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Education Loan

Secured vs. unsecured education loans for studying abroad

Key Takeaways

  • Secured loans need collateral, like property or fixed deposits.
  • Unsecured loans do not need any security but may have higher interest.
  • Choose based on what you have - assets for secured loans, or a strong co-applicant for unsecured ones.
10 Jun 2025 by Team FinFIRST
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Planning to study abroad is exciting, but arranging funds for it can feel overwhelming. The good news? Education loans make it easier. But before applying, it is important to understand the difference between secured and unsecured education loans. Let us break it down in a simple way.

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What is a secured education loan?
 

A secured education loan means you need to offer something valuable (like property or fixed deposits) as security or collateral. The bank holds this until you repay the loan. Since the risk for the lender is low, the interest rates are usually lower.

Key points:

  • Requires collateral like a fixed deposit (FD).
  • Lower interest rates.
  • Longer repayment tenure.

This is good for families who have assets and are looking for low-interest loans for big-ticket education expenses.

What is an unsecured education loan?
 

An unsecured loan for education abroad does not require any collateral. You do not need to mortgage property or provide any security. However, because there is no guarantee for the bank, interest rates may be slightly higher, and the approval depends more on your academic profile and co-applicant’s income.

Key points:

  • No collateral required.
  • Faster processing and less paperwork.
  • Approval depends on a co-applicant’s financial strength and your academic background.
  • Ideal for middle-class families with no assets to pledge.

If you are searching for an education loan for abroad without security, many financial institutions now offer flexible options to support students' dreams.

IDFC FIRST Bank education loan - A strong choice for studying abroad
 

IDFC FIRST Bank offers one of the best options for obtaining an unsecured loan for studying abroad. Here’s what makes it stand out:

  • Collateral-free loans of up to ₹75 lakhs

You can get a loan without security for high-ticket programs abroad.

  • Competitive interest rates

The bank offers attractive student loan rates even without any collateral.

  • Covers 35,000+ courses globally across 4,500+ universities

Whether it is engineering in Germany or MBA in the US, you are covered.

  • Fast loan sanction through a seamless application process

Apply online and get approvals quickly, saving time and hassle.

It is one of the most reliable options for those looking for an unsecured education loan for abroad with minimal stress.

How to choose between secured and unsecured loans?
 

Ask yourself:
 

  • Do you have assets to pledge? - Go for a secured loan for lower interest.
  • Want to keep your family assets safe? Consider choosing an unsecured loan that doesn’t require collateral."Need quick funds? - Unsecured loans are faster to process.
  • Have a strong co-applicant (with stable income)? - Unsecured loans become easier to obtain.

Final thoughts
 

Studying abroad is a big dream, and you should not let the lack of funds stop you. Whether you go for a secured loan with lower interest or an education loan without security for studying abroad, what matters is choosing the one that suits your financial situation.

IDFC FIRST Bank offers unsecured education loans up to ₹75 lakhs, making the process easier for students from all walks of life. Do not let collateral be the reason to delay your dream - your journey begins with the right financial support.

Frequently Asked Questions

Can I get an education loan without collateral for studying abroad?

Yes, many banks offer unsecured education loans for abroad, including IDFC FIRST Bank, which provides collateral-free loans of up to ₹75 lakhs.

What is the benefit of an unsecured loan for studying abroad?

You do not have to pledge [AK1] any asset as security, and the process is quicker with fewer documents involved.

What happens if I do not have a co-applicant?

Unsecured loans require a co-applicant with a stable income. If you do not have one, approval may be difficult or limited.

Is the interest rate higher in unsecured education loans?

Yes, usually unsecured loans for education abroad have slightly higher interest rates than secured ones because the financial institution is taking on more risk.

What is meant by "education loan security" or "collateral"?

Education loan security refers to any asset you pledge to the bank when applying for a secured education loan. This could be a fixed deposit or non-agricultural land. If you are unable to repay the loan, the bank can recover the amount using this security.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.

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