Higher education, in India or abroad, is a dream for millions of students. However, increasing tuition fees, housing costs, and living expenses may limit many families abilities to pay for education entirely out-of-pocket. Education loans close the financial gap, allowing students to focus on education, rather than on finances.
Students and parents have relied on traditional banks for education loans, yet Non-Banking Financial Companies (NBFCs) are experiencing a rapid growth in popularity as lenders of education loans. NBFCs are financial institutions that are highlighted for their specialized lending processes that generally have quicker processing times, flexible underwriting, and more flexible payment options. NBFCs can be very appealing to students who may need a fast education loan approval, or whose educational journey does not meet bank-warranty criteria. Many NBFCs that specialize in educational lending will lend for education outside of India; lending for educational expenses such as tuition, housing, or living expenses, and often with little or no collateral.
This blog will provide you with insight into the 5 best NBFCs offering education loans in India along with their interest rates, processing timelines, and pros. Being informed about the various features of each NBFC will help a student make the best choice and see what fits into their financial picture and academic plans, no matter whether they are interested in undergraduate professional course programs (engineering, medicine, management, etc.) or pursuing higher education abroad. This blog aims to help students build the best educational plans by providing them with the information they will need to successfully navigate the field of NBFC education loans and receive the funding to meet their educational aspirations.
What are NBFCs?
NBFCs, or Non-Banking Financial Companies, are financial institutions that provide a variety of banking-related services except for a full banking license. While they cannot accept demand deposits (like savings or current accounts), they can provide loans, credit facilities, investment products, and other financial services.
NBFCs are an important part of India’s financial structure because they are filling the gap between a financial institution and the customer, particularly sectors that require a specialized financial solution. NBFCs will often serve individuals, small businesses, and students who do not always meet strict eligibility measures set by traditional banks.
In terms of education, NBFCs have become a popular source of education loans for students. They have several benefits versus standard banks, including the following:
- Quicker Processing: Compared to banks, NBFCs nearly always process loans and complete the loan approval process much faster, and this is a helpful feature especially if the student urgently needs cash.
- Flexible Eligibility: Many NBFCs will have a more lenient view on qualification and consider things like future earning potential, which gives access to a loan to most students responsible for financing their education (even without a fixed employment or “normal” merit history.
- Customized Loan Options: NBFCs have loan products dedicated specifically to either domestic or international education as well as tuition, living expenses, travel, and fees.
- Competitive Interest Rates: While NBFCs will still likely have higher interest rates when compared to some bank loans, it can likely be offset by the expediency of the processing and flexible repayment terms.
NBFCs have positioned themselves as an important alternative source of funding for students [in India] who would like to access a strong quality of education, without requiring current financial barriers to entry.
Top 5 NBFCs Offering Education Loans in India
When it comes to financing higher education, several NBFCs in India provide student-friendly loans with varying loan amounts, interest rates, and repayment options. Below is an overview of the top 5 NBFCs that are popular among students:
| NBFC | Maximum Loan Amount | Interest Rate (p.a.) |
|---|---|---|
| Avanse | Up to Rs.1.25 Crore | 16.5% – 19.5% |
| HDFC Credila | Up to Rs.80 Lakhs | 9.95% – 13.25% |
| Auxilo | Up to Rs.50 Lakhs | 9.5% – 14% |
| InCred | Up to Rs.65 Lakhs | 11% – 13.5% |
| Propelld | Up to Rs.40 Lakhs | 12% – 14% |
1. Avanse Financial Services
Avanse is a top lender in the NBFC category with loan amounts reaching the highest amounts available in the segment. It suits aspiring students pursuing expensive courses in India and abroad. The interest rates are on the higher end, however, the financial institute provides flexible repayment options and expertise when it comes to education abroad.
2. HDFC Credila
HDFC Credila is one of the more trusted NBFC’s for education loans in India. They have both competitive interest rates, and a hassle free-processing as well. With loans of amounts upto 80 Lakhs, they are proffering financial services for students aspiring to study in professional courses in India or abroad.
