Greetings, fellow Keralites! Are you thinking about studying abroad as well?

OK. So, when you think of studying abroad, what comes to your mind? The campus, international-level tutoring, better job opportunities, meeting new people, experiencing a different culture, and most importantly arranging funds, right? 

It is this fund that may make or break your chances of getting into your dream universities. Unless you go to one of the cheapest counties to study in, studying overseas is usually costly, requiring a minimum of 10-15 lakhs and averaging 20-30 lakhs each year. And, because not everyone is that wealthy, education loans are an alternative that students choose to finance their education abroad. 

However, education loan in Kerala more often than not take up a significant amount of students' time owing to a lack of knowledge about what all region-specific collateral requirements must be met for a collateral education loan. Well, fret not, in this article we'll explain all education loan details in Kerala.

To begin, you may be aware that there are two types of education loans available-

1.Collateral/Secured education loan 

A secured education loan is obtained by pledging collateral to the bank as security for the loan. With a secured education loan you can expect to receive more lenient loan terms, such as a lower rate of interest, a higher loan amount, or a longer repayment period. Now again collateral is of two types-

• Immovable property like a house, flat, non-agricultural land and 
• Liquid security like Fixed deposits, Insurance policy(Term Insurance), and Government bonds.

You can also receive a loan with third-party collateral if a relative or friend of yours is willing to put his or her property up as collateral for your education loan.

Now for Kerala, as mentioned above there are a few things you need to keep in mind about collaterals. 

• Wetland or Nilam land is not accepted as collateral by banks. 
• When it comes to immovable property, there should be adequate road access to the pledged property.
• The road should be a municipal road with a minimum width of 8 feet, wide enough for a car to pass through.
• Rubber plantations, as well as non-agricultural properties with rubber plantations, are not acceptable.

Now few general points as well to keep in mind about collaterals

• Agricultural lands are not accepted by banks for collateral education loans
• Gram Panchayat properties are generally not accepted. The property should be under the municipal corporation.
• The properties in the Cantonment Area are not acceptable at all.
• Banks prefer and usually only accept residential property over commercial property. 
• A distinct demarcation is essential for an open plot, which means it must be encircled by a wall of at least 2 feet.
• All collateral-related documents must be available, such as a property title deed, a registered sale agreement, a gift deed, or a will. 

2.Non-collateral loan/Unsecured-

An unsecured education loan can be obtained without pledging any collateral. Lenders assess the applicant's eligibility for an unsecured education loan using a set of eligibility parameters. The education loan eligibility in Kerala for study abroad is also the same.

Education loan procedure in Kerala

The procedure depends on the type of loan you’re opting for-

The procedure for a secured education loan

• The process of a secured loan starts with students filling the application form online or by visiting the bank’s branch with all the required documents. 
• Then the bank will assign a lawyer and a valuer for the pledged property for which students have to pay some 7K to 8K to banks as a fee to the lawyer and the valuer ( This is not needed for liquid security). 
• After receiving the legal and valuation report, they send these reports along with all the documents to the central processing cell (CPC) that takes care of the loan process.
• Once the loan gets sanctioned, students get a sanction letter which stays valid for approx 6 months. 
• And then students with their co-applicants have to submit all property original documents to either CPC or branch. The process involves stamp papers, affidavits, etc which will be charged at approx 0.5% of the loan amount, then the account is ready for the loan amount to be disbursed.

The procedure for an unsecured education loan

• The process of an unsecured loan starts with students submitting the documents to the lender.
• After that, the lender log in their file in the system. 
• Then if everything is ok (meeting the eligibility criteria), the loan gets approved. 
• Students finalize the offer by paying the processing fee and signing the loan agreement.

If you still have any doubts, read this article to clear them up:- The Education Loan Procedure in India: Secured Loans and Unsecured loans

Documents required for an education loan procedure in Kerala-

We previously published an article about the paperwork needed for the student loan application process. It has extensively explored the subject and can be used to learn more about- Education loan documents required by Private and Government banks

Alternatively, you can watch the 4th episode of our LoanFlix series on Youtube, which is featured below, to gain a better understanding of the subject.

An overview of lenders and their offerings for an education loan in Kerala for study abroad

 1. Govt banks/ Public banks - Government banks are the best for a secured education loan. If you have collateral, it is always better to go with government banks for a secured education loan in Kerala.

Amount	Up to 1.5 Crores
Interest rates	8-9%
Processing fee	10,000 plus GST
Moratorium period	Course duration + 6 months to 12 months
Repayment period	Up to 15 years

 

2. Private banks- Private banks are better suited for unsecured education loans, although as previously said, they favor students with a promising profile. 

Amount	Up to 40 Lakhs unsecured education loan
Interest rates	10% and above
Processing fee	Around 1% on the loan amount +GST
Moratorium period	Course duration + 6 months
Repayment period	Up to 10 years

 

3. NBFCs-  Non-banking financial companies, or NBFCs, provide unsecured and partially secured education loans in India. Their offers are likely to vary depending on the country in which you wish to pursue your studies.

Amount	Up to 60 Lakhs unsecured education loan
Interest rates	11-13.5%
Processing fee	0.95% to 1.5% on the loan amount +GST
Moratorium period	Course duration + 12 months
Repayment period	Up to 10 years

Challenges that students from Kerala faces

A significant area of the state's total land is wetland areas which can not be pledged as collateral. And also most of the regions in Kerala are non-serviceable for education loans by private banks and NBFCs leaving students with few alternatives on their own.

However, if you apply for your education loan through WeMakeScholars, since we are associated with 10+ Government banks, private banks, and NBFCs plus we handle multiple cases for education loans in Kerala on a daily basis, we can assist you in obtaining an education loan that meets your requirement in the shortest possible time. 

We try our best to get students the best deal they can get. So do reach out to WeMakeScholars by requesting a callback, our team of financial officers will assist you throughout your education loan process, from application through sanction, distribution, and beyond without charging you a single penny.

Conclusion 

So to summarize, if you have and can provide collateral it is recommended to go with Government banks for an education loan in Kerala as they offer the best education loan in Kerala, including lower interest rates and other benefits.

Private banks and NBFCs have somewhat higher interest rates because they give an unsecured education loan, but with no other options, we can turn to these private lenders for an education loan in Kerala.

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it's free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, New Zealand, France among others.