There are times when our financial allowances overflow from the financial limit that we might not take seriously. In such cases, taking an education loan from a bank becomes nearly improbable. This is exactly when an NBFC comes into the picture. Because, why would you waste your merit and academics over a financial situation, right? This blog helps you to get through all your queries regarding education loans from NBFCs. Thus, look for the parts that you were previously confused about and get to the core concept of NBFC education loans for studying abroad.
What is Loan without Collateral?
Collateral is any type of valuable asset that one has to give away to the lender of a loan if repayment does not occur. This is more like the security that keeps the lender secured financially against any defaulter who is unable to repay the debt due to the loan.
In the case of an education loan, collaterals allow the students to get a secured loan against the asset. This is extremely important in the case of a government bank giving an education loan. However, NBFCs have schemes to give out student loans for students aspiring to study abroad.
What are NBFCs?
NBFC is an acronym for Non-Banking Financial Companies. These institutions allow banking operations without a banking license. The explicit right comes to them from a small limitation. These financial institutions are unable to take any demand drafts or publicly avail funds on paper. Additionally, this limitation allows the NBFCs to keep out of RBI and other boards. Thus, the NBFCs are not eligible under banking regulations.
It is during the pandemic that NBFCs became majorly opted for in the case of education loans. This is because there were many defaulters during this period due to the low economic growth of the various economic classes. NBFCs are thus called shadow banks.
When Is An NBFC Education Loan Suggested?
Generally, the study abroad programs of most abroad universities have a much higher financial requirement than government banks can provide. They have a loan amount limit. However, these NBFCs have a much higher upper limit than the normal government banks.
Most students from the middle economic classes do not have collateral for getting a high-valued loan for studying abroad. In such a case NBFCs are suitable for getting an education loan. Additionally, there is additional flexibility in repaying the loans.
However, due to the pandemic, most people had reduced CIBIL scores because of these students were exceptionally unable to access bank loans. NBFCs became a breath of fresh air though at a higher rate of interest. However, the students planning to get an education abroad had a good option. The main driving point here is that most meritorious students get into great jobs once they arrive at their abraid universities. This allows them to repay even higher rates of interest.
Also read: Education Loans in India
NBFCs in India
India has four major NBFCs that cater to students planning to go abroad for their higher education. These are given below for the reference of the students.
The best features of this NBFC providing education loans to the students are given here. One of the most remarkable NBFC schemes comes from Auxilo as they provide customized loans to students. The other features that make this one of the most preferred NBFC options for international students are given below.
- This NBFC funds all the necessary expenses of the student on abroad education. This includes all the study-related costs at the college, the cost of a laptop, insurance premiums, along will all other miscellaneous charges.
- There is a range of co-applicants accepted.
- Interest rate starts from 11.5%.
- The repayment tenure is 10 years after the moratorium period.
- Repayment of interest starts within the moratorium period.
|Student||Above 18 years of age Indian citizenship is a mandate|
Offer letter mandatory for loan disbursal
|Co-applicant||Finances must be based in India with Indian citizenship |
Must be directly attached to the applicant
Should have a bank with cheque facilities
Co-applicant is the first debtor
Compared to Auxilo, Incred does not offer laboratory fees. However, all the other expenses are covered in names and not the miscellaneous fees. Additionally, the parents and guardians can only be the co-applicants. Thus, the flexibility of selecting a co-applicant is much less. Some other features are given below for your reference.
- Interest rate is 11.5%.
- The moratorium period can be stretched up to one year after course completion. However, the general period is till 6 months.
- No loan margin with suitable proof of funds.
- The repayment tenure is 10 years after the moratorium period.
|Student||Students must be Indian|
Loans are approved for only Master’s courses
Preference is given especially to STEM courses
The institution must be already present on the Premiere Institute list
|Co-applicant||Collaterals must be either liquid securities or immovable properties|
3rd party collaterals will depend on the student’s profile
This is a subsidiary of HDFC Bank and is running successfully since its inception. This has been the very first NBFC in India for Indian students planning to study abroad for their higher education. HDFC Credila education loan is among the most preferred NBFCs among the Indian mass of international students. HDFC Credila provides both collateral-free and secured student loans to study abroad aspirants.
