Education Loan without Collateral

Education is one of the most important investments you can make, but it can also be expensive. If you're looking to pursue higher education in India or abroad but don't have the necessary collateral to secure a loan, there are options available.

Non-collateral education loans can help you finance your academic dreams. An education loan without collateral is specifically designed to meet the financial needs of students and their families and can help cover the cost of tuition fees, living expenses, and other related expenses. In this way, an education loan without collateral can help you achieve your dreams of higher studies and a better future.

What is collateral in education loans?

In the case of education loans, collateral can take different forms. You may need to provide property, such as a house or a piece of land, as collateral. You may also pledge other assets, such as a fixed deposit, life insurance policy, or even a vehicle.

The purpose of collateral is to reduce the lender's risk and ensure they can recover the loan amount if the borrower defaults on their payments. By providing collateral, you show your commitment to repaying the loan and give the lender assurance that they will not lose money.

It's important to note that not all education loans require collateral. Lenders, like IIFL Finance, may offer non-collateral education loans or education loans for abroad, which do not require collateral but may have higher interest rates or stricter eligibility criteria.

Features of Education Loan without Collateral

Some features of an education loan for studying abroad without collateral are as follows.

  1. Collateral-free: A collateral-free education loan for abroad makes them accessible for students who do not have any collateral to pledge or for those who do not want to risk losing their assets in case of default.

  2. Lower loan amount: Since the loan is collateral-free, the loan amount for an unsecured education loan is usually lower compared to a secured education loan

  3. Higher interest rates: Unsecured education loans for abroad often have higher interest rates than secured education loans.

  4. Shorter repayment tenure: You may have to repay the loan within five to seven years.

  5. Eligibility criteria: To be eligible for a non-collateral education loan for abroad, you must have a good credit score, a stable source of income or a co-signer with a good credit score and stable income.

Benefits of Education Loan without Collateral

The benefits of a collateral-free education loan are as follows.

No collateral required

Abroad education loan without collateral makes it easier for students who do not have any assets to secure a loan to finance their education.

Quick processing

Collateral-free education loans are usually processed faster than secured loans.

No risk to assets

Since there is no requirement for collateral, students and their families do not need to worry about putting their assets at risk if they default on their loan payments.

Flexible repayment options

Borrowers can choose from various repayment tenure options and can also choose to make interest-only payments while they are still studying.

Builds credit history

Taking an education loan without collateral can help students build their credit history, which can be useful when applying for other loans in the future.

No prepayment penalty

Many lenders do not charge a prepayment penalty for collateral-free education loans. This means that borrowers can choose to prepay their loan amount without any additional charges or fees.

Eligibility Criteria for Education Loan without Collateral

You must fulfil the below criteria to be eligible for an education loan without collateral:

  1. Age: Must be at least 18 years old at the time of loan application.

  2. Citizenship: Must be an Indian citizen or have a valid Indian passport.

  3. Academic qualifications: Must have completed their higher secondary education or an equivalent course from a recognized board or institution.

  4. Admission to a recognized institution: Must have secured admission to a recognized institution in India or abroad for a course that leads to a degree or diploma.

  5. Creditworthiness: Must have a good credit score and a stable source of income, or have a co-signer with a good credit score and stable income.

  6. Course and Institution: Must have enrolled in a course that is approved by the lender and must have secured admission to a recognized institution that is approved by the lender.

  7. Loan amount: The loan amount for an education loan without collateral is usually limited to a specific amount, and the borrower must meet the lender's criteria for loan amount eligibility.

Documents Required for Education Loan without Collateral

Documents required for an education loan without collateral are-

KYC Documents

Valid KYC documents like Aadhar card, PAN card, etc.

Admission Letter

Admission letter from a recognised educational institution in India or abroad.

Academic Records

Academic records such as mark sheets and certificates from their previous educational institutions.

Bank Statements

Last 3 months’ bank statement as income proof.


If the borrower does not have a good credit score or a stable income, they may need a co-signer. In that case, the co-signer must provide their identity proof, address proof, and income proof.

How to Apply For Education Loan without Collateral from IIFL Finance

You can apply for an education loan without collateral from IIFL Finance by following these steps.

  • ‌‌

    Visit the IIFL Finance website and go to the "Loans" section.

  • ‌‌

    Click on the "Apply Online" button.

  • ‌‌

    Fill in the online application form with your personal and professional details, and verify OTP sent to the registered mobile number.

  • Verify your KYC details data to check income eligibility.

  • ‌‌

    Choose the amount you want to borrow up to ₹5 lakhs.

  • ‌‌

    Click submit to complete your KYC.

Find the Right Personal Loan for You

When looking for a personal loan, it's important to find one that suits your specific needs and financial situation. Here are other personal loans offered by IIFL Finance.

Education Loan Without Collateral FAQs

Some of the most common types of education loans are as follows.

  • Higher Studies in India
  • Higher Studies Abroad
  • For Vocational Courses
  • For Career Development
  • For Abroad Studies for Job or Immigration
  • For Girl Child
  • For Minority Communities
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When providing an education loan without collateral, lenders typically consider the following factors.

  • Academic record
  • Course & Institution
  • Repayment Capacity
  • Co-borrower/Guarantor
  • Employment prospects
  • Credit history
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There are several advantages of availing of a non-collateral education loan for abroad.

  • Collateral-free
  • Easy access
  • Lower risk
  • No need for co-signer
  • Improve credit score
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Education loans without collateral in India may have a higher interest rate over those with collateral because the lender is taking a higher risk by not having any security or collateral against the loan.

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Following types of collateral are accepted for education loans.

  • Residential property
  • Commercial property
  • Fixed deposits
  • Life insurance policies
  • Shares and securities
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The processing fee for an education loan for study abroad without collateral can range from 2% to 4% of the loan amount.

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