All You Need To Know About Unsecured Educational Loan

All You Need To Know About Unsecured Educational Loan

 

The cost of education has been increasing for the last few years. One of the factors behind this is the rise in the number of students who are opting for their higher studies abroad. This rise in the cost discourages many students from applying for higher studies abroad. However, financial institutions such as banks and NBFCs have been offering educational loan to students at affordable interest rates so that their dream of pursuing higher studies abroad doesn’t get hampered.

One such type of educational loan is the unsecured loan. Compared to secured loan, unsecured loan is one of the better options due to the sum offered and the flexibility in its criteria. Given below is more information related to unsecured educational loan:

1.      What is unsecured educational loan?

An unsecured loan is where you do not have to provide any kind of collateral at all for a loan of higher amount. You can go for an unsecured loan at any of the financial institution. However, PSBs tend to give only a limited amount of unsecured loan which might not be sufficient. Private banks, and NBFCs provide a higher amount for educational loan. When you apply for an unsecured loan at an NBFC or a private bank, then ROI that will be charged to you will be a little higher as a loan of higher amount is provided to you without some collateral. Unsecured loans have a greater moratorium period compared to secured loans. They also help in covering almost 100% of your expenses abroad.

2.      How is different from secured loan?

Due to regulations imposed on public banks by the RBI, they are only able to lend loan amount upto a certain limit without having to provide any collateral. If you want to apply for an educational loan of an higher amount, then you will be required to provide collateral. That is not the case when it comes to unsecured loans. As NBFCs aren’t banking institutions, they do not come under the gambit of any regulations. If you require a higher loan amount for further education, then you can apply for that at an NBFC. Private banks also provide unsecured loan of an higher amount, but NBFC offers a better alternative. For example, if you want an educational loan of Rs.60 lakhs, then you can apply for it at an NBFC to get the amount you require instantly. 

3.      Should you opt for it?

As the cost of education keeps rising and more students opt for their higher education abroad, it becomes economical to apply for an educational loan for higher studies. However, not everyone is financially capable of providing the necessary collateral. This could hamper their chances of getting a better education and the prospect of a better future. Unsecured loans could be a boon for such students.

This is all the information related to unsecured educational loan. Please be sure to discuss in detail everything related to unsecured loan with your preferred financial institution. This would help in clearing any doubts you have before you apply for the loan.