Your higher education can be funded most easily with a student loan. Since there are many places to receive an education loan, it might be challenging to select one that will cover the cost without additional components, as so many applicants don’t hold collateral or it doesn’t meet the lender’s criteria. Students might choose an education loan from Indian lenders in this situation without providing any security.
For students hoping to obtain an education loan without collateral, we’ve provided some frequently asked questions and solutions below.
How can I obtain a 7.5 lakh rupee school loan without putting up any security?
The Credit Guarantee Fund Scheme for Education Loans (CGFSEL) was launched by the Indian government to assist students in getting an education loan of up to Rs 7.5 lakh without any collateral or third-party guarantee. Bank education unsecured loans under the Model Education Loan System of the Indian Banks’ Association are covered by the credit risk guarantee fund scheme.
If the household income is less than Rs. 4.5 lakh and the student falls under the Economically Weaker Section (EWS) category, they may apply for a loan under this scheme. Even if the loan amount they seek is more than the allowed by the plan, students are still eligible.
These are some aspects of this plan that students need to be aware of:
1. Up to Rs 7.5 lakh of the loan amount is subsidized for eligible students.
2. The subsidy is only applicable for the duration of the moratorium and the course time.
3. Students are only permitted to use this subsidy once during their lifetime.
4. Applicants must provide income documentation.
5. For loans made under this program, the lending institution may levy a maximum interest rate of 2% yearly over the base rate.
How can I receive a higher education loan than Rs. 7.5 lakh?
Numerous financial institutions offer education loans without collateral for study in India and abroad. Only loans up to Rs 7.5 lakh are available without collateral from public banks. Private banks and Non-Banking Finance Companies (NBFCs) do, however, offer a variety of securities loan products that can cover educational expenses up to Rs 75 lakh.
Important characteristics of loans with no collateral include:
1. As opposed to loans with collateral, loans without collateral cover a broad range of courses, universities, and nations.
2. The interest rate ranges from 10.5 to 14 percent, with the place to start being 10.5 percent.
3. Any student who can arrange for a co-applicant to co-sign the loan can apply for an education loan in India even if they have no collateral to offer.
4. The majority of loans made without collateral don’t have a grace period. Depending on the terms and conditions, the co-applicant must pay all or part of the interest accrued throughout the study time.
Students must arrange for a co-applicant with just enough income to shoulder the responsibility of paying the interest or partial interest amount during the study period in order to be eligible for a loan without collateral.
— Possess a strong academic record and should be enrolled in one of the institutions that the lender has pre-approved. Based on the employment prospects after graduation, the lender has chosen these universities as candidates.
In addition, the co-applicant must provide income documentation, such as the ITR for the last two years, bank statements, and proof of income. The co-applicant must also introduce considerable financial documents, such as P/L statements and proof of GST registration, if they are a self-employed professional.
Calling a lender after doing your homework on the lender and the loan offering is just how you apply for a loan without collateral. Complete the application and provide the relevant paperwork. The minimal document list and quick processing time are due to the absence of collateral for these loans.
The market is crowded with lenders claiming to offer the greatest “without-collateral” loan product available, making it difficult for students to choose the best loan option. Many markets offer end-to-end loan support while assisting students in finding the ideal product. The loan transaction is walked through step-by-step with the help of a committed loan counselor, from selecting the best loan package to getting money in the student’s registered account.