3. Auxilo Finserv
Auxilo lends money with a repayable amount of up-to 50 Lakhs at competitive interest rates. They are known for quick processing of loans for students requiring quick funds. They also cover tuition, living expenses and other study related costs.
4. InCred Finance
InCred Finance provides up to 65 lakhs at competitive interest rates which are also some of the best in the education loan segment.InCred is popular for flexible repayment and lengths. As a forward thinking lender, they appeal to students seeking digital processing which are fast and which process paperwork and repairs quickly.
5. Propelld
Propelld specializes in customized education loans for domsestic and overseas education, with loan amounts reaching 40 lakhs. The interest rate range is between 12 % -14% making them preferable for studnets seeking expedite processing.
Why Choose NBFCs Over Banks for Education Loans?
Choosing the appropriate lender to fund your education loan can significantly impact the speed of your loan approval, flexibility, and comfort during your repayment schedule. Traditionally, banks have been the go-to source for student loans. Recently, however, NBFCs have created an opportunity for students with advantages relevant to their needs.
1. Faster Processing and Disbursement
NBFCs are known for processing applications and disbursing loans quickly. In most cases, banks request a more extended documentation process or have many verification steps to take prior to disbursing funds. A disadvantage in this convoluted process is that by the time the money is transferred to the educational institution, students’ desired programs may no longer have space for their enrollment. NBFCs typically succeed to immediately utilize the money when needed, giving students’ more security about their admittance to the educational program of their liking.
2. Flexible Eligibility and Loan Options
NBFCs typically have relaxed eligibility factors and offer lending strategies to students. For example, academic potential in a specific degree and future expected potential earning capacity will be examined rather than solely focusing on credit history or specifics of the applicant’s profile. In addition to that, NBFCs offer loans to cover students’ tuition, accommodation, travel, and purchase materials either domestically or abroad.
3. Flexible Repayment Options
One of the most attractive benefits of education loans from NBFCs is that they are often more responsive in their repayment structures. Several NBFCs allow students to begin repayment after their course is complete, with a moratorium period that can be anywhere from 6 to 12 months. Some NBFCs will even accept partial interest cost payments during the study period to relieve some of the student and family financial pressures.
4. Flexible Collateral options
For educational loan amounts up to a certain smaller level (often dependent on country), NBFCs do not generally require collateral, which simplifies the loan process and can accommodate more students. For higher loan amounts (typically above Rs.30 Lakhs), NBFCs may require collateral such as property, fixed deposits, or a co-signer. This flexibility surrounding collateral contributes to the accessibility of education financing for students while minimizing impact on family resources.
5. Additional Benefits
Many NBFCs often offer additional value-added benefits such as coverage for the loan for the student or co-borrower, other agreements with universities for expedited processing, and increased repayment flexibility depending on student employment after graduation. Overall, these added features make NBFCs a more progressive and undergraduate-friendly option than traditional banks.
How to Apply for an Education Loan Through NBFCs?
Getting an education loan through an NBFC is generally an easier and faster process than using a bank. NBFCs tend to be more student-friendly with their process, their documentation is limited, and their release of funds is quick. Here’s a step-by-step list to help you navigate the process.
1. Research and Compare NBFCs
Before you apply to an NBFC, you should compare a few NBFCs on the following parameters:
- Maximum loan amount you can get from this NBFC
- Interest rates and processing fees
- Repayment terms and moratorium period
- Need for collateral to obtain the education loan
- Additional offerings/benefits (insurance coverage, partnerships with universities)
- Choose an NBFC that works with your financial needs and your course needs.
