Types of Education Loans: Which One Is Right for You?
September 3, 2024
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Secured and Unsecured Education Loans: Which Is Right for You?
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Are you a student looking for pursuing higher education and study abroad, but worried about how to finance your studies? You can now explore getting an unsecured education loan from a lender with favouring conditions as per your needs. This is a blog post by Qck Loans, a leading lender for students such as you, who are looking for student loan lenders, where we will cover the necessary information about secured loans, and unsecured loans, how to choose your lenders, and the benefits of obtaining the right fit for you and more aspects that are related to your abroad studies.
Understanding Secured and Unsecured Education Loan
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.
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 a secured loan?
This type of loan requires collateral where a specific asset that is valuable or a property is pledged with the lender as a security deposit and borrows the loan amount. Here the lender is doubly making sure that they do not incur heavy loss if the borrower defaults making the repayment of the loan borrowed. Let’s get into the world of education loan for abroad studies and help you make an informed decision.
Let us see some of the features related to secured loans:
- Here the type of securities that are claimed by the lender until repayment are a house, flat or non-agri land. Liquidating securities such as fixed deposits, bonds and insurance policies are used as collaterals.
- Here, the lender evaluates the collateral in question and prepares a valuation report. The lender then decides the amount that can be given as an education loan for abroad studies based on the value of the collateral.
- There are three main types of valuation. First fair-market value is where the collateral is sold in the current market value. Second, the realizable value is where the collateral can be sold at the expected evaluating the expected selling price in the market. The distressed value is the final type where post-reduction is based on depreciation, age and expected returns in the future market.
- In secured loans, the approval time for the loan amount is longer as there are multiple steps involved, when there is a collateral present.
In a gist, secured loans are a more viable option for education loans for abroad studies, as they are more favourable with increased approval rates, but with a lot of formalities and paperwork involved.
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What is an unsecured education loan?
An unsecured education loan in India, is that kind of education loan where students can look to pursue abroad studies without pledging any type of asset as a collateral. Here lenders are at higher risk when compared to secured education loans. The lenders consider your financial ability and resources to repay the education loan at a later stage without defaulting.
For students looking to secure an unsecured loan, without forgoing their assets as collateral, can opt for this type of loan. It encourages students to pursue their study abroad dreams without putting their assets at stake.
For students who hail from Tier 2 and 3 cities, or towns and villages, who find it difficult to obtain a loan against securities such as collaterals like properties or large sum of deposits, or bonds, unsecured loans are a good option where the lenders give away education loan without collateral requirement. Unsecured education loans offer flexibility and convenience to students as it has lesser formalities when compared to secured loans.
Perks of Unsecured Education Loans in India
Students with high responsibility, either to support financially at home, or who have high goals in life, can seldom default while opting for unsecured education loan. The lenders conduct thorough research keeping in mind these are other factors and deduce whether to sanction the unsecured education loan for abroad studies. Let us look at the advantages of opting for unsecured education loans:
- The disbursement of loan amount usually is faster in these types of loans.
- Here, the students can avail 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 Differences between Secured and Unsecured Education Loan
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
Leveraging on the Right Choice of Education Loans
After lots of research conducted by Qck Loans, we advise students to keep in mind these pointers while choosing between a secured and unsecured education loan:
- If you are looking for a greater sum of loan amount, a secured loan can be a preferred option as you get lower interest rates.
- If your parents have multiple assets or large number of deposits in the bank, then a secured loan can be your preferred option, with less risk for both parties
- If you are a student with financial contingencies in your family, and have the potential to bear higher risk, without pledging your assets, an education loan without collateral is a safer option.
- With a high-risk appetite, and the confidence of pulling through your academic studies abroad, and landing in a decent paying job, you can go for unsecured education loan.
Tidbit: Did you know? A good set of marks and academic excellence can be a trump card for you to avail an education loan for abroad studies in an easy manner.
Role of Qck Loans in Your Academic Venture
At Qck Loans, we understand the financial problems the students face more often in Tier 2 and 3 cities than in Tier 1 cities, where there are a lesser number of students going through financial hiccups. Keeping this in mind, we at Qck Loans offer unsecured education loans to aspiring students and tailor the packages to their needs. We offer both secured and unsecured education loan with quick processing within 48 hours of applying for a loan, user-friendly process, lower interest rates, and flexible repayment terms make us a preferred choice among other lenders.
While secured loans can provide you with an education loan for abroad studies immediately, and with less paperwork, unsecured education loans in India also are a powerful medium of funding your study abroad plans, without compromising your assets or financial security.
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!
Conclusion:
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.
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