Private Education Loan: An Overview

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 to avail of his kind of loan.

What is a Private Education Loan without collateral?

Having a financial co-applicant is mandatory to get a private education loan. The co-applicant can be parents, siblings, parents-in-law, spouse, and cousins, and are also accepted in rare cases.

Which Banks Provide Private Education Loans?

Private education loans in India are majorly provided by private banks in the form of non-collateralized education loans. 

Private banks have a list of universities that they prefer for unsecured education loans. Even if the university that a student has chosen doesn’t come under this particular list, they can still avail a private education loan.

Prominent Private Banks that provide unsecured education loans in India are ICICI Bank, AXIS Bank, and IDFC Bank. And they generally offer:

Eligibility for Private Education Loans

Not every student is eligible to get a private education loan without collateral. Lenders thoroughly evaluate the profile of every student before approving the education loan. Various factors that are evaluated can be 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 must have at least 60% - 10th onwards and no more than 3 backlogs in 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:

   The Co-applicant's financial status, like their Income, income return (ITR) of the last two years, and CIBIL score of 685, are strongly considered.

4. The preferred course/degree:

   Chances of loan approval increase if the preferred course belongs to one of the STEM subjects or is job-oriented. It is next to impossible to get a non-collateral education loan for courses like PhD, 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, as the student is more likely to get hired there.

6. The University:

   To be eligible to get a loan from private banks, the university must come under the designated list of universities of that respective bank. For NBFCs, the university has to be top and renowned.

7. Age:

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

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

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 at least a 0.5% reduction in the rate of interest. Hence you get the best rate in the market.

2. Faster processing time:

   If applied via WeMakeScholars, the time taken for the education loan application to be sanctioned at NBFCs is just 5 to 7 working days once all the required documents are submitted.

3. Best customer support:

   With qualified financial officers assigned to each one of the students, 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 education loans in private banks. 

4. Deviations possible:

   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. 

5. Cashback:

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

Conclusion:

Unsecured loans have been proven to be the go-to option for students who cannot pledge collateral as it is a quick and easy process that doesn't involve many documents. It has its pros and cons which you should be aware of before applying for one.

We suggest you request a callback on the website of WeMakeScholars to ensure maximum benefit and negotiation support on your education loan.