Private Bank Education Loan | Get Up to 1 Cr at Low Interest.

Education loans provide much-needed financial assistance to the majority of students who otherwise without one wouldn't be able to further their education abroad or even in India. 

As there are two types of education loans made available to students,  collateral and non-collateral education loans, students can choose one as per their needs. Indeed, there will be eligibility screening, creditworthiness checks, and so forth set by lenders.

Private banks are known for their private education loans without collateral, through which an education loan of up to 1 crore can be availed. These lenders do not require students to pledge any kind of security against the loan, however, the co-applicant's income and creditworthiness play a crucial part in proving to be eligible for the loan.

What is a Private Bank Education Loan?

It is a private education loan offered by private banks to help students pursue their higher study dreams. Private banks offer 2 types of education loans, collateral and on-collateral education loans. While private banks do offer secured education loans, they are well known for their unsecured education loans.

Types of loans provided by private banks

1. Collateral education loans: As the name suggests, these are education loans offered by private banks that require students to pledge collateral as security. These are also known as secured education loans. These loans can offer higher loan amounts as collateral is involved. Without collateral, you cannot get a secured education loan from private banks.
2. Non-Collateral education loans: Private education loans that do not require students to pledge any collateral or security are non-collateral education loans. Nevertheless, other factors like the student's academic profile, earning potential, the co-applicant income profile, etc, are taken into account.

These are also known as unsecured education loans. A financial co-applicant is generally mandatory to get an unsecured education loan from private banks.

Private Education Loan Lenders in India

In India, several banks offer private education loans to students who are planning to pursue their higher education. Prominent private banks that provide private education loans to students include AXIS Bank, ICICI Bank, and IDFC Bank.

These terms can vary according to factors like the student's profile, co-applicant's profile, preferred course, preferred country, the university, etc. Students can get overwhelmed while approaching multiple lenders individually for private education loans in India. 

This is why you should get in touch with WeMakeScholars, an organization funded and supported by the Ministry of IT, the Government of India, and is associated with 15+ prominent government and private lenders. What WeMakeScholars does is connect you to multiple lenders concurrently, guide you throughout your education loan process, and help you get the best deal possible.

Advantages of taking an Education Loan from Private Banks

• Relatively low interest rate: 

  Private banks offer a relatively low interest rate for private education loans compared to NBFCs.

• Faster processing time: 

  Since there is no collateral involved, unsecured education loans can be processed much faster compared to a secured education loan. They can offer a swift application process to students who require a loan fast.

• No loan margin: 

  There will be no loan margin in unsecured education loans from private banks, which means the lenders will sanction the entire loan amount without needing any margin amount from the student.

• No need for collateral: 

  Unsecured education loans from private banks do not require any collateral to be pledged as security. You can get an education loan based on the income and the credit history of your co-signer.

  Students who do not have any collateral to be pledged as security can get an unsecured education loan from private banks.

• Online process:

  Loan processing of all private lenders can be done online. You can apply and submit all your documents online and visit only once while finalizing the deal.

• Eligible for interest subsidy: 

  Education loans from private banks can be eligible for an interest subsidy under the Central Sector Interest Subsidy Scheme (CSIS). 

• Tax benefits:

  Private bank education loans offer the same tax benefits as an education loan from a public bank. Under Section 80E of the Income Tax Act, borrowers can claim tax deductions on the interest paid on education loans for 8 years.

Eligibility for Private Education Loans

The profile of every student is thoroughly evaluated by the banks before approving the private education loan without collateral. Not every student is eligible, various factors that are evaluated can be clearly understood from the points below:

1. Students Academics:
   

   The students' previous academic background, i.e., grades, and GAP (if any) are thoroughly checked by the banks to qualify for an unsecured loan. The students are expected to have at least 60% in previous academic records and no more than 3 backlogs during graduation.

2. Competitive Test Scores:
   

   Relevant  IELTS, TOEFL, GRE, and other test scores are also required according to the country that the student is planning for.

3. The co-applicant's profile:

   To get an unsecured education loan, the Co-applicant's financial status, like their Income and CIBIL score, has to meet the requirements of the bank.

   Also, the co-applicant must provide income proof documents like an ITR of the last two years, Form 16, recent payslips, etc., according to the bank.

