Non Collateral education loan in india (Know all the details) - VidyaLoans

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Introduction

With changing times the education system has come a long way in making our country progressive through education but  with this continuous evolution, the cost of education is also increasing at a sharp pace. Given the cost of expenses, it becomes very challenging to fund education but thankfully we have education loans through which we can afford to finance our education and pursue our dream of higher studies. Education loans have emerged as an elixir which addresses the concerns of the students. With the help of education loans, no student would be deprived of funds to finance their dream of studying abroad. Adding to that, banks also provide unsecured education loans in India. This article will shed light on all the details on non collateral education loans in India.

Types of education loan

There are two types of education loan: 

  1. Secured education loan
    A secured loan is defined as a loan where the student has to mortgage collateral in order to avail of an education loan. Tangible assets like flat, house, non-agricultural land, etc, and intangible assets like an insurance policy, fixed deposits, etc are accepted as collateral. 

  2. Unsecured education loan
    An unsecured loan is defined as a loan where the student is not required to mortgage collateral in order to avail of an education loan. 

Non collateral education loan in India

In an unsecured loan, the lender does not ask the student to pledge security in order to avail an education loan i.e. no collateral is required, which saves time in the loan processing and also makes the documentation process less complicated. This is the biggest advantage of an unsecured education loan.

Because the risk taken by the financial institution is higher, the interest rates are higher for loans without collateral. These loans often require a co-applicant or co-signer as the student loan without collateral is sanctioned on the basis of the income and CIBIL score of the co-applicant. There are other factors also which students and co-applicants have to meet in order to avail an education loan without collateral. 

Documents required to take a non collateral education loan in India

Documentation plays a significant role in any loan process. For unsecured education loans, the education loan documentation process is no different. To provide non-collateral education loans,  banks set a number of terms and conditions and mandatory documents to be submitted by the student and the co-applicant. These documents and eligibility criteria set by the bank must be met by any aspiring education loan applicant to utilize the full services offered by the bank. 

1. Documents to be submitted by the salaried co-applicants are:

  1. Previous 3 months salary slips
  2. At least 2 years of ITR filing receipts 
  3. At least 6  months of their bank statement

2. Documents to be submitted by the Business-owning/Self-employed Co-applicants are:

  1. At least 6  months of their bank statement
  2. 3 years ITR documents 
  3. Business proof i.e. Profit/Loss statements, GST registration, etc.

3. Documents to be submitted by the Loan Applicants are:

  1. Marksheet of Xth and XIIth 
  2. Degree certificates- Semester wise or annual basis
  3. Admit letter of the University

4. Documents to be submitted by the Loan Applicants if the applicant is a working professional are:

  1. 3 years ITR documents 
  2. Previous 3 months salary slips
  3. Work-experience letter

 5. Basic Documents to be submitted by both the loan applicant and the co-applicant are:

  1. KYC (Know Your Customer) Documents to be submitted at NBFCs
  2. Passport size photograph
  3. Pancard Copy
  4. Aadhaar Card Copy
  5. A copy of the loan applicant’s (student) passport

Non collateral student loan- Eligibility criteria for students

  1. Academic Grading- Percentage of your marks
    Most government-run banks such as the Bank of Baroda, Canara Bank, PNB, etc. offer due preference to students having more than 60 percent marks. As collateral is not involved in unsecured loans, banks set a higher benchmark for academic scores for applicants in order to meet the standards of eligibility for unsecured education loans.

  2. Backlogs in Academic Profile
    When students directly approach most government banks for a non collateral education loan in India, many of the bank officials may state that students who have more than three backlogs are not considered to qualify for an education loan but if the student successfully clears his/her backlogs in the stipulated course duration, then the student may apply for an unsecured education loan. 
    But there are few cases where Government banks generally do not accept the loan application. To avoid such situations, apply through VidyaLoans as our dedicated team of professionals directly deals with the higher authorities available in the bank and will help you throughout the loan process. 

  3. A gap in the education
    In order to prove your eligibility for unsecured education loans, any gap in your academics or in the period post that would have to be accounted for by writing a letter to the bank explaining the gap.

  4. Degree level
    Government banks accept all types of degrees i.e. undergraduate courses, post-graduation courses, Ph.D., etc except for UG Diploma and certificate programs. 

Non collateral student loan- Eligibility criteria for co-applicants

  1. CIBIL Score- A minimum of 650 CIBIL score is required in order to be eligible for an unsecured education loan in India
  2. IT Returns Documents- ITR of last 2 yrs if the co-applicant is salaried, ITR of last 3 yrs if the co-applicant is self-employed
  3. Income Proof/Business Proof- Latest Salary slips (for last 3 months) and  Form 16 of last 2 yrs if the co-applicant is salaried,  Last 3 yrs Balance sheet and Profit & Loss account and Proof of Business address if the co-applicant is self-employed

For loans upto 7.5 lakhs or below, Government banks have strict eligibility criteria and also the process is very slow and tedious. Do not worry if you are looking to process through Government banks as our team at VidyaLoans will help you process through Government banks at a fast pace. Our dedicated team of professionals closely check with all the Government banks on the loan application status of the students and also will guide you throughout the education loan process. 

Advantages of taking an education loan without collateral

  1. Faster approval of the loan
    While taking an unsecured education loan without collateral in India, students can expect their education loans to be approved faster and more efficiently.

  2. Lesser documentation process
    In unsecured education loans, the process goes very smoothly with the presence of all the required documents. Despite having all the mandatory documents, banks may demand for other documents which are very difficult to arrange at the last minute. To avoid such last minute hassle, connect with our team at Vidyaloans, where our processing officer will give you the latest checklist of the documents required and will guide you through the entire unsecured education loan process. 

  3. Build up your CIBIL score
    Students with regular repayment of loans can build their CIBIL score.     

About the organizationVidyaLoans is an organization which helps Indian students in India to secure a non-collateral loan from Government banks up to 7.5 Lakhs. We have a dedicated team of professionals who assist students with queries and guide them throughout the loan process. Our Team at Vidyaloans is committed to sanction the best loan option suiting the applicant's profile and needs, in a stipulated time frame.