The pursuit of higher education is one of the best things you can do for your career and future. However, if a lack of funds stops you from chasing your dream, education financing can be a great way to solve your problems. This guide will provide all the information you need to avail of an education loan without collateral.
What is education finance without collateral?
Education finance is typically available in the form of a secured loan, meaning you need to provide some form of collateral against the loan to get the necessary funds. Not to mention, many lenders in the market offer competitive education loan interest rates.
However, there are many financing options you can avail without pledging any collateral. Such loans can be used for higher education in India and abroad. And cover all the expenses related to your studies such as tuition fee, books, library and exam fee, accommodation charges, course-specific equipment, even travelling expenses if you are planning to study abroad.
Some of the loan features are mentioned below.
Educational finance is unique in the sense that you do not need to start paying instalments right away. Most lenders offer a moratorium period for your loan.
A moratorium period is a period where you don’t have to make any payments to the lender. However, the moratorium period differs according to the lender. Some need repayment after you have completed your studies, whereas others give you 1 or 2 additional years to start repaying.
Loan amount eligibility
According to the Reserve Bank of India’s guidelines, you can get a loan of up to Rs. 4 lakhs without pledging collateral. But suppose you have an excellent academic record, and your co-signer has a good credit record and a steady source of income. In that case, you have a higher education loan eligibility and may qualify for a collateral-free loan of up to Rs. 7.5 lakhs, depending on the lender’s loan sanction policy.
However, if you are looking for a collateral-free loan of more than Rs. 7.5 lakhs, you should consider opting for a personal loan for education.
Documents required for educational financing
Preparing the necessary documents in advance can help you speed up the loan process. However, different lenders may ask for a different set of documents. Given below are the most common documents you would need for a speedy loan sanction:
- Identification proof
- Academic record
- Income proof of self or parents/guardian
- Proof of admission from the educational institution
- A detailed schedule of the course expense
- Bank account statement of self or parents/guardian
- Scholarship details, if any
Given how higher education costs have increased over the years, a collateral-free loan is an excellent way to secure funds without worrying about pledging any security.
Moreover, if you want to get a loan amount more than Rs. 7.5 lakhs, you can also check out the various personal financing options by different lenders, available at attractive personal loan interest rates.