Most of the internationally acclaimed universities and colleges abroad increase their tuition fees with every passing year, making it difficult for students in our nation to fulfil their dreams of studying abroad. Moreover, with the high cost of living in developed countries, it often becomes difficult for a student to study abroad without taking a loan for the same. The solution is a Collateral Free Loan.
Getting a collateral free loan is any student’s best choice as this prevents you from pledging something as valuable as a property or business as security for getting the loan in the first place. Education loans generally cover a student’s tuition and supplies fees, book expenses, transportation fees and living expenses.
Basics of getting collateral free loan for your education abroad
Applying for a collateral free loan –
Apply for the loan as soon as the university you wish to study in, sends you your offer letter. Research your loan options beforehand so that you do not waste time later on.
How To Select Your Best Option?
Comparing interests of banks – Interest rates are calculated on yearly basis and it is important to know that different banks offer different rates of interest for student loans. This is why it is recommended that you first compare the rates being offered by several banks and only then select the bank to take loan from. It should be noted that state-run banks have a lower rate of interest as compared to the private ones. The rate of interest depends totally on the loan amount and in most cases, more the amount lesser the rate of interest. Always read all the related information thoroughly before signing up for a loan to avoid any discrepancy later on.
Eligibility for loans – When you apply for collateral free loans, you must check the eligibility criteria. Most banks offer such loans only for long-term programs which are run by reputed institutions abroad. Most short-term programs are not covered under bank loans. Also check the bank’s website for more details.
Cosigner – When the loan amount exceeds Rs 5 lakhs, the student who takes the loan must have a cosigner with him. In our nation, it is mostly the parents who act as co-signers. The job of a co-signer is that he signs the loan along with the student who is taking it and agrees to pay the loan taken from the bank in case the student fails to do so. Being a huge commitment and responsibility, your co-signer should be a person whom you can trust completely.
Providing margin money – When you take a collateral free loan, you must provide the bank with around 15 percent of the loan amount as margin money for the loan to be sanctioned.
Once you have decided on the bank you wish to take the loan from, it is advisable to obtain a checklist from the concerned personnel so that you can have all the papers and documents ready. Many international universities also have tie-up with banks and if your bank is one of them then the entire process of loan approval can be hastened and done rapidly.