2. Check Eligibility
- Most NBFCs are flexible on eligibility, however they typically look for:
- You have to be enrolled in an approved course in India or worldwide
- You have to have qualifying academic credentials (marks in high school, graduation, entrance exam results)
- You have to have a co-applicant or guarantor (usually a parent or someone closely related)
- Age criteria (varies by NBFC)
3. Prepare your needed documents
NBFCs ask for fewer documents than banks. However, when asked, here are the common documents lone creditors will expect:
- Admission letter or offer letter from the college
- Proof of identity (Aadhaar, Passport, PAN card)
- Proof of address (Passport, Aadhaar, or utility bills)
- Proof of education conducted (mark sheets, certificates)
- Income proof of co-applicant (salary slips and/or bank statements)
- Collateral paperwork, If collateral is part of obtaining a loan.
4. Loan Application Submission
You can typically submit a loan application either online via the NBFC’s portal or offline by visiting the appropriate branch. You are required to fill the loan application form based on personal and financial information as follows:
- Details of the student and co-applicant such as name, ages, and gender
- Course and college
- Loan amount requested and loan repayment preference
5. Verification and Approval
Upon submission of the loan application, the NBFC is required to do the following:
- Academic and admission status of the student
- Income and credit capacity of the co-applicant.
- Collateral, if applicable
Upon the conclusion of verification, the NBFC will issue unsolicited basis. The loan sanction letter will indicate the approved loan amount, interest rate, and repayment terms.
6. Loan Disbursal
- The approved loan amount is then disbursed to the educational institution by the NBFC, usually, in installments, aligning with the tuition fee payment deadlines.
- Some NBFCs will also provide financial lending for accommodation, travel, and educational materials.
7. Repayment and Monitoring
- Most lender NBFCs will indicate all repayment plans to ensure repayment following education can happen both before or after course termination periods depending on the respective timing.
- It is essential to keep track of your EMI to help visualize when the loan obligation will terminate, and continue to have dialogues with your lender NBFC to monitor any adjustments related to the loan.
FAQs:Top 5 NBFCs Offering Education Loans in India
Q. Which are the top NBFCs providing education loans in India?
A. The most well-known NBFCs for education loans in India are Avanse, HDFC Credila, Auxilo, InCred, and Propelld. These NBFCs are well-regarded for their speedy processing, flexible repayment terms, and student-centric loan products.
Q. What is the maximum loan amount offered by these NBFCs?
A. Avanse provides loans of up to Rs.1.25 Crore, HDFC Credila offers a maximum of Rs.80 Lakhs, Auxilo provides up to Rs.50 Lakhs, InCred offers loans up to Rs.65 Lakhs, and Propelld provides up to Rs.40 Lakhs.
Q. What are the interest rates for these NBFC education loans?
A. Interest rates charged by these NBFC institutions will be contingent upon the type of loan and amount borrowed. Avanse rates are in the 16.5% to 19.5% range per annum, HDFC Credila is 9.95% to 13.25% per annum, Auxilo is 9.5% to 14% per annum, InCred is 11% to 13.5% per annum, and Propelld is 12% to 14% per annum.
Q. Are NBFC loans faster to process than bank loans?
A. NBFC education loans have a different application and approval process that usually takes less time than a bank loan application because of fewer documents to prove income and verification that allows students to access their funds quicker.
Q. Do these NBFCs require collateral?
A. Smaller loan amounts might not require collateral, while larger loans generally with an amount above Rs.30 Lakhs will require collateral. Common collateral could include property, fixed deposits, or a guarantor.
Q. Can NBFC education loans cover expenses beyond tuition fees?
A. Education loans from NBFCs typically do cover accommodation costs, books, laptops, and travel expenses, which would mean you can use these loans for domestic or international studies.
Q. What repayment options do NBFC education loans offer?
A. Many NBFCs do offer some form of repayment flexibility, providing a moratorium period of 6-12 months after completion of the course. Some also offer the ability to make partial interest payments during the course to lessen the burden of the loan.
Q. Are NBFC loans suitable for studying abroad?
A. There are NBFCs like Avanse and HDFC Credila that do provide loan products specifically for studying internationally, covering tuition, living expenses, and travel expenses.