Apply for an education loan? Here’s when lenders demand collateral from borrowers

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Apply for an education loan? Here’s when lenders demand collateral from borrowers

New Delhi: Nowadays, many are unable to finance their child’s higher education, and under circumstances like these, student loans have become popular. Some children who wish to pay for their higher education on their own to ease the financial burden on their parents also choose student loans to help them.

Student loans are readily available these days and most people have no problem borrowing money from NBFC banks for their education or that of their children. However, students who are already using credit and have a bad credit history find it difficult to get a loan approved in the first place because bad credit casts doubt on the borrower’s ability to repay.

Nowadays, many are unable to finance their child’s higher education, and under circumstances like these, student loans have become popular. Some children who wish to pay for their higher education on their own to ease the financial burden on their parents also choose student loans to help them.

Student loans are readily available these days and most people have no problem borrowing money from NBFC banks for their education or that of their children. However, students who are already using credit and have a bad credit history find it difficult to get a loan approved in the first place because bad credit casts doubt on the borrower’s ability to repay.

Lenders need large amounts of collateral to secure their loans. If the borrower defaults, he can auction the collateral to recover his funds.

National Bank of India

The bank requires collateral for loans over Rs 7.5 lakh. However, it maintains a list of major Indian institutes like IIT (Indian Institute of Technology) and IIM (Indian Institute of Management) to which it offers unsecured loans up to Rs40 lakh.

National Bank of Punjab

The Punjab National Bank, like the SBI, requires guarantees greater than Rs 7.5 lakh.

Bank of Baroda (BoB) and Federal Bank

The collateral conditions are the same for these two lenders. However, they have additional requirements. For a loan amount between Rs 4 lakh and Rs 7.5 lakh, lenders ask for a third party guarantor.

BoB offers unsecured loans up to Rs 40 lakh for some leading Indian institutes, while Federal Bank offers Rs 20 lakh in unsecured loans.

HDFC Credila

Being a Non-Bank Financial Company (NBFC), the amount of collateral for HDFC Credila depends on the applicant. On its website, the company states: “HDFC Credila can offer up to Rs 20 lakh without deposit for talented and deserving applicants.”

Bank of India

The collateral requirement of Bank of India is the same as that of State Bank of India – only for loans over Rs 7.5 lakh. However, Bank of India offers unsecured up to Rs 30 lakh for some leading Indian institutes.

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