What are the best education loans for students with no margin money? With GyanDhan’s help, you can find a student loan with 100% financing easily!
The cost of studying abroad is considerable, and if you are hoping to enroll in a reputed and renowned college, it increases even further. This is why students commonly find that they lack the funds to get a foreign degree.
Scholarships do come in handy, but often they are not enough. Education loans, therefore, play a critical role in fulfilling your dream of studying abroad.
An education loan covers the basic college tuition, accommodation, books & equipment, travel, living costs and other expenses. The student is considered as the primary borrower, while the parent, sibling or spouse is known as the co-applicant or co-borrower.
What are the Available Education Loan Options?
Currently, private banks, nationalised banks, NBFCs and FinTech companies like MPower offer student loans for higher education Since a student can either opt to study further in India or overseas, there are two types of education loans. Education loans for students who wish to study in India and education loans for students who aim to study abroad.
This article only focuses on education loan details for studies overseas. Within this category, there are two further divisions – secured and unsecured.
What are Unsecured Education Loans?
Education loans that are not covered by a security are called unsecured loans. The student doesn’t have to pledge any collateral as security.
Unsecured education loans authorise smaller amounts and have higher interest rates because the lender takes the risk of bearing a loss if the loans are not repaid. Student loans without collateral are given on the basis of the income and credit score of the co-applicant, among other criteria. The lack of a security makes the process and paperwork of unsecured loan comparatively simpler. That said, it is hard to get an unsecured education loan application approved. This is mainly because the lender does not have an asset to make up for the loss in the case of loan default.
Though the terms and conditions of an unsecured education loan are stringent, they are useful for students who do not have a financial asset or property to pledge to the lender.
What are Secured Education Loans?
If an education loan amount surpasses a specified limit, the lender will ask the student to provide security. For example, public banks require collateral for education loans above INR 7.5 lakh. The limit for private banks and NBFCs is higher. The bank uses the security if the borrower is unable to repay the loan. Such loans are known as secured education loans.
Features of Education Loans with Collateral
Education loans with collateral sanction much higher amounts in contrast to unsecured loans. For instance, a student can avail up to INR 1.5 Cr as a loan from SBI. Secured loans also tend to have a lower interest rate and processing fee since the risk to the bank is much lighter. Another feature of secured education loan is a more flexible and longer repayment term when compared to a loan without collateral. Additionally, secured loans have the provision of moratorium period, that is, a fixed period where the borrower does not have to make any payments towards the loan.
It should be noted that a secured education loan in India for study abroad takes longer time to authorise as compare to unsecured loans as it necessitates more extensive paperwork.
What Can be Usually Used as a Collateral?
- A property. It can be flat or house
- A deposit. Example, fixed deposits.
Which Education Loans and Lenders Do Not Have Margin Money?
One feature common feature of both secured and unsecured education loans is margin money.
When a bank sanctions a student loan, they don’t fund 100% of the money required to pay for the degree abroad. In most cases, 85% of the total amount is approved. The rest 15% is paid out of the pocket of the student. The precise amount of margin money depends upon the lender and the overall expense. Generally, it falls within 10% to 30%. There are some exceptions to this rule:
- If the education loan is up to INR 4 lakh, there is no margin money.
- Bank of Baroda for select few colleges fund 100% of expenses
- ICICI education loans up to INR 20 lakh are free of margin money.
- Student loans from Avanse meet 100% expenses with zero margin money.
- Incred, an NBFC, also sanctions loans with nil loan margin.
Find the Best Bank for Education Loan with GyanDhan’s Help
Education loan providers that finance 100% of expenses have difficult and complicated procedures. Over and above, their policies are generally unclear. Since GyanDhan partners with them, they are aware of the policies and procedures which helps get an education loan from these lending entities quickly.
GyanDhan also pre-assess the student’s profile to ascertain the best bank or NBFC for them. With this, they ensure that applicants find a low-interest rate loan, saving a considerable amount in the long run. Besides, searching for the best loan, GyanDhan makes sure that the usual roadblocks that crop up while applying for a student loan are taken care of.
That’s just the tip of the iceberg. Their education loan counsellors are present in every step of the way. For example, if a student wants a loan from PSUs for studying abroad and needs 100% of the expenses to be funded, GyanDhan will help him/her avail the BOB Education Loan. The bank funds 100% of the expenses for select colleges which GyanDhan will give you a list of over the phone. If your college does not make it to the list, GyanDhan will get your loan done from SBI, and with further aid from them, the student can cover the 10% margin through scholarships and other financial grants.
To Sum Up…
Shopping for an education loan with a low-interest rate is only a part of the process. Finding a student loan that has no margin money or as little as possible is another. At GyanDhan, a dedicated team of loan counsellors supports students in both of these areas. They address the concern of margin money by taking up your case with their partner banks or NBFC. If you are looking for an education loan, don’t wait and request a call back immediately from GyanDhan.