Questions regarding education loans and collateral

Education Loans
1
  1. Can multiple collaterals be combined for education loans?
  2. Can gold also be used as one of the components of collateral for the loans?
  3. Is it possible to obtain an education loan for studying abroad that covers half of the amount with collateral and the other half without collateral?
2

Hi,

  1. Yes, two properties can be combined for an Education loan. However, the expenses for Valuation and Legal Investigation have to be calculated independently.
  2. Gold is not used as collateral in Education loans,
  3. A combination of secured and Unsecured loans happens only from private lenders depending upon the profile of the student.

Regards,
Team GyanDhan

3

What private lenders can give a combination of secured and unsecured loans? Also is it possible to have one secured loan from one bank and one unsecured one from the other?

4

Private lenders like Axis Bank, ICICI Bank, Yes Bank, and IDFC First Bank offer both secured (collateral-based) and unsecured (non-collateral) education loans. These options provide flexibility for students seeking to finance their education.

However, obtaining one secured loan from one bank and an unsecured loan from another bank can be a bit complex and risky. This process typically requires different co-applicants for each loan, and it involves additional documentation and approval steps. Coordination between the two banks can also be challenging, leading to potential delays and complications in the disbursement process.

Therefore, while it is technically possible to secure loans from different banks, it is often more practical and less cumbersome to work with a single lender that offers both types of loans. This approach simplifies the application process and ensures smoother management of your education financing.

5

For example I am taking a secured loan from a bank with one parent as the co-applicant and it gets approved. Can I still take a non-collateral education loan from some other lender with my other parent as the co-applicant? I did ask someone from GyanDhan on this and they simply said that it is not possible.

6

Taking a secured loan from one bank with one parent as the co-applicant and then attempting to take a non-collateral education loan from another lender with your other parent as the co-applicant is generally not feasible. Here’s why:

  • Credit Limit and Eligibility: When banks and financial institutions assess loan applications, they consider the overall credit exposure and repayment capacity of the applicant and co-applicants. Having a secured loan already approved would impact the assessment of the second loan application, as the financial burden and repayment responsibilities are taken into account.

  • Regulatory Constraints: Financial institutions have regulations and internal policies that prevent individuals from over-leveraging themselves. This is to ensure that borrowers do not default on their loans due to excessive financial commitments.

  • Cross-Verification: Lenders often conduct thorough background checks and credit score verifications through credit bureaus. Any existing loans, including the secured one, would appear on the credit report of both the applicant and the co-applicant. This makes it difficult to secure additional loans without disclosing previous liabilities.

  • Co-Applicant’s Financial Responsibility: Each co-applicant is financially liable for the loan. Splitting co-applicants across multiple loans does not reduce the overall financial burden on the family unit, and lenders are aware of this.

Given these factors, it is usually not possible to take a second education loan from another lender under these circumstances. It’s advisable to discuss your specific financial situation and requirements with your financial advisor.