Securing an education loan is a crucial step for many Indian students pursuing their dream of studying abroad. While public sector banks have long been the traditional choice, Non-Banking Financial Companies (NBFCs) have emerged as a popular and often more efficient alternative.
The NBFC education loan market has seen remarkable growth, with Assets Under Management (AUM) growing by an impressive 50% in FY25, reaching ₹64,000 crore. This surge is a clear indicator of the trust and preference students are placing in NBFCs for their overseas education funding.
This blog explores the key benefits of taking a study abroad loan from NBFC, highlighting why they are becoming the go-to choice for aspiring students.
What are NBFCs?
A Non-Banking Financial Company (NBFC) is a financial institution that provides banking services without holding a banking license. Regulated by the Reserve Bank of India (RBI), NBFCs are registered under the Companies Act, 2013, and are engaged in the business of loans and advances, investment services, and insurance, among others.
Unlike traditional banks, NBFCs cannot accept demand deposits, issue cheques, or be a part of the payment and settlement system. Their streamlined structure and focus on specific financial products, like education loans, allow for greater flexibility and faster processing.
Minimal Docs, Maximum Approval - Apply Now.
Key Benefits of Taking a Study Abroad Loan from an NBFC
The Advantages of NBFC education loans are numerous, but they can be broadly categorised by their speed, flexibility, and customer-centric approach.
1. Simple and 100% Digital Process:
NBFCs have fully embraced technology to make the application process seamless. The entire journey, from submitting your documents to signing the loan agreement and receiving disbursal, can be completed online.
For instance, Propelld's digital platform allows you to upload all documents from the comfort of your home, saving you multiple trips to a physical branch. This streamlined process is a key benefit for students managing demanding academic schedules.
2.Faster Sanctions and Quicker Disbursements:
NBFCs leverage a streamlined, tech-driven process to sanction loans in as little as 10-15 days, a huge relief for students facing tight university and visa deadlines.
Once the loan agreement is signed and the student's visa is approved, the Faster disbursement with NBFC study loans ensures that tuition fees and living expenses are transferred rapidly, often within a few working days.
3.Comprehensive Loan Coverage:
NBFCs offer a major benefit by often funding 100% of the cost of education. This means you do not need to worry about arranging for 'margin money' from your family. The loan can cover everything from tuition fees and accommodation to travel, insurance, and the cost of a laptop, ensuring you have complete financial coverage.
4.Moratorium Period and Flexible Repayment:
NBFCs provide flexible repayment options that align with your post-graduation life. A key feature is the moratorium period, which is your study duration plus a grace period of 6 to 12 months. During this time, you have flexible repayment options from NBFCs such as paying just the simple interest or, in some cases, not making any payments at all, allowing you to focus completely on your studies.
6.Personalised and Tailored Services:
NBFCs are known for their student-centric approach. They often assign a dedicated relationship manager to each applicant who provides expert guidance throughout the process.
Propelld, for example, offers tailored financing solutions, including customised loan products and Flexible repayment options from NBFCs, that match the diverse needs and career prospects of modern students.
7. Relaxed Eligibility Criteria:
The NBFC loan eligibility for study abroad is often more flexible than that of traditional banks. NBFCs place a greater emphasis on the student's academic record, the university's ranking, and the career prospects of the chosen course. This makes it possible for students to secure a loan even if their co-applicant's CIBIL score is not perfect.
Explore different Types of Education loans with Eligibility, Interest Rates, & Benefits to understand which option best suits your needs and repayment capacity.
Get an Education Loan with Higher Chances of Approval
Required Documents for an NBFC Study Abroad Loan
The documentation required for an NBFC loan is similar to a bank loan, but the process is often more streamlined.
Student's Documents:
- Passport, PAN card, and Aadhaar card.
- Academic records (mark sheets, degree certificates).
- Admission letter from the university.
- Standardised test scores (e.g., GRE, GMAT, TOEFL, IELTS).
- Break in studies affidavit (if applicable).
Co-applicant's Documents:
- PAN card and Aadhaar card.
- Proof of income (salary slips, ITRs, bank statements).
- Proof of business (for self-employed co-applicants).
Collateral Documents (if applicable):
- Property title deed.
