An unsecured loan for studying abroad is a type of personal loan that students can use to cover the cost of studying abroad. Unlike a secured loan, an unsecured loan does not require the student to put up any collateral as security against the loan. Instead, the lender will assess the student’s creditworthiness and ability to repay the loan based on their income, credit score, and other factors.
What is an Unsecured Loan
An unsecured loan is a type of loan that does not require collateral, such as a house, car, or other assets, to secure the loan. This means that the lender provides funds to the borrower based on their creditworthiness and ability to repay the loan, without any property or asset to act as a guarantee or security for the loan.
Difference Between Secured and Unsecured Loan
This is the basic difference between Secured and Unsecured Loan
|Secured Loan||Unsecured Loan|
|A secured loan is a type of loan that requires collateral. Examples of secured loans include mortgage loans, car loans, and secured personal loans. Because the lender has the security of the collateral, secured loans typically have lower interest rates and longer repayment terms than unsecured loans.||On the other hand, an unsecured loan is a type of loan that does not require collateral. Examples of unsecured loans include credit card debt, personal loans, and student loans. Since the lender has no collateral to secure the loan, unsecured loans usually have higher interest rates and shorter repayment terms than secured loans. Lenders typically require a good credit score and stable income to approve an unsecured loan.|
Benefits of Unsecured loan for study abroad
Here are some potential benefits of taking an unsecured loan for studying abroad:
- No Collateral Required: Unsecured loans do not require collateral, which means that you do not need to put up your property or other assets as security for the loan. This can be beneficial for students who may not have significant assets to use as collateral.
- Flexibility: Unsecured loans can offer more flexibility than other types of loans, such as education loans. They can be used to cover various expenses related to studying abroad, such as tuition fees, living expenses, airfare, and other expenses. This can help you to better manage your finances and prioritize your expenses.
- Quick Approval: Unsecured loans can be approved quickly since they do not require collateral. The loan approval process is typically shorter than secured loans, which often require time-consuming appraisals and valuations.
- Build Credit History: Taking an unsecured loan and paying it back on time can help build your credit history. This can be beneficial in the long run as it can help you qualify for better interest rates and other financial products in the future.
Relevant Read- Education Loan without Collateral
List of Unsecured Loans for Study Abroad
Here are some common unsecured loans that you can consider for financing your studies abroad:
- Personal Loans: A personal loan is an unsecured loan that can be taken from a bank or a financial institution to finance your studies abroad. The loan amount can vary depending on your credit score, income, and other factors.
- Credit Cards: Credit cards can also be used to finance your studies abroad. However, this should be used as a last resort as credit card interest rates are generally higher than personal loans.
- Education Loans: Many banks and financial institutions offer education loans for studying abroad. These loans typically have lower interest rates compared to personal loans or credit cards but may require a co-signer or collateral.
- Peer-to-peer Loans: Peer-to-peer lending platforms connect borrowers directly with individual investors. These loans can be used to finance your studies abroad, but the interest rates may vary based on your credit score and the lending platform.
- Crowdfunding: Crowdfunding platforms like GoFundMe or Kickstarter can be used to raise funds for your studies abroad. However, this option is more suitable for smaller amounts as it can be challenging to raise large sums of money through crowdfunding.
Relevant Read- Here is a guide on Loans to Study Abroad.
Banks In India offered Unsecured loans for Study Abroad,
Yes, there are several banks in India that offer unsecured loans for studying abroad. Some of the major banks that offer these loans include
- State Bank of India: This offers SBI Global Ed-Vantage Loan for students looking to study abroad for graduate and postgraduate courses.
- HDFC Bank: Offers unsecured personal loans for higher education, including studying abroad.
- Axis Bank: Offers education loans for students studying abroad without any collateral.
- ICICI Bank: Offers unsecured personal loans for education purposes, including studying abroad.
- Punjab National Bank: Offers PNB Udaan education loan for students looking to study abroad.
- Canara Bank: Offers unsecured education loans for students studying abroad.
The eligibility criteria for an unsecured loan for study abroad may vary depending on the lender, but some common requirements include:
- The student must be at least 18 years old.
- The student must have completed at least a high school diploma or equivalent.
- The student must have secured admission to an accredited educational institution abroad.
- The student should have a good credit score, which typically means a score of 650 or higher.
- The student should have a steady source of income, either through part-time or full-time employment or through a co-signer who has a steady source of income.
- Some lenders may require a co-signer who is a creditworthy individual, such as a parent or guardian, to guarantee the loan.
- Lenders may consider other factors such as the student’s employment history, debt-to-income ratio, and financial stability.
How to apply for an Unsecured Loan
To apply for an unsecured loan for study abroad, you will need to research different lenders and loan options and compare interest rates, fees, and repayment terms.
- You will also need to provide personal and financial information, such as your credit score, income, and employment status.
- Apply for the loan through the lender’s website or by visiting a branch office.
- Complete the loan application and submit it along with the required documentation.
Relevant Read- Secured vs Unsecured Education Loans
The documents required for an unsecured loan for study abroad may vary depending on the bank or lender but typically include
- Aadhaar card, a PAN card, a Voter ID card, or driving license.
- Address proof
- Academic documents Mark sheets, degree certificate, admission letter from the institution abroad, and proof of enrolment in the program.
- Income proof Bank statements, salary slips, or income tax returns for the last 2-3 years.
- Collateral documents
- Some lenders may require additional documents such as a letter of recommendation or a statement of purpose.
Ans. An unsecured loan is a type of loan that does not require collateral to secure the loan. This means that the loan is granted based on the borrower’s creditworthiness and ability to repay the loan.
Ans. You can use an unsecured loan to cover various expenses related to studying abroad, such as tuition fees, living expenses, airfare, and other expenses.
Ans. Advantages of unsecured loans for study abroad include no collateral required, flexibility, quick approval, building credit history, and low processing fees.
This was all about Unsecured Loans for Study Abroad. If you need assistance in choosing the right loan for studying abroad, connect with our Leverage Edu experts at 1800572000 and book a 30-minute free counseling session.