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Education loans in India & security collaterals – 4 things you must know.

Education loans in India & security collaterals – 4 things you must know.

Monday June 18, 2018,

3 min Read

Education loan provides comprehensive financial support for young aspirants looking to pursue their further education plans, both in India and abroad.


They offer up to 100% financing to ensure a lack of funds is never a problem for those with big dreams. However, most students often have a big question mark when it comes to the security collateral aspect of a student loan.

If you aren’t very sure about this factor as well, you’ve come to exactly the right place.

This article will discuss 3 important factors when it comes to student loans and security collaterals so you can get a better idea and make smarter borrowing decisions.

1. What do you mean by security collaterals?

Let’s first begin by explaining what security collateral is. Education Loans In India involve large amounts of money that the borrower provides to you on the basis of your financial capacity, academic record, and other factors. The lender turns a profit from the interest you pay over and above the loan amount repaid. However, in case you are not able to repay the loan, the lender could suffer a huge loss. To safeguard themselves from this loss, some lenders require you to pledge some financial asset that will offset the loan amount in case you fail to repay it.

2. When do you have to provide a security?

As per RBI guidelines, you are only required to provide security collateral on Education Loans India that is above Rs. 4 lakh. So if you borrow less than Rs. 4 lakh, you need not provide any collateral. Some lenders increase this non-collateral loan limit to up to 7.5 lakhs meaning you will only have to provide a security if your loan amount is upwards of Rs. 7.5 lakh.

3. Other factors

Some lenders take into consideration many other factors besides the loan amount you’ve applied for. For instance, some lenders will look at your financial backing to decide whether or not you need to provide collateral. Some will provide you a loan without any security if you have an exceptional academic background or good entrance exam results. So if you have a GRE of above 300, not only will you be provided preferential interest rates & higher loan amounts, chances are you won’t be required to provide collateral for loan amounts not exceeding a certain amount.

4. What can you provide as collateral for education loans?

In the end, if you do need to provide collateral, you can offer varying types of assets. Some lenders will accept fixed deposits, property deeds, life insurance policies, etc. as collateral as long as they are close to, if not equal to, the loan amount.

So there you have it, 4 important things you need to know about Education Loans In India and security collaterals. We hope this article help paint a better picture in this regard and help you make smart borrowing decision. Good luck and all the best with your further education plans, study hard!