Pursuing higher education from a prestigious college is a crowning glory that every student dreams of. However, the costly tuition fees and additional expenses can get challenging to bear, especially if you’re planning on studying abroad. Luckily, this is where a student loan can get you out of the rut.
Types of student loans
In India, there are two main types of student loans you can avail of:
- Unsecured student loans
- Secured student loans
While both student loan, secured or unsecured, can help finance your education, choosing one can be a frustrating affair. To help you out, here’s a detailed guide on secured vs unsecured student loans.
Additional Read: Just ask yourself 5 questions before you avail an education loan
Key differences between secured and unsecured student loans
Whether an education loan is secured or unsecuredis determined by its collateral requirement. An unsecured loan doesn’t require you to pledge any security to the lender. On the contrary, you need to provide an asset as collateral to borrow unsecured loans.
Other than the collateral requirement, here’s how secured and unsecured student loans differ:
Unsecured student loans are swiftly processed as they involve minimal paperwork. Thus, if you require funds immediately, this is a favourable choice. In contrast, secured student loans can take longer to process due to additional documentation related to the assets. If you don’t mind waiting, you can opt for a secured loan.
However, the processing time differs amongst lenders. For example, Tata Capital approves secured student loans in only a couple of working days.
When comparing secured and unsecured education loans, their interest rates can play a decisive role. Secured loans typically entail a lower personal loan interest rate since they are backed by security. In contrast, unsecured loans have a higher interest rate since the risk involved is also higher.
Secured student loans come with longer repayment tenures, some even going up to 10-15 years. This can be helpful if you’re looking for smaller installments spread across an extended period. In comparison, unsecured loans are usually provided for a comparatively short tenure. This is ideal if you wish to repay the debt and save on the interest costs quickly.
If applying for unsecured loans, your co-borrower’s income will play a vital role in determining your loan eligibility. Their credit score will also directly impact your chances of approval. However, it’s the opposite with secured loans, as lenders don’t require you to have a co-applicant. You just need to provide any suitable collateral.
Additional Read: Things to Look Out for While Signing Education Loan Documents
To sum up
A personal loan for education – be it secured or unsecured – goes a long way in supporting your education financially. If you’re currently looking for a loan, come to Tata Capital. Our collateral-free loans offer affordable interest rates for stress-free higher education. The same goes for our personal loan for travel, which can help you finance your flight expenses if you’re going abroad for higher education.
Moreover, you can also use our personal loan EMI calculator to check estimated EMIs and select loan terms most convenient for you. If you wish to explore our complete list of loan facilities, click here, and apply for your student loan today!