Checkpoints to consider while applying for Unsecured Education Loan

Checkpoints to consider while applying for Unsecured Education Loan

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Unsecured Education Loan

An education loan can provide a convenient way for you to pursue higher education without worrying about your financial status. Even if you cannot afford it presently, an unsecured education loan can help you finish your education. Such loans take into account the future earning potential of the borrower (you), allowing you to live up to your true potential.

In today’s competitive world, where education inflation is high, it can be challenging for your parents to support your aspirations of attending your dream college or a reputed institute. According to a survey conducted by a professor from the Indian Institute of Technology-Bombay (IIT-B), 82% of the 38,108 students surveyed anticipated having trouble paying for their education, while 27% expressed low or very low chances of continuing their education in the academic year 2020-21. Additionally, 73% of the respondents said they would need to provide for their families financially.

This illustrates multiple benefits associated with education loans for higher study, making them the apt choice for funding your education. Whether you wish to take a management degree or engineering, an unsecured education loan could be the answer.

What is an Unsecured Education Loan?

An unsecured education loan can be an ideal choice for funding your education. It is a loan that does not require any collateral, meaning the borrower (you) does not need to pledge any valuables or property as security. Instead, they have to meet certain criteria set by the lending institution, such as the course and university.

Many banks and non-bank financial institutions (NBFCs) offer unsecured education loans up to a certain amount, making it possible for those of you with financial constraints to study in India for a course of your choice without worrying about providing collateral. This type of loan can provide several benefits associated with pursuing higher education and realizing your true potential.

Also Read: 5 Best Tips To Get The Best Education Loan Interest Rate In India

Purpose of unsecured education loan

Attending university may be the best decision for a student’s career, but funding the education can be difficult to come by. If they don’t have enough financial aid to pay for tuition and other costs, they should think about getting an unsecured education loan. 

However, before signing anything, you should look for the best education loan rates and additional benefits.

How can unsecured education loans help students?

The biggest benefit of an unsecured education loan is that the funds are easily available to students from any background. Moreover, you can:

Continue education without financial stress 

Get an unsecured education loan to pursue higher education without financial stress. A post-graduate degree from a prestigious institution can lay the foundation for a thriving career and life. Loans are available for both higher and graduate-level studies.

Cover almost everything

Avail unsecured education loans that cover both academic and non-academic fees such as tuition fees and living expenses including hostel fees, exam fees, library charges, lab fees etc. This loan also covers the cost of books and travel.

Get a loan easily

Usually, collateral is not required for a loan up to Rs 5 lakh. Lenders typically charge for the transaction processing and the loan can take up to two weeks to process. Depending on the fee structure and requirements, lenders may disburse the loan amount at once or in installments, either to the borrower or directly to the institution.

Repay faster

If you obtain unsecured education loans at the best interest rates, it will be easier for you to make repayments. Lenders offer various collateral and co-borrower options to simplify the loan repayment process.

Achieve the dream of studying at a premier University

People of all classes can get an unsecured education loan irrespective of their source of income. While the score is essential for admission to any reputed university, it can also help you when applying for an unsecured education loan.

Build financial discipline

An unsecured education loan can help you build financial discipline. Timely and regular repayment of the loan is also a way of building a good credit score, which can help you or your parents get a better deal if you need to take out formal credit later on in life.

How to apply for unsecured education loan

Aspirants can apply for unsecured education loans either online or in-person at a branch. The online process is very easy. Follow the steps to apply today:

  1. Visit the chosen financial company’s website and fill out the application form
  2. Enter your personal information and property details
  3. Fill out your/co-borrower’s income details to access a personalized offer
  4. After the submission of the required information, an authorized person will contact the student to provide additional loan processing instructions.

Unsecured education loan- Eligibility criteria for students

To approve unsecured educational loans, the lender will typically look at the following criteria. The applicant should:

  • Be an Indian national
  • Be 18-35 year-old
  • Be looking to pursue skill development courses in India or full time regular courses at Indian colleges/universities
  • Have a good academic record
  • Have secured admission in select premier institutions through entrance test/selection process

Eligibility criteria for Co-borrowers

  • Parent(s) must participate as a co-applicant.
  • In case of a married person, co-applicant can be spouse/parent(s)/parent(s)-in-law.
  • In cases where both parents are not alive, a close relative or guardian will be considered a co-applicant.
  • Co-applicant must be an Indian national.

Expenses covered

Traditionally, unsecured education loans in India cover the total tuition fee and some of the additional costs. Here are broad categories:

  • 100% College tuition fees payable
  • Accommodation charges
  • Exam and library fees
  • Books and equipment including a computer
  • Traveling expenses abroad if any
  • Other reasonable expenses required to complete the course

Documents required to avail unsecured education loan

Basic KYC documents, financial documents of the borrower and co-borrower are required. The loan assistant will give the student detailed and specific requirements at the time of application.

Also Read: 5 Best Tips To Get The Best Education Loan Interest Rate In India

Checkpoints to consider while applying for unsecured education loan

  1. Use a co-signer: If you have a family member, guardian or a relative with a strong credit score and financial history, they may be willing to co-sign on the unsecured education loan with you. This can help you secure the loan and may even result in a lower interest rate.
  2. Build up your credit score: A high credit score is one of the biggest factors lenders consider when evaluating an unsecured education loan application. Make sure your co-applicant’s credit score is as neat as possible because the primary borrower (you) does not have a strong credit history or neither meet the lender’s credit requirements.
  3. Demonstrate financial need: If you can show that you have a genuine financial need for the education loan for higher study, you may be more likely to receive it. This can include providing proof of low income, unexpected financial hardship, or other financial challenges.
  4. Show a solid repayment plan: Again, the lenders want to know that the co-applicant has a plan in place for paying back the unsecured education loan. Make sure to have a clear budget that shows how you or your co-applicant will use the loan and how it will be paid back.
  5. Consider alternative lenders: Traditional banks may have strict lending criteria, but there are many alternative lenders, like NBFCs or other financial institutions, that may be more willing to work with you. Look into online lenders, peer-to-peer lending platforms, and other alternative options to find a lender that fits your needs.
  6. Shop around: Don’t just settle for the first lender you come across. Compare rates and terms from multiple lenders to find the best deal for your needs.

Education can aid students in landing a position at a reputable company, and even the university they choose to attend can affect their capacity to entice major corporations to review their applications.

Unsecured education loans are available from a variety of lenders but finding the best loan providers in India is a challenging task. Varthana is driven to help students like you with financial aid to make the journey as smooth as possible.