Content

1. What is Collateral?
2. What is a Collateral Education Loan?
3. Collateral study abroad loan providers in India
4. What is Collateral Margin?
5. When to start the loan process? 
6. Documents Required

What is Collateral?

Collateral is an asset pledged against your education loan. If a student fails to repay the loan, the collateral is used for the loan repayment. 

There are two types of assets that can be placed as collateral- 

1. Immovable property: Flat, house, and non-agricultural land. (Note- Agricultural land can’t be used collateral )
2. Liquid Security: Fixed Deposits, Insurance Policy, Government Bonds, etc.

Students can put up anyone’s property provided the collateral’s owner is ready to pledge it for your study abroad student loan. So your uncle, aunt, family friend, parents, etc can pledge their collateral.

What is a Collateral Education Loan?

1. Loans in which the bank(lender) requires collateral as security for extending a loan. If the student defaults on the loan payments, the bank may seize the collateral and sell it to recover losses.
2. The interest rate of a Collateral loan is usually less than a Non-Collateral loan, as the risk factor is lower from the bank’s perspective.
3. A student can get up to INR 1.5 crores from a collateral education loan.
4. Usually, the interest rate for collateral loans is between 9% to 11%.

Who is a Co-applicant?

Collateral study abroad loan providers in India

The three types of entities which provide collateral study abroad education loans in India are-

1. Public Banks - 
2. Private Banks - 
3. NBFCs - 

Banks are the most common option for collateral study abroad loans. Collateral Loans from NBFCs are not very popular as they offer loans at a higher interest rate. Collateral Loans from NBFCs are only advised in cases where the collateral documents are not complete or inline with bank rules.

What is Collateral Margin?

The value of collateral required is usually greater than the loan amount this is called collateral margin.

When should you start the process of getting a collateral study abroad education loan?

Collateral loans require many formalities and documents, the banks may take up a considerable amount of time for processing your loan as they have to assess the collateral you have put up which takes time.

It is advised to start arranging the necessary documents just after you are done with your application. Waiting till you get your admit and then starting your loan process may result in you running out of time.

Documents Required for Collateral 

-Immovable property

1. Title deed and sale agreement
2. Registration Receipt of agreement
3. Allotment Letter issued by municipal or any other local govt. body
4. Chain deed or EC
5. Latest Tax copy or electricity bill
6. Approved building plan
7. OC and completion certificate

-State-Wise Documents for Immovable property

-For Maharashtra

1. NOC from society
2. Payment receipts
3. Index II document
4. A share certificate issued by the society
5. Conveyance deed of the society
6. Certified copy of a power of attorney or board of resolution

-For Karnataka

1. Khata certi
2. khata extract

-For Telangana

1. LRS for lands
2. BRS for building

What kind of properties are not acceptable or have fewer chances

1. Agricultural land
2. Gram panchayat property are not usually acceptable
3. Open lands without boundaries
4. Notary registered properties
5. B Khata property
6. GPA or leasehold

Documents required for Liquid Security

Fixed Deposit -

1. FD paper or certificate is required by the bank

FD needs to be from the same bank to which you are applying for a loan. If you already do not have FD in a particular bank, you can start one and use it against your loan.

-Insurance Policy

1. Policy Paper
2. Surrender value certificate

The insurance policy should be a maturing policy

-Gold

1. Need to deposit the gold in the bank
2. copy of purchase proofs

-Government Bonds

1. Bond Certificate