Education Loan : The easiest way of funding for your better education. With so many sources to get an education loan, it is equally difficult to choose one that will cover the cost without the need for collateral, as many borrowers do not have collateral or are not eligible as per the lender’s rules. In such a case, students can opt for unsecured education loans from Indian lenders.
Here are answers to some frequently asked questions for students hoping to get an unsecured education loan.
How to get an education loan of up to 7.5 lakh rupees without guarantee?
The Government of India launched the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) to help students get education loans of up to Rs 7.5 lakh without any collateral or third party guarantee. The Credit Risk Guarantee Fund Scheme provides guarantee on education loans granted by banks under the Model Education Loan Scheme of the Association of Indian Banks.
Students can apply for a loan under this scheme if they belong to the Economically Weaker Section (EWS) category, and the family income is less than 4.5 lakh rupees. Students are eligible under this scheme, even if the loan amount required by them is more than the prescribed amount in the same
Features of this scheme that students should be aware of:
1. Eligible students get subsidy on loan amount up to Rs 7.5 lakh.
2. Subsidy is admissible only during course duration and moratorium period.
3. Students can avail this subsidy only once in their lifetime.
4. Candidates will have to submit income proof.
5. The lending institution shall charge a maximum rate of 2 percent per annum from the base rate on loans under this scheme
Maximum interest can be charged.
How to get an education loan of more than 7.5 lakh rupees?
There are many lenders in the market who provide unsecured education loans for studying in India and abroad. Public banks offer loans up to Rs 7.5 lakh only without collateral. However, private banks and non-banking finance companies (NBFCs) have several uncollateralized loan products that cover the cost of education up to Rs 75 lakh.
Some key features of no collateral loan:
1. Loans without collateral cover a wide range of courses, colleges and countries unlike loans with collateral.
2. The interest rate starts at 10.5 percent and can go up to 14 percent.
3. Any student can apply for an unsecured education loan, as long as they can arrange for a co-applicant to co-sign the loan.
4. . Almost all unsecured loans come with no grace period. The interest incurred during the study period is to be paid in whole or in part by the co-applicant as per the terms and conditions.
To be eligible for an unsecured loan, students must –
– Arrange for a co-applicant with sufficient income to take responsibility for the payment of interest/partial interest amount during the study period.
– Must have a good academic record and attend a university on the lender list of pre-approved universities. These universities are shortlisted by lenders based on employment opportunities after graduation.
In addition, the co-applicant needs to submit income proof, such as ITR of the last two years, bank statement and salary slip. If the co-applicant is self-employed, they have to submit further business documents, such as P/L statement and GST registration.
The process of applying for an unsecured loan is to approach the lender after doing due diligence about the lender and the loan product. Fill the application form and submit the required documents. Since these loans do not come with collateral requirements, the document list is short and the processing time is also short.
Finding the right loan product confuses students as the market is flooded with lenders who promise to offer the best ‘no collateral’ loan products in the market. Many marketplaces help students find the right product while providing complete loan assistance. A dedicated loan consultant guides the loan process from choosing the right loan product to finally getting the funds into the student’s registered account.
Note:except the headline is edited by team Burningupdates rest of the article is taken from syndicate feed.