Quality education is an indispensable part of a complete and successful life. The cost of education is rising rapidly. So Education Loan Become most Important Factor for this. That’s why we need a collateral free Education Loan. Considering this, parents are required to save a lot of money to provide their children with the opportunity to get quality education. But despite their efforts, they may face shortage of funds. In such a situation, an education loan plays an important role to bridge the gap between shortfall and the required amount.
What is an education loan?
Education loan is availed of to finance all your education related expenses and collateral free education loan become most important. They are given for the purpose of pursuing an academic degree in India or abroad and are provided by almost all banks and NBFCs (Non-Banking Financial Companies).
There are two types of education loan – secured and unsecured. A secured education loan is one against which you provide a security or collateral and in an unsecured education loan there is no need to provide any security. Usually, upto Rs.4 lacs for an education loan no collateral is required but when the loan amount exceeds Rs.4 lacs, borrowers are required to provide collateral/security and a third party guarantee to secure the loan.
In very rare cases, when the student is extraordinary or highly meritorious and has secured admission in one of the Ivy League colleges in India or abroad, banks & NBFCs provide a larger education loan without any collateral. However, there are some banks and NBFCs in India that provide education loan without collateral in normal course as well.
Collateral Free Education Loan
NBFCs like Incred, Avanse (a subsidiary of DHFL), Auxilo and Credila (a part of HDFC Ltd) provide collateral-free education loans upto 40 Lacs. The interest rate ranges from 9% to 13.5%. The amount of loan sanctioned and the interest rate depend upon the profile of the candidate and the institution he has gotten admission to. Normally such loans are sanctioned for meritorious students getting admitted to Ivy League colleges in foreign countries.
Collateral Free Education loan from foreign institutions
If you are planning to study abroad, a few foreign financial institutions, like Prodigy Finance, have also started offering student loan to Indian students studying abroad. However, the processing fee (2% to 5%) and the USD($)-based interest rates (9%-12% typically) are quite high.
On the other hand, if working professionals want to pursue part-time degree courses then they can avail a personal loan for financing their education. Personal loans don’t require any guarantor or security.
Although many banks and other financial institutions are willing to dole out sufficiently large sum of loans, reaching out to the right loan provider is the key. There will always be loan providers whose offers will meet your requirements.