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Education Loans without Collateral

Even if they have financial constraints, educational loans allow students to study for a course of their choosing in India or overseas. For loans up to a particular sum, several banks offer education loans without requiring collateral or security. This is beneficial for students who may be limited in their ability to provide such collaterals. Here's everything you need to know about no-collateral education loans for studies in India or abroad.

Collateral Required for Education Loan

According to RBI, the maximum amount eligible for a study loan for courses in India is Rs.10 lakhs while for studying abroad, it is Rs.20 lakhs.

Guidelines show that loan taken up to Rs.4 lakhs does not require collateral security. It is only when the loan exceeds a specified amount as set by the bank that collateral will be required as well as third-party guarantee.

Banks offering Education Loans and Collaterals Required

Here are details of banks which offer education loans and the collateral required:

Bank Loan Amount and Collateral Required
HDFC Bank Domestic Education – Up to Rs.15 lakhs Foreign Education – Up to Rs.20 lakhs For loans up to Rs.7.5 lakhs no collateral is required
HSBC Loan up to Rs.5 lakhs do not require collateral
State Bank of India (SBI) Domestic Education – Up to Rs.15 lakhs Foreign Education – Up to Rs.20 lakhs For loans up to Rs.7.5 lakhs no collateral is required
Punjab and Sind Bank Domestic Education – Up to Rs.15 lakhs Foreign Education – Up to Rs.20 lakhs For loans up to Rs.4 lakhs no collateral is required
IDBI Bank Domestic Education – Up to Rs.15 lakhs Foreign Education – Up to Rs.20 lakhs For loans up to Rs.4 lakhs no collateral is required

FAQ

  1. What are the different types of education loans that are provided?

    The two different types of education loans that are provided are mentioned below:

    • Secured education loans
    • Unsecured education loans
  2. What are the factors that are considered when providing an education loan without collateral?

    The two different factors that are considered when providing an education loan without collateral are mentioned below:

    • The co-borrower’s and borrower’s future income
    • Creditworthiness of the borrower and co-borrower
  3. Would there be any processing fee levied for availing an education loan without providing collateral?

    Yes, a processing fee may be levied for availing an education loan without collateral. Depending on the lender, the processing fee will vary.

  4. What are the advantages of availing an education loan without proving collateral?

    The advantages of availing an education without providing collateral are mentioned below:

    • Paperwork is less
    • Quick processing time
  5. Are the interest rates higher for education loans without collateral?

    Yes, lenders levy higher interest rates for education loans without collateral.

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