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Secured and Unsecured Education Loans: Which Is Right for You?  

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Table of contents

Understanding Secured and Unsecured Education Loan  
What is a secured loan? 
Education Loan with Collateral
What is an unsecured education loan? 
Education Loan without Collateral
Key Secured Unsecured Loan Difference 
Want to Know More About Collateral
Unsecured Education Loan Eligibility
Conclusion
If you are looking to fund your higher education by studying abroad, you can now explore getting an unsecured education loan or a non-collateral from a lender with favouring conditions. Here, the crucial information on how to choose your lenders, and the benefits of obtaining the right fit for you and more aspects that are related to your studies abroad are covered.

Understanding Secured and Unsecured Education Loan

education loan without collateral
An education loan is a financial blessing for aspiring students who are looking to pursue higher education abroad but face monetary difficulties within the family, making it difficult for their parents to spend a huge amount of money in their Childrens’ education. As helpful as they may be, it is crucial for a student and the family to sit and consider which option, between secured or unsecured loan, is more favorable to them.   

You will be amazed to know that from India, there are more than 13.35 lakh students have gone abroad to pursue higher studies till date! Also, in 2024 alone, there is an increase of around 16,000 new students as compared to last year, who are currently gone abroad to higher studies. With India having the world’s largest youth populations, and umpteen opportunities for young minds to explore the outside world, applying for secured or unsecured education loan in India is an ideal option for students for their academic pursuits.

what is secured loan?

This type of education loan, also known as a collateral loan, is given to a student whose family has pledged a specific asset that is valuable or property to the lender and received an education loan for abroad studies. 

Education Loan with Collateral

unsecured education loan in India
  • If a borrower defaults making the repayment of loan, this type of loan equips them to claim the collateral, for instance, a house, flat or non-agricultural land or liquidating securities such as fixed deposits, bonds and insurance policies are used as collaterals.
  • Before the loan is disbursed, the lender puts forth options for the borrowers to choose from. If a secured loan is opted for, the lender evaluates the collateral in question and prepares a valuation report, based on which the loan amount can be given.
  • In secured loans, the approval time for the loan amount is longer as there are multiple steps involved, when there is a collateral present.

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Education Loan for Study abroad

What is an unsecured education loan?

Education loan for abroad studies

In this type of loan, students can pursue abroad studies without pledging collateral with the lender. Here the process is quicker between secured loan vs unsecured loan. The lenders consider your financial ability and resources to repay the education loan at a later stage without defaulting. 

Education Loan without Collateral

  • The responsibility is on the higher side for the student borrower where the repayment has to be done meticulously without missing a single installment in a timely manner.
  • The disbursement of loan amount usually is faster in these types of loans.
  • Here, the students can have flexible repayment options such as a holiday period in the repayment term or waiting till they are employed post the graduation.
  • In education loan without collateral, there is no hassle or tension of safeguarding the asset in question, that is pledged.

Key Secured Unsecured Loan Difference

Feature 

Secured Education Loan

Unsecured Education Loan

Collateral

Required

Not Required

Interest Rates

Lower

Higher

Borrowing limits

Higher

Lower Compared to Secured Loan

Repayment term

Longer

Lower compared to secured loan

Eligibility

Stricter Criteria

Relatively Relaxed Criteria

Want to Know More About Collateral?

unsecured education loan
Collateral acts as a guarantee against the education loan taken by the student borrower. Usually, tangible assets like automobiles, especially cars, apartments or houses, or fixed deposits in banks qualify as collateral.

Types of Collateral

  • Immovable property: Tangible properties like a piece of non-agricultural land, apartment or a house are considered collateral.
  • Movable property: Sometimes, financial institutions opt for a car to be considered as collateral against your education loan.
  • Intangible properties: Fixed deposits, Government bons and sometimes LIC insurance are considered as collateral for your study loan.

Unsecured Education Loan Eligibility

education loan without collateral
Since your lender has added responsibility about trusting you with the study loan, you can avail one only if you meet the criteria such as: 
  • Exceptional academic scores and performance in your previous years of study.
  • Your entrance exams scores should be beyond the qualifying range for exams like GRE, GMAT, SAT, MSAT and similar exams, as it is an important factor while considering your profile for unsecured education loan.
  • Location of study plays a significant role in availing study loans. Opting for popular destinations with reputable and quality education like the USA, Australia, UK, Germany, Canada etc. can up your chances better than other lesser-known locations.
  • Courses opted also impacts availing an unsecured study loan as the most prominent ones are given preference by the lenders due to its familiarity known to many.

Qck Loans is here to help choose the best option for student loans for studying abroad!

Reach out on +91 9448113666 or write to us at qckloans@gmail.com to let us know our process now!
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Conclusion: 

By following these options, the options posed to you when education loan is secured or unsecured, choose the best option after considering the above factors before taking the final leap.  A secured loan with collateral is an easier choice, however an unsecured education loan can be a game-changer, allowing you to pursue your academic aspirations without financial hassles until you finish your studies, making it a compelling choice among many students. By reaching out to some leading names like Qck Loans, you can get the right advice from their team of financial experts, assisting you throughout the loan process. 

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