4. The preferred course/degree:

   Chances of loan approval increase if the preferred course belongs to one of the STEM subjects i.e., Science, Technology, Engineering, and Mathematics, or Master’s courses.

   It can be difficult to get a non-collateral education loan for courses like MBBS, Theology, tailoring, etc.

5. The preferred country:

   Major overseas destinations like the US, UK, Canada, Australia, Ireland, and Germany have higher approval rates for private education loans. Because the students are more likely to get hired there. 

6. The University:

   To be eligible to get a loan from private banks, the university that the student is going to should come under the designated list of universities of that respective bank.

7. Age:

   Applicant's and co-applicant's age is a major criterion for most private banks in an unsecured education loan. Usually, students aged between 16 to 35 are preferred by the lenders. However, these criteria vary by bank.

   And also, private banks generally don’t accept co-applicants aged more than 60 years, or nearing their retirement age.

8. Collateral requirements:

You have to pledge collateral as security to get a secured education loan from private banks. But, if you are looking for an unsecured education loan, there is no need for collateral.

Partially Secured Education Loans by Private Lenders

Partially secured education loans are a hybrid between secured and unsecured education loans. If a student doesn’t meet the eligibility criteria for a completely unsecured education loan, then they can opt for a partially secured education loan by pledging collateral for a portion of the loan amount.

These loans are given by including collateral as security for some part of the education loan. The collateral value can be much lower than the loan amount. Students who didn't qualify for a non-collateral loan for reasons like low CIBIL can take a partially secured education loan from private lenders.

For example, you may get a 20 lakhs education loan by pledging an FD of just Rs. 10 lakhs.

Benefits of partially secured education loans

• Lower interest rates: 

  As there is collateral involved, partially secured education loans can offer a lower interest rate than completely unsecured education loans. 

• Higher loan amount:

  When the collateral value does not meet the required loan amount for a secured education loan, you can choose a partially secured education loan that can offer a higher loan amount for the same collateral. 

• Flexibility:

  These loans are more flexible than secured and unsecured education loans. You can get higher loan amounts by including small assets as collateral. And if you cannot get an unsecured loan due to a low CIBIL score or lower income, you can still get a partially secured education loan.

• Eligibility:

  Students who are not eligible for a completely unsecured education loan due to low income or CIBIL score can still be eligible for a partially secured education loan. 

• Helps improve credibility: 

  These loans can help improve borrowers’ credibility. Making timely payments for partially secured loans can increase the CIBIL score and improve the creditworthiness of the borrowers.

Advantages of applying through WeMakeScholars

There are certain benefits you get when you apply for a private education loan without collateral through WeMakeScholars. They are listed below:

1. Lower rate of interest:

   As WeMakeScholars is partnered with more than 15 public and private lenders, we can help you get a reduction in the rate of interest. Hence you get the best rate in the market.

2. Deviations:

   Lenders usually tend to avoid risks by rejecting a case that has deviations. Our team will negotiate with the lender on your behalf, whenever any deviations are hindering the sanction of your education loan.

3. Best customer support:

   With qualified financial officers assigned to each one of you, our team tries to answer every query either you or your parents might have related to the education loan process. And also you get genuine transparency in terms and conditions of private banks. 

4. Cashback:

   When going via WeMakeScholars, post-sanction, you will be rewarded with a cashback of up to INR 3000 on the disbursement of your loan, as you are supporting the Digital India campaign by applying for your study abroad education loan via WeMakeScholars.

5. Faster processing time:

   When applying through us, the time taken for the education loan application to be sanctioned is just 15 to 20 working days once all the required documents are submitted.

Conclusion

Private education loans have been the go-to option for students who cannot pledge collateral. However, these lenders rarely provide complete details of the terms of the loan. Our team at WeMakeScholars gives you transparent information about every education loan-related aspect and helps you make the right choice. 

Also, private banks' terms like the interest rates, loan amount, processing fee, etc., can be negotiated when you apply via WeMakeScholars. We negotiate all of them on your behalf and get the best possible deal for you. Request a callback on our website to ensure you get the maximum benefit and negotiation support on your education loan.  

This is why we also have a YouTube channel where we created a comprehensive web series on education loans named "LoanFlix". So do check out that as well for any other education loan-related queries.