An education loan
in India gets categorized into two different types depending on the need for collateral security. These are –
Secured Educational Loans – For this type of education loan, you may or may not be required to provide collateral to the lender to secure the loan. These educational loans are generally offered by government banks that accept immovable property and liquid security as collateral against the student loan. Examples of liquid security are intangible assets like fixed deposits
(you can get (FDs at 7.5%
with North Loop), life insurance policies or government bonds. However, even though most of the lenders for this type of loan are well-regulated RBI governed institutions and banks
, the various collateral requirements are a deterrent to many. Flexible and low-cost student loans can be secured from other providers as well that do not have too many collateral conditions.
Unsecured Education Loans – These student loans do not require any collateral security and are relatively easier to apply. Most student loans company (in case of student loans UK, students loans UAE, students loans USA etc.), however, pay close attention to a variety of factors like the global ranking of your university, your credit score
and also overall repayment capacity. That is primarily because of the lack of any pledging of collateral security in this type of loan. The interest rates on unsecured student loans vary from 11.9% to 14.5%, and the processing fee charges are usually 0.9% to 2% of the total education loan amount. While most lenders also provide a moratorium period, many student loans company expect you to begin the repayment within one month of availing your first disbursement. You can, however, opt for unsecured student loans with North Loop
, at low-interest rates and zero processing fees. You also get a six-month moratorium after graduation for the student loan repayment.