These days, students want to be super independent, build global careers, and eventually thrive in a competitive job market. Students have recognised the importance of developing competitive advantage through quality education that enables them to master the skills and knowledge. However, education these days can be expensive, and that’s where education loans come into the picture. Let’s understand collateral and non-collateral education loans better.
Key highlights:
- What is the Difference Between Collateral and Non-Collateral Education Loan
- Secured Education loan
- Non-Collateral Education Loan Meaning
- Which Assets Are Accepted As Collateral?
- Which Type is Better - Secured or Unsecured Student Loan?
- Documents Required for Non-Collateral Education Loan and Secured Education Loan
- Some Important Education Loan Calculators You Must Know
What is the Difference Between Collateral and Non-Collateral Education Loan
Student loans effectively bridge the gap between students and their academic aspirations and allow them to fund their studies independently without depending on their parents. At the start of the education loan journey, students must understand the difference between secured and unsecured student loans to make wise decisions.
Secured Education loan
Secured (with collateral) student loans require you to pledge collateral as a guarantee against the education loan. This collateral is an asset that acts as a security for your student loan.
Non-Collateral Education Loan Meaning
On the other hand, as the name suggests, a non-collateral education loan is a loan that doesn’t require you to offer an asset as a security or collateral. You can get a non-collateral loan for study abroad programmes as well as to study in India.
Which Assets Are Accepted As Collateral?
There are two types of collateral, i.e., tangible assets that are immovable in nature, such as a residential property (apartment/house) or non-agricultural land and intangible assets, such as fixed deposits. Every financial institution will have its own set of requirements, so please check these details before applying.
Also Read: Everything you Must Know About an Education Loan From NBFC
Which Type is Better - Secured or Unsecured Student Loan?
Most education loan providers will offer you both types of student loans. Whether you want to opt for a non-collateral education loan for abroad studies or to study in India or you want to opt for a collateral education loan, you must make a decision based on your financial requirements and preferences.
Documents Required for Non-Collateral & Secured Education Loan
- For students:
- 2 colour passport-sized photos
- Photo ID
- Residence proof
- Date of birth proof
- Signature verification
- Academic documents
- Proof of admission
- Fee structure
- For co-applicant:
- 2 colour passport-sized photos
- Photo ID
- Residence proof
- Date of birth proof
- Signature verification
- Income proof
- Collateral-related documents (only for unsecured student loans)
- 8-month bank statement
- Relationship proof
Please remember, in addition to the documents required for a non-collateral education loan or a secured student loan, your student profile will be thoroughly checked. The lenders do this to determine your employability potential. Therefore, parameters such as academic scores, entrance exam scores, the pedigree of your university, and continuity in your education, to name a few, will be analysed. Additionally, your co-applicant’s financial background will be examined too. If you meet the criteria, your education loan will be approved.
Your documents, along with your student profile, will be evaluated regardless of whether you apply for a secured loan or a non-collateral education loan for abroad studies or to study in India.
Some Important Education Loan Calculators You Must Know
- Education Loan EMI Calculator: This free online EMI education loan calculator is super easy to use. You can try different combinations of tenure and education loan amounts to find the most suitable EMIs.
- College Course Expense Calculator: If you are wondering how much your education will cost you, you can use this online calculator. It will help you understand potential college expenses.
- Eligibility Calculator: You can use this calculator if you want to opt for an educational loan for abroad studies or to study in India and wish to understand the approximate student loan amount you are eligible to borrow based on your current finances.
So, this is what you must know about collateral and non-collateral education loan meaning and difference. If you have any queries about Avanse non-collateral loan, or secured student loan, please get in touch with us. We will be glad to assist you.
