What is Collateral Security in Education Loan?
Collateral security refers to the asset or property that a borrower pledges to a lender as a form of guarantee for an education loan. It provides the lender with a sense of security and reduces the risk associated with lending a large sum of money. In the event of loan default, the lender has the right to seize and sell the collateral to recover the outstanding balance.amount can vary based on the lender’s policy and the borrower’s profile.
Education Loans with Collateral Security to Study Abroad
Financial Support
Helps cover tuition fees, accommodation, books, and other academic expenses. Reduce the immediate financial burden on parents.
Flexible Repayment Options
Repayment usually starts after course completion (moratorium period). EMI payments can be structured based on the borrower’s earning capacity.
Minimum Interest Rates
Many education loans come with lower interest rates compared to other secured loans. Some government schemes offer subsidized interest rates for students.
Different Types of Education Loan Collateral Accepted by the Lenders
Tangible collateral security – Lenders accept immovable property such as an independent house, flat, plot, or any non agricultural land with a clearly defined boundary. A bank-appointed evaluator will evaluate the property as student loan collateral.
Third-party collateral – If in the case, a borrower does not own collateral, they can pledge third party collateral for education loan belonging to a friend or a relative. The original documents of the collateral have to be submitted in this case as well.
What are the Benefits of an Education Loan with Collateral?
Securing the loan with collateral allows you to borrow a larger amount of money. Lenders are more willing to provide substantial loans when they have an asset as security,
giving you access to the funds you need to finance your education abroad.
Secured loans generally have lower interest rates compared to unsecured loans. By offering collateral, you reduce the risk for the lender, making them more likely to provide a loan at a lower interest rate. This can result in significant cost savings over the loan term.
Secured education loans often come with longer repayment terms, providing you with more time to repay the loan. This can make payments more manageable and reduce the financial burden while you’re studying and establishing your career.
Securing the loan with collateral can make it easier to get approved, especially if you have a limited credit history or a lower credit score. The collateral assures the lender, increasing your chances of loan approval.
Depending on the lender, you may have flexibility in choosing the collateral to secure the loan. This can include assets such as property, investments, or other valuable possessions. You can select collateral that aligns with your financial situation and preferences.
Expenses Covered in an secured Education Loan for Abroad
This section will guide you about the expenses that are been covered in abroad loan for students without collateral. However, the expenses covered may vary depending on the country, course, and specific schemes of these education loans. Here are the expenses which are covered in the education loan.
Tuition Fees: Full or partial coverage of tuition fees, depending on the loan amount approved.
Accommodation: Under a foreign education loan without collateral, costs of on-campus or off-campus housing are also included.
Travel Expense: Travel costs include flight tickets and other transportation expenses.
Study Materials: Study material expenses could be expenses for books, e-resources, and academic tools. Costs for laptops or other necessary equipment may also be included under this category.
Health Insurance: Health insurance is a mandatory requirement by universities or countries. Health insurance is also covered undera foreign education loan without collateral.
Examination and Application Fees: Study abroad education loan without collateral also cover additional costs like examination costs and other miscellaneous expenses.
Support From LoanSetu
- As a consultant, we stay with student at each and every steps of loan procedure at initial level that saves lots time of students
- We select best bank loan option for students, (lower rate of interest, processing Fee, insurance amount)
- We guide students as well as his guardian for smooth process
- We preparing students for bank interview by the our expert team
- We guide student's guardian for financial questionnaire which will be asked by bank officers
- After getting approval, we offer concession in ROI as well as PF, which is offered to LoanSetu.
- With the help of LoanSetu, you can get disbursement process easily and fast
