiness, including your co-applicants (usually a parent’s) credit score, income, and overall financial stability.
- Like other education loans, those without collateral come with a moratorium period (usually during the course duration + 6 months to 1 year), which means you don’t have to repay the loan immediately after disbursement.
- Since there’s no collateral involved, the loan approval process is often quicker. Some banks or lenders can approve loans in as little as 7-10 days, allowing you to meet tight deadlines for university admissions.
- While unsecured loans are easier to get, they often come with slightly higher interest rates compared to secured loans, as the bank takes on more risk by not having collateral.
- Many education loans without collateral do not have pre-payment penalties, meaning you can pay off the loan early without incurring any extra charges.
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Loan Amount Limit on Education Loans without Collateral
The maximum education loan amount that can be availed without collateral typically depends on several factors such as the lender’s policies, the course, and the university. As per RBI guidelines, banks cannot obtain collateral security in the case of education loans up to INR 4 lakhs.
- In most cases, education loans can be availed without collateral up to INR 7.5 lakhs. However, they require a third-party guarantee. This can be a parent/ guardian as a co-borrower. You can apply for no collateral no cosigner education loans if you do not have one.
While INR 7.5 lakhs is the standard limit, some banks or NBFCs may offer slightly higher amounts for students going abroad, especially if the applicant has a strong academic profile and a reliable co-applicant (usually a parent). This is also based on the applicant’s academic performance and future earning potential. For instance, ICICI Bank provides unsecured loans up to INR 1 crore, while Axis Bank offers up to INR 75 lakhs for studying abroad.
Several institutions even go the extra mile by offering loans up to INR 1 crore without requiring collateral, depending on factors such as the borrower’s creditworthiness and eligibility. Here’s a quick look at some prominent banks offering unsecured education loans for international studies:
| Bank | Maximum Loan Amount |
| ICICI Bank | Up to INR 1 crore |
| Axis Bank | Up to INR 75 lakhs |
| HDFC Bank | Up to INR 50 lakhs |
| IDFC First Bank | Up to INR 50 lakhs |
| Union Bank of India | Up to INR 40 lakhs |
| YES Bank | Up to INR 40 lakhs |
| State Bank of India | Up to INR 7.5 lakhs |
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Factors Affecting Your Chances of Getting a Collateral-Free Education Loan
Applying for an education loan without collateral can seem like a dream come true—no need to mortgage property or pledge assets. However, securing such a loan isn’t as simple as just filling out an application. Several key factors play a crucial role in determining whether you qualify for an unsecured education loan. Let’s break down these factors and explore how they impact your chances of getting approved:
Your Academic Profile- A strong academic record signals that you’re likely to succeed in your course and land a high-paying job. Lenders prefer students with good grades, especially in technical or job-oriented fields like engineering or medicine.
Choice of Course- Lenders favour programs with strong job prospects and high earning potential. Courses in STEM, business, and healthcare tend to be more appealing to banks, as they predict better repayment chances.
Co-Applicant’s Financial Strength- Having a financially stable co-applicant (usually a parent) can significantly improve your chances. A strong income, good credit score, and overall financial stability of your co-applicant are crucial for approval.
Future Earning Potential- Banks assess your future career prospects. If your course leads to a high-paying job, lenders feel more confident in your ability to repay the loan, making you a stronger candidate for an unsecured loan.
Financial Documentation- Complete and accurate financial documents, including bank statements and proof of income, show that you and your co-applicant are financially responsible. Well-organized paperwork can boost your chances.
Credit Score- A good credit score (750 and above) is key for both you and your co-applicant. A healthy score demonstrates financial reliability and increases the likelihood of securing a collateral-free loan.
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How to Increase Your Chances of Getting an Education Loan Without Collateral?
A financially stable co-applicant (like a parent) with a solid income and good credit score can significantly improve your chances of getting approved for an unsecured loan. Lenders prefer courses that offer high earning potential. Fields like engineering, business, healthcare, and computer science are considered favourable.
- Ensure both you and your co-applicant have a credit score of 750 or higher. A strong credit score indicates financial reliability and increases your approval chances.
- Private banks and non-banking financial companies (NBFCs) may offer more flexible terms compared to public banks. They are often more willing to approve unsecured loans for higher amounts.
- Platforms like Fly Finance allow you to compare offers from multiple lenders, helping you find the best deal and increasing your chances of approval by widening your options.
This was all about getting education loans without collateral. Strengthen your loan application by securing a reliable co-applicant, maintaining a good credit score, and opting for in-demand courses. Applying through platforms like Fly Finance can also increase your approval chances.
To learn more about education loans, the best bank accounts for students, forex, banking experience for global students, or international money transfers, reach out to our experts at 1800572126 to help ease your experience with studying abroad.
FAQs
Yes, many banks and financial institutions offer unsecured education loans for studying abroad, depending on factors like your academic profile, co-applicant, and the course you’re pursuing.
The maximum amount can vary by lender. Generally, banks cannot obtain collateral security in the case of education loans up to INR 4 lakhs. However, private banks and NBFCs offer loans up to INR 50 lakh to INR 1 crore without collateral for studying abroad.
Interest rates typically range from 9.25% to 14%, depending on the lender, the applicant’s profile, and the loan amount. They are higher than secured loans as the risk for the lender is high.
Major banks offering collateral-free education loans include ICICI Bank, Axis Bank, HDFC Bank, IDFC First Bank, and State Bank of India, among others.
Factors such as your academic performance, the reputation of the university, the course you’re studying, your co-applicant’s financial background, and your credit score play a key role.
Yes, most banks require a co-applicant (usually a parent or guardian) for collateral-free loans, especially for higher loan amounts.
A good credit score (750+) significantly improves your chances of getting an unsecured education loan with favourable terms, including lower interest rates.
While it is more challenging, it’s still possible if you have a co-applicant with a strong financial background or a good academic record.
Repayment typically begins after the course is completed, with a moratorium period of 6 months to 1 year. The loan is generally repayable in 5 to 10 years.
Yes, banks and lenders typically charge a processing fee, which can range from 0.5% to 2% of the loan amount.
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