Students now have an easier time selecting the institutions of their dreams thanks to education loans. But in order to receive a loan, we typically need to put up security in the form of collateral, which could be fixed deposits, government bonds, shares, or even tangible property like a house. This is an important step for your lender because there is a chance that you will stop making payments on your loan, in which case the collateral will protect the lender.
However, many students lack the assets to use as security, and some think it would be hazardous. This deters them from taking out an education. What if, though, you were able to qualify for a student loan without putting up any security? You did read that correctly. Thanks to the numerous programmes offered by the government and financial organisations, many banks provide education loans without requesting collateral security. Continue reading to learn how to apply for a loan without putting up any collateral, as well as additional information.
Points to Note Before Applying for Education Loans Without Collateral
Any time you choose a loan repayment plan, particularly one for an education loan, you should exercise caution. To choose the best choice, consider the following:
- Always keep in mind that if you choose an education loan without collateral, you must have a co-applicant. This co-applicant can be your parent, spouse, or sibling. Additionally, information about your co-applicant is required, as well as their pay stubs and Income Tax Return (ITR) documents.
- The banks’ IBA-provided “moratorium term,” which is the course duration plus an additional year, remains the same. During this time, the borrower is not compelled to repay the loan. But in the case of private banks, it can vary.
- Several banks provide interest-subsidy programmes; before applying for an education loan, take care to review the details and select the most appropriate programme.
- According to RBI standards, there is no maximum age for obtaining an education loan, however, banks may have various internal policies.
- You must be an Indian citizen to obtain student loans. In addition, the establishment you wish to enrol in must be recognised by the National Assessment and Accreditation Council (NAAC) or National Board of Accreditation (NBA), or it must be a Centrally Funded Technical Institution (CFTI) or an Institution of National Importance (INI).
- Before requesting a loan, it would be beneficial if you have your admission letter prepared. To ensure a smooth application procedure, keep your Xth and XIIth grade transcripts and admit cards on hand.
- If the bank approves your loan request, the money will be paid immediately to the institution in accordance with the fee schedule you were given.
You have the chance to study at the college of your dreams thanks to education loans. They also help you develop financial discipline because you must pay the EMI each month once you start earning money. By doing so, you raise your credit score and boost your chances of receiving better offers later on in life when you apply for credit such as a personal loan, auto loan, home loan, etc. This makes it crucial that you make the best decision for yourself. Making the best decision requires a thorough awareness of the ways that various banking institutions can support your education. So, before choosing a loan, compare the best deals offered by several banks.