Read more: HDFC Education Loan
|Student||Indian students applying to abroad universities for masters|
The students have to have secured admission for loan disbursal
|Co-applicant||An Indian citizen with a fixed income source|
Generally, immediate blood relatives can be co-applicants
Equal responsibility for loan repayment with the student
Relationship documentation is important n the case of collateral, there must be a sufficient market value for collateral
This is a less opted NBFC option for the international students of India. While the loan covers 100% of the tuition fees, it covers only 75% of the other expenses till it does not cross 20% of the tuition amount. Additionally, accommodation details need to be provided by the University for accommodation fees to be provided. For travel costs, INR 75,000 will be allotted to the student applying for the education loan. For co-applicants, even in-laws and first cousins are allowed to take responsibility. Other features are:
- The rate of interest is 13.65%.
- The moratorium period is either 6 months after course completion or 3 months after securing a job.
- The repayment duration is longer than the other NBFCs: 15 years.
|Student||Indian-origin students over 18 years of age.|
Students should secure admission before loan disbursal.
|Co-applicant||Must be working in IndiaIs as the primary defaulter in case of non-repayment|
Should have an Indian bank account with cheque facilities
Important Points For Applicants about NBFCs
There are certain points about NBFCs that need to be kept in mind while dealing with NBFCs. This is because these are the basic points where NBFCs lack in comparison to banks while providing the best quality services outside the scope of government banks. The points are given below for your reference for the students aiming for studying abroad.
- Education loans without collateral are provided.
- A large loan amount of up to 60 lakhs gets sanctioned through NBFCs.
- Interest amounts need to be paid starting from the second month of the loan disbursal. However, after the moratorium period, the students need to start paying the EMIs for the loan amounts.
- The moratorium period closes 12 months after the course duration.
- The collateral-free loan tenure is generally 10 years from the disbursal.
- NBFCs have approx. 1% processing fee for student loans. These additionally have GST attached to the borrowed amounts.
Ans. NBFCs are alternatives to the banks that provide education loans for studying abroad. These organizations allow for both collateral-free education loans and also secured education loans. Thus, NBFCs are always great education finance partners.
Ans. The most shocking fact for regular bank users is that NBFCs offer home loans even if the credit score or the CIBIL score is below 700 points! Thus, if a student plans to study abroad, there is a huge scope that the student will get a good loan amount with easy disbursal. This is also at a slightly higher rate of interest even at a time the banks refuse to settle for a loan sanction. Ultimately, what matters is that the students get a good chance to study abroad. Their future careers are brighter after a degree from abroad. Thus, there is a great chance for the NBFCs to collect back the loan.
Ans. While there are collateral-free NBFC education loans for students planning to study abroad, the eligibility depends on quite a number of factors. These are generally to evaluate the repayment capability of the student.
Age of the loan applicant
Educational achievements and qualifications
Chosen degree course
Ans. NBFCs are famous for their intolerably high sanctions for education loans to students. A student can take a loan of up to 40 Lakhs from an NBFC without collateral for studying abroad. This means that students can easily get involved in a great university without taking the hassle of a serious discussion in the case of parents who keep a great deal of focus on expenditures.
Thus, a student can most likely get a student loan from an NBFC without much hassle. Studying abroad has become a lot easier these days with the basic requirement being great academic performance. Academic performance is more like a token of trust for financing institutions. Thus, students from economically dependent families can easily score a great college and an NBFc education loan just by proving their merit. These institutions are making it easier for students to change their entire lives.
Leverage Edu is a one-stop shop for all your study abroad dreams. We have our own Fly Finance to help you with Banking, NBFCs, and Forex among all others. While you surf our websites, do catch up with the educational mentors at 1800572000!