Are there loan options available for studying abroad and how do collateral and non-collateral loans work?
Collateral loans require property as security and offer larger amounts at lower interest rates (typically 10-11%). Non-collateral loans need no asset pledge, are faster to process, and are offered by NBFCs and international lenders but carry higher rates (12-14%). Both options are available for studying abroad.
Collateral vs Non-Collateral Loans - Key Differences
Factor | Collateral Loan | Non-Collateral Loan |
|---|---|---|
Security Required | Property, FD, or asset pledged | No asset required |
Loan Amount Available | Rs 20L - Rs 1.5 crore or more | Up to Rs 40-75L typically |
Interest Rate | 9.5% - 11.5% per annum | 11.5% - 14.5% per annum |
Processing Time | 4-8 weeks (property valuation needed) | 1-2 weeks (faster approval) |
Margin Money Required | Often 10-15% of loan amount | Often 5-10% |
Best For | Higher loan amounts; lower EMI burden | Quick approval; no property available |
Major Lenders for Study Abroad Education Loans
Lender Type | Examples | Loan Type | Key Feature |
|---|---|---|---|
Nationalised Banks | SBI, Bank of Baroda, Canara Bank | Both | Lowest rates; government backing; slower processing |
Private Banks | ICICI, Axis, HDFC Bank | Both | Faster; competitive rates; co-applicant required |
NBFCs | HDFC Credila, Avanse, InCred | Non-collateral primarily | Fast approval; cover 100% expenses; slightly higher rates |
International Lenders | Prodigy Finance, GradRight, MPOWER | Non-collateral | No co-applicant; USD/GBP loans; based on future earnings |
My Advice
If your family has property and can pledge it as collateral, a nationalised bank loan like SBI's Scholar Loan or Canara Bank's IBA scheme is the most cost-effective option because of significantly lower interest rates. Start the process at least 3 months before you need the funds - property valuation, legal checks, and bank processing take time. If you do not have property or need faster access to funds, an NBFC like HDFC Credila or Avanse provides 100% expense coverage and approvals within 7-14 days. Prodigy Finance and GradRight are excellent non-collateral options for students at target universities (mostly top-ranked institutions in the UK, USA, and Canada) - they require no Indian co-applicant and disburse in GBP or USD directly. Compare interest rates carefully and calculate the total repayment amount, not just the monthly EMI, before committing.
More expert answers
To get an education loan for studying abroad, you’ll usually need a co-applicant and, for higher amounts, collateral.
- Collateral: For loans above ₹7.5 lakh, most banks require collateral such as residential property, non-agricultural land, fixed deposits, or government bonds. The approved amount depends on the collateral’s value. Unsecured loans up to ₹7.5 lakh may be available, especially for top institutions.
- Co-applicant: A co-applicant (typically a parent or guardian) is mandatory. They must have a stable income, a good credit score (usually 750+), and a low debt-to-income ratio.
- Other criteria: Both applicant and co-applicant must be Indian citizens. Admission to a recognized foreign university and a strong academic record are required. Age limits and documentation (ID proof, academic records, admission letter, income proof) apply.
Loan policies are subject to change. If you need help with your application, connect with your LeapScholar counsellor.
It depends. Education loans for studying abroad can be either secured (collateral) or unsecured (non-collateral), based on the lender and the loan amount.
- Secured loans require you to pledge an asset (like property or fixed deposits). They usually offer higher loan amounts and lower interest rates.
- Unsecured loans do not require collateral. Approval depends on your academic profile, university ranking, and your co-applicant’s financial background. These typically have higher interest rates and lower maximum amounts.
With your strong academic record (8.2 CGPA in Commerce), you may qualify for unsecured loans, but the amount may be limited compared to secured options. If you need guidance on which loan type suits your needs, connect with your LeapScholar counsellor.
There are two main types of education loans for studying abroad: secured (collateral) and unsecured (non-collateral) loans.
- Secured (Collateral) Loans: Require you to pledge an asset (such as property or fixed deposits). These typically offer higher loan amounts (up to ₹1.5 crore or more), lower interest rates (around 8.5%-10.5%/year), and longer repayment periods (up to 15 years). Processing can take 3-6 weeks due to collateral verification.
- Unsecured (Non-Collateral) Loans: Do not require any asset as security. Approval depends on your academic profile and your co-applicant’s financial background. These usually offer loan amounts up to ₹75 lakh, higher interest rates (10.5%-14%/year), and repayment periods up to 10 years. Processing is faster, often 7-15 working days.
Eligibility, interest rates, and terms are subject to change. For detailed guidance and to compare options, please connect with your LeapScholar counsellor.
Still have doubts?
Speak to a LeapScholar expert — free, no obligations.
More Cost & living questions
- Is Germany the best first priority country for my course and career scope for a Master's?
- Which universities in the USA offer MS Engineering Management for a B.Tech Automotive Engineering graduate, Duolingo 120 and ₹80 lakhs budget?
- How do US universities evaluate Indian LLM applicants differently from UK or European law schools?
- What is the fee range for a one-year MBA course compared to a two-year course in UK?
- Does my 12th grade percentage affect my master's application in Germany/France for a Bachelor's?
- Is the USA the best country option for my AI or data science master's program, or should I consider other countries in UK/Canada?
- What scholarships are available for Cybersecurity Master's programs in UK universities?
- Do I need to show living expenses in my bank account for visa purposes, and can I withdraw it after reaching Ireland?