Embarking on an abroad education journey is an exciting yet financially demanding endeavor. Many students aspire to pursue higher education abroad, but the cost can often be a significant barrier. To overcome this hurdle, prospective students often turn to education loans. When exploring financing options, two main categories emerge: Abroad Education Loans with collateral and Abroad Education Loans without collateral.
Types of Abroad education loan without collateral
Education loans for studying abroad are commonly classified into two categories based on the security provided by the applicant. While most lenders offer both types of loans, certain lenders may specialize in one type over the other, depending on the specific loan category. They are –
- Abroad Education Loans with collateral: loan with security
- Abroad Education Loans without collateral: loan without security
Meaning of Abroad Education Loan with Collateral
1.Security for Lenders:
Collateral, typically in the form of assets such as property, fixed deposits, or life insurance policies, provides a sense of security for lenders. Lenders are more inclined to offer higher loan amounts and lower interest rates due to the reduced risk associated with collateral.
Loans with collateral generally come with lower interest rates, making them a cost-effective option for borrowers in the long run. The interest rates are often fixed, providing predictability in repayment planning.
With collateral, students can secure larger loan amounts, covering not only tuition fees but also living expenses, travel, and other associated costs. The loan amount is often determined by the value of the collateral provided.
4.Longer Repayment Period:
Loans with collateral may offer longer repayment periods, reducing the monthly burden on the borrower. Extended repayment terms provide flexibility and ease financial strain.
Meaning of Abroad Education Loan Without Collateral
1.No Asset Risk:
One of the primary advantages of unsecured loans is that they do not require collateral, eliminating the risk of losing assets in the event of non-repayment. This makes them an attractive option for students who may not have substantial assets to pledge.
Collateral-free loans often have a quicker approval and disbursement process since there is no need for extensive property evaluation or paperwork related to assets. This can be advantageous for students who need to secure funds promptly.
Collateral-free loans are more accessible to a broader range of students, including those without significant assets or those unwilling to risk their property. This inclusivity allows a diverse group of students to pursue international education.
4.Smaller Loan Amounts:
Unsecured loans typically come with smaller loan amounts compared to their secured counterparts. This may require students to explore additional sources of funding to cover all expenses adequately.
Leading lenders for abroad education loan without collateral
- Axis Bank: Axis Bank is a private sector bank offering abroad education loan without collateral for studying abroad. These loans usually require a co-applicant, such as a parent or guardian, who provides financial backing.
- ICICI Bank: ICICI Bank, a leading private sector bank, offers abroad education loan without collateral. A co-applicant is typically required for these loans.
- IDFC FIRST Bank: This private sector bank provides abroad education loan without collateral, requiring a co-applicant to support the application.
- Avanse: Avanse is a Non-Banking Financial Company (NBFC) that offers abroad education loan without collateral for international studies. A co-applicant is generally needed for these loans.
- Auxilo: As an NBFC, Auxilo provides abroad education loan without collateral. These loans usually involve a co-applicant in the application process.
- Incred: Incred is an NBFC that offers abroad education loan without collateral. A co-applicant is typically required for these loans.
- HDFC Credila: HDFC Credila, a specialized education loan provider and an NBFC, offers unsecured loans for studying abroad. Co-applicants are usually required for these loans.
- MPOWER Finance: MPOWER Finance is an international lender that provides unsecured education loans for students planning to study abroad. Unlike many traditional lenders, MPOWER often does not require a co-applicant.
- Prodigy Finance: Prodigy Finance is another international lender specializing in unsecured education loans for international students. Similar to MPOWER Finance, Prodigy Finance may not require a co-applicant for certain loan products.
It’s important for students and their families to carefully review the terms, interest rates, repayment options, and eligibility criteria of these lenders before choosing the one that best fits their needs and financial situation. Additionally, regulations and offerings may change, so it’s advisable to check with the lenders for the most up-to-date information.
Factors to Keep in Consideration for Borrowers:
- Risk Tolerance: Students must assess their risk tolerance and financial situation to determine whether they are comfortable pledging assets as collateral.
- Financial Planning:Borrowers should meticulously plan their finances, considering the loan amount, interest rates, and repayment terms to ensure they can meet their obligations.
- Loan Repayment Capacity: Understanding one’s future earning potential and the ability to repay the loan is crucial when opting for either collateral or collateral-free loans.
Abroad education loan without collateral vs Abroad education loan with collateral: Non-collateral: Which type of education loan is best?
Both types of abroad education loans have their merits and demerits. The loan quantum can get as much as INR 1.5 Crore as a loan. You cannot get such a high amount of loan without collateral property. On the other hand, the loan amount that is required is less like up to 50 Lakhs but if you do not have collateral to pledge then in this case going for an abroad education loan without collateral will be better. Having a proper budgeting process will help you to make the repayment effectively.
Choosing between abroad education loans with collateral and without collateral is a significant decision that depends on individual circumstances and preferences. Students must carefully weigh the advantages and considerations associated with each type of loan to make informed choices that align with their educational and financial goals. Ultimately, securing the right financing option can pave the way for a successful and enriching international education experience.
GyanDhan streamlines the intricate process of obtaining education loans for studying abroad through its intuitive interface and extensive network of financial institutions. The platform’s user-friendly design simplifies the complexities, providing students with a seamless experience. Through strategic partnerships with reputable lenders, GyanDhan ensures competitive interest rates, adaptable repayment terms, and expert guidance, facilitating a smooth and informed journey for students throughout the loan application process.