https://www.wemakescholars.com/blog/education-loan-without-collateral-and-co-applicant-for-study-abroad
Education Loan without Collateral and Co-applicant for Study Abroad!
Non-Collateral/ Unsecured Education Loan | Updated
If you've come here wondering if it is even possible to get an education loan for abroad studies without collateral and co-applicant for study abroad then let me tell you yes, it is very much possible in some scenarios which I'll come to later in this article but before that, you can also watch our episode 14 of the LoanFix series on the same topic which is embedded below for your ease-
So, as we know that there are two types of Study abroad education loan you can get -
- Secured/ Collateral loans- A secured loan is where you pledge collateral to the banks to take a loan against it and it could be Immovable property like a house, flat, non-agricultural land, and Liquid security like Fixed deposits, Insurance policy(Term Insurance), and govt bond.
- Unsecured/ Non-collateral loan- An unsecured loan is the opposite of a secured loan. You can get an education loan without collateral but you are required to bring a strong financial co-applicant i.e someone with a stable income source who files ITR to get an unsecured loan. A financial co-applicant can be anyone of your family or close relatives.
But, what if you don't have collateral to pledge and you don't have a financial co-applicant, or say you have collateral but the value is too low to fund your education abroad, then don't lose hope, there are still some four scenarios where if your profile fits into, you can get an education loan without co applicant and collateral. For students who have collateral with good value or financial co-applicant with good income, it is not feasible for them to visit each bank and get their education loan done by themself in these covid and lockdowns situations, they can take help from experts in the market 'WeMakeScholars'. Since WeMakeScholars is an organization, funded and supported by the Ministry of IT, Govt. of India, and as this initiative comes under the Digital India Campaign, we do not charge any service charges, hence it's free of cost.
Coming to the scenario-
Case 1 - Work experience
- Students should have work experience of 3 years or more
- The last drawn salary should be at least 35k per month
- University should be present in the list of some top 300 universities worldwide which are there with the lenders
- Students course should be MS/MBA
- If students are eligible for case 1, they can get up to 40 lakhs without collateral and co-applicant with the rate of interest around 10.5 to 11%.
- The CIBIL score of the co-applicant will be checked and it should not be below 685.
It is to keep in mind that you get an education loan without co applicant but co-applicant is mandatory for contact purposes only and their financial status will not be checked. Co-applicant should be of your first family i.e parents, parents in law, siblings, and spouse.
Case 2 - US top universities for Masters / Elitescholars
- This is for students going to the US only
- This is only for some top 150 universities in the US
- STEM/MBA programs will be considered
- GRE score should be above 305, and for universities that have waved off the GRE score, students' past academic records can be considered for this loan scheme
- If students are eligible for case 2, they can get up to 65 lakhs without collateral and co-applicant with the rate of interest around 11 to 11.5%.
- The CIBIL score of the co-applicant will be checked and it should not be below 685.
Though Collateral and financial co-applicant is not required here, but a co-applicant is required for contact purposes when the student is abroad. Likewise, in case 1 the financial status of the co-applicant is not important to the lender. This funding comes from the EliteScholars Funding Program and it is a special initiative by WeMakeScholars for Indian students.
More about EliteScholars here
Case 3- Top Universities globally for masters
- This is for some top 100-200 universities in other countries like Canada, UK, Germany, etc.
- Master programs will be considered
- Students should have a good past academic record
- University Should have a good employability record
- If students are eligible for case 3, they can get up to 30-40 lakhs education loan without collateral and co-applicant with a rate of interest minimum up to 12%.
- The CIBIL score of the students and co-applicant will be checked and it should not be below 685.
Case 4- Foreign lenders
As the name suggests these lenders are foreign lenders and funds in USD not in rupee unlike in the above three cases of Indian lenders. And also unlike Indian lenders where a co-applicant is mandatory, these USD lenders don't ask for it
Students opting for master's in the US in top universities are eligible to get an education loan for abroad studies without collateral and co-applicant from these foreign lenders. They can offer up to 80% of the cost of education with the rate of interest of 9-10.5% in USD but this 9% is equivalent to 14% in Indian currency. USD loan from foreign lenders should be the last option for any Indian students but with no other options, students can opt for foreign lenders.
Few drawbacks of the USD loan
- Currency fluctuation with INR depreciation (Ex: 1$ was 64 in Jan 2018 and today 1$ is above 70) ultimately you repay way higher than what you borrow today
- No income tax benefits under section 80E
So if your profile suits any of the above 4 cases, you are eligible to get a study abroad education loan without collateral and without a financial co-applicant.
It can be hectic for students alone to go through the loan process as we try our best to get students the best deal they can get. So do reach out to our financial officers by requesting a callback.
Our team of financial officers assists you with the entire education loan process until sanction, disbursement, and beyond. All the services offered by WeMakeScholars are free of cost as this initiative is supported by the IT Ministry, Govt. of India.
Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it's free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others.
Darshana Divekar
Paravesh Saireddy Scholarship Expert