Collateral Education Loan to Study Abroad: Types, Eligibility, Process, Advantages

The Collateral education loan to study abroad is one of the best options to support your education expenses in a foreign country. Due to high tuition fees in the abroad country, you may be required to take an education loan for abroad study but by taking a collateral loan you will have high loan approval chances and lower interest rates.

This Story also Contains

1. What is a Collateral in Education Loan?
2. Different Types of Collateral Education Loans to Study Abroad
3. How Much Amount Can I Get on a Collateral Education Loan to Study Abroad?
4. Interest Rates on Collateral Education Loans
5. Eligibility for Collateral Education Loans
6. Expenses Covered Under the Collateral Loans to Study Abroad
7. How to apply for a Collateral Education Loan to Study Abroad?
8. What are the Documents required for evidence of collateral?

There are various types of education loans to study abroad. While researching education loans one common term is collateral loan or loan with collateral. This is one of the common FAQs on education loans. The collateral student loans can be granted by placing properties, liquid securities like bonds, and fixed deposits as collateral.

As a student, if you like to know whether the collateral education loan is suitable for you to study abroad and know the eligibility, interest rates and the maximum loan amount receivable, then read the article mentioned below.

What is a Collateral in Education Loan?

The term collateral in finance means a valuable asset placed by the borrower for seeking the loan. This collateral can be in the form of immovable property like a house, flat, non-agricultural land and liquid securities like bonds, fixed deposits, insurance policies, etc. Here the borrower pledges the properties or liquid securities to take the education loan.

Usually, the banks demand the collateral to secure their loan amount if in case the borrower fails to repay the loan. A collateral education loan to study abroad is also known as a secured education loan. There are also collateral-less education loans that do not require any properties or liquid securities to seek the loan.

Different Types of Collateral Education Loans to Study Abroad

Based on the type of securities you offer to the money lenders, there are different types of collateral free loans for education. The details of the collateral loan to study abroad types are as follows.

Tangible Collateral Security:

The immovable properties like houses, plots, flat, non-agriculture lands with clearly defined boundaries are treated as tangible collateral. Here the banks or lenders will evaluate the property and offer the student loan.

Intangible Assets:

These intangible assets are liquid securities like fixed deposits, government bonds, life insurance policies, etc. Here the exact value of the asset is considered and converted into cash amount for giving the education loan.

Third-party Collateral:

As a student if you do not have any assets or properties, then you can borrow a collateral loan by pledging the collateral of a friend or a relative, this is called third-party collateral.

How Much Amount Can I Get on a Collateral Education Loan to Study Abroad?

The loan amount for the collateral free education loan will be based on the value of the asset or property you pledge to the money lender. The financial corporations and banks offer the loan amount to meet the tuition fees and living expenses in the abroad country. Generally, the loan amount for the collateral free education loan ranges from Rs 7.5 lakhs to 1.5 crores.

Collateral of at least 50% of the loan amount should be offered by the borrower to seek the Collateral education loan. If the borrower provides collateral of 100%, they can receive a concession in the interest rates.

Interest Rates on Collateral Education Loans

The interest rates for the collateral education loan to study abroad can range between 8 to 18%. Usually, the interest for collateral education loans will be lower than non-collateral loans. The interest rates for the collateral loan will differ based on the bank or financial corporation and loan amount.

Eligibility for Collateral Education Loans

To seek the education loan candidates need to meet the following eligibility criteria.

The requirements for a collateral free education loan to study abroad eligibility are mentioned below.

• The student must be an Indian national.

• Secured admission to an abroad university.

• The candidate must have enrolled in the applicable courses under the loan scheme.

• Ability to offer collateral.

Expenses Covered Under the Collateral Loans to Study Abroad

Students who secure the collateral education loans can utilize the loan amount to cover the following expenses as mentioned below.

• Tuition fee payable to college.

• Accommodation charges

• Examination, Library and Laboratory fees.

• Health insurance charges for the student.

• Travel expenses.

• Purchase of books and/equipment like laptop and other essential instruments/ uniforms

• Other expenses required to complete the course in abroad.

How to apply for a Collateral Education Loan to Study Abroad?

The loan application process can be done online or offline by directly walking into the bank or financial corporation. Once the candidate provides the details regarding loan requirements and mobile numbers online on their official website, the banks or lenders directly contact them via phone and enable them to fill in the loan application form online. After filling in the details you are required to upload few documents online or carry them directly to the nearest branch of the bank or NBFC.

Documents required Collateral Loan to Study Abroad

While applying for a collateral loan for education, the candidate needs to submit the following documents to submit the loan application form.

• Passport Size Photos

• ID proof like passport, PAN card, Aadhaar Card, driver license, etc.

• Aadhaar Card for residence proof

• 12th class mark list

• Marksheet of previous degree (if any)

• Entrance exam test scores of GRE, GMAT, TOEFL, IELTS (if applicable)

• Scholarship documents (if any).

• Abroad university admission acceptance letter.

• Documents related to collateral.

What are the Documents required for evidence of collateral?

If the collateral offered by the borrower is an immovable property like a house, flat, or non-agricultural land, then the following documents can be considered as proof of collateral.

• Property deed.

• Registered sale agreement Along With Society Share Certificate

• Original Registration receipt for the above agreement

• Letter of allotment by Municipal Corporation.

• Previous chain of sale deed.

• Building plan

• Encumbrance certificates

• Recent maintenance bills.

• Latest property tax bill

Related reading:

• Top education loan providers in India to study abroad

• Education loan to study abroad: Whom to approach?