Secured Student Loan

Banks and other financial institutions offer education loans to help students cover their higher education expenses. These costs could include books and supplies, tuition fees, and living expenses incurred while pursuing a higher education degree. 

Payments are usually deferred during the period in which students study at college. Some lenders also offer an additional deferment period or grace period of six months after securing a degree. 

Students can avail of loans for higher education. Their education loan is secured or unsecured. These loans can be taken from both government and private banks. Let’s learn a bit more about them in detail. 

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Types of Secured Loans 

Unlike unsecured loans, secured loans require the borrower or applicant to pledge any asset as collateral with the lender. These loans generally come with a lower rate of interest. 

If the borrower cannot repay the loan amount, the lender owns all rights to take over the asset kept as collateral. This aspect makes a secured loan one of the best ways to secure significant funds. Listed below are the different types of fast student loans –

1. Immoveable Property 

Tangible and immovable assets can be kept as security or collateral with an immovable property-secured student loan. 

The collateral under this loan would include ready-to-move-in property, clear demarcation lands, or even commercial properties. Another type of asset accepted as a secured loan is vehicles, mainly four-wheelers. 

2. Liquid Securities 

A second type of secured student loan can be availed of by keeping liquid securities an individual owns as collateral. These include Fixed Deposits, Government bonds, insurance policies, stocks, and even mutual funds. 

Till loan repayment, these securities become the financial institution’s possession. 

3. Third-Party Property 

Select