Types of Education Loans Education loans are majorly classified into two types based on the collateral requirement: secured and unsecured education loans.
Education loans are majorly classified into two types based on the collateral requirement: secured and unsecured education loans.
A secured education loan or a collateral education loan is a loan that requires applicants to offer collateral as security. For education loans greater than INR 7.5 lakhs, most public banks ask applicants to pledge collateral as security for the loan amount. These loans offer higher amounts for lower interest rates.
An unsecured education loan, also known as a non-collateral education loan, doesn’t require any collateral or security. This means you can get an unsecured education loan without having to pledge any collateral as security. However, these loans are given based on the income and creditworthiness of the financial co-applicant.
In this section, we will examine and compare all aspects of secured and unsecured education loans, including Loan Amount, Interest Rate, Type of Interest, Moratorium period, Documentation, Processing time, and Embassy Acceptability.
| Parameters | Secured Education Loan | Unsecured Education Loan |
| Loan Amount | Up to 1.5 Cr (For India) Up to 3 Cr (For Abroad) | Up to 1 Cr (For India) Up to 1 Cr (For Abroad) |
| Interest Rates | Starts from 8.15% | Starts from 10.5% |
| Type of Interest | No interest during the moratorium | Partial or simple interest during the moratorium period |
| Repayment duration | 10 to 15 years | 10 to 15 years |
| Moratorium Period | Course duration + 6 to 12 months | Course duration + 6 to 12 months |
| Documentation | Requires a lot of paperwork | Relatively less paperwork |
| Processing Time | Minimum 15-20 days*(working days) | 7 working days* |
| Embassy Acceptability | All countries’ embassies accept secured loans as proof of funds. | A few countries do not accept unsecured loans as proof of funds for the student visa process. |
We want to create a platform where every student can find information about Abroad Education easily and thereby steer clear of any career fraud or fake promises by temporary education agencies that look to make profit in short time.
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