- Registered sale agreement.
- Latest property tax receipts and Encumbrance Certificate.
- Approved building plan.
Eligibility Requirements for NBFC Education Loans Abroad
NBFCs are more flexible with their eligibility criteria, but they still have a set of requirements that applicants must meet.
Student's Profile:
- Must be an Indian citizen.
- Must have a strong academic record.
- Must have secured admission to a recognised university.
- Must be pursuing a job-oriented course.
Co-applicant's Profile:
- Must be an Indian citizen with a stable source of income.
- Must have a good credit score (though some flexibility exists).
- Can be a parent, legal guardian, spouse, sibling, or sometimes even a relative.
Planning to study overseas but worried about finances? Don’t miss our detailed guide on how to get an education loan for abroad studies in 2024.
Which Bank or NBFC is Ideal for a ₹35 Lakh Education Loan? Reddit Insights
Taking a high-value education loan of ₹35 lakhs requires careful planning. Many students and parents often wonder which lender, bank or NBFC is best, and what factors to consider before and after applying.
Reddit User in r/IndiaInvestments shared:
"Which bank or NBFC is the most ideal to take an education loan of 35 lakhs, and what factors should one consider before/after taking a loan?"
Insight: Both banks and NBFCs have their pros and cons. Banks generally offer lower interest rates but slower processing, while NBFCs process loans faster but may charge slightly higher fees. Key considerations include interest rates, prepayment penalties, processing charges, co-applicant income, and repayment flexibility.
What do we infer from the above discussion?
A ₹35 lakh education loan can be managed effectively if you:
- Compare interest rates, processing fees, and prepayment options between banks and NBFCs.
- Ensure your co-applicant’s income and credit documents are complete and up-to-date.
- Keep digital copies of all academic, admission, and financial documents ready to avoid delays.
- Plan your repayment schedule carefully to manage high-value loans without financial strain.
Tip: Before applying, make a checklist of eligibility criteria, documentation, and cost estimates. This ensures smooth approval and avoids last-minute surprises.
Key Points to Evaluate Before Choosing an NBFC Education Loan
While NBFCs offer many advantages, it's essential to consider all factors before making a decision.
1. Interest Rates:
While the convenience of NBFCs is a major plus, their interest rates can sometimes be slightly higher than those of public sector banks. This is because they take on a higher risk by offering collateral-free loans. It is crucial to compare the rates from different lenders, including both banks and NBFCs, before you make a decision.
2.Processing Fees:
Almost all NBFCs charge a processing fee, which is a percentage of the loan amount, typically ranging from 1% to 3%. It is vital to check if this fee is refundable in case your loan application is rejected.
3.Loan Repayment Tenure:
While NBFCs offer flexible repayment tenures, you must ensure the repayment period aligns with your post-graduation career prospects and anticipated salary. A longer tenure may mean smaller EMIs but a higher total interest payout.
4.Hidden Charges:
Always read the loan agreement carefully. Be aware of any hidden charges, such as prepayment fees, late payment penalties, or other administrative costs that might not be clearly mentioned upfront. A transparent lender, like Propelld, will make all fees clear from the start.
5.Customer Service:
As you will be managing your loan from a different country, a reliable customer service team is crucial. Evaluate the lender's online support, communication channels, and responsiveness. A lender with a dedicated relationship manager and a user-friendly app will make managing your loan from abroad much easier.
Taking a study abroad loan from an NBFC offers a modern, efficient, and student-focused alternative to traditional banks. By providing a fully digital process, faster disbursals, and flexible repayment options, NBFCs have simplified the journey of securing an education loan. Their relaxed eligibility criteria and comprehensive loan coverage ensure that more students, regardless of their financial background, can pursue a quality education.
While it's essential to carefully consider factors like interest rates and fees, the benefits of convenience and tailored services make NBFCs an excellent choice for a successful education loan experience.
Propelld has you covered with personalised education loans that fit your unique needs. Propelld offers fast digital approvals, study loans of up to ₹50 lakhs, and the ease of zero-collateral requirements.
Take the first step towards your future Apply with Propelld today!
Are you parent of a JEE/NEET aspirant?
.svg)
