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Things You Do Not Know About Education Loan Without Collateral

By Finserv MARKETS - May 3,2019
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Education Loan Without Collateral

Education loans are a blessing for students who want to pursue their dream career without worrying about finances. These loans are available in various forms like personal loans for education and student loans. Student loans are secured loans that require assets as collateral. Education loan without collateral are more popular as they do not require any collateral and have a quick and hassle-free application process. Here are a few things you don’t know about Education Loan without Collateral.

1: Without Collaterals Does Not Mean Without Security

When any financial or banking institution is offering you a loan without any collaterals, it does not mean that you or your parents cannot be held liable for the loan taken.

The guarantee papers have certain clauses wherein your lender makes sure that they can take over the personal assets (belonging to your parents) in case there is a non-repayment of the loan. So overall, any education loan that you take is backed by your parents’ assets.

2: Fixed Interest

It would be contradicting to state that education loan without collateral have a fixed interest rate. As a matter of fact, different lenders offer different rate – Base Rate + Interest Spread.

On the other hand, all banking institutes are governed by Marginal cost of lending rate (MCLR) – which is the cost of funds to the banking institutes. Hence, if the MCLR increases so will the interest rate.

All the NBFCs work on Commercial lending rate (CLR). The interest rate that the NBFCs offer on their services is linked to this rate, which is CLR (+ or -) Premium/Discount. So, when the CLR increases the interest rate will also increase.

3: Education Loan Is the Cheapest Loan Available

Since there are boundless interest adjustments against income tax under the provision of section 80E, RBI ensures that these loans happens to be the cheapest net costing loan that is available in the market.

However, parents must make sure that there is no hindrance in their child’s education due to unavailability of loan. Perhaps after 80E tax deductions, the net rate of interest comes to around 8% to 9%.

4: Flexibility of Interest Payments

You should know for a fact that these loans are one of the most flexible products when it comes to interest payments. The loan terms are structured in such a way that the repayments would start only after the student starts earning. This is typically after 6 months to one year of the completion of the course.

5: Education Loan Are Not As Scary As They Sound

When coming across big financial terms and scary paperwork, parents and students are usually started. Now, even if these loans come with a lot of paperwork and big financial terminologies, it is still essential that you carefully go through it all and ask questions when you have them (especially the students).

Your parents, your lender and sometimes even some online financial bloggers readily help you resolve your queries. In fact, you will feel much more confident and less stressed out after you take some time to learn about and understand your loan terms and conditions.

In A Nutshell

Taking a personal loan for education cannot be scary, but you still have to understand the loan terms. Don’t worry, it will be ok!

Education Loan available on Finserv MARKETS come with a quick online process, without collateral, competitive interest rates and are bespoke to best suit your needs. What’s more? Your loan can be processed under just 3 minutes and the amount can be credited to your bank account within 24 hours! So why wait? For your child’s bright future, apply for a Bajaj Finserv Education Loan with Finserv MARKETS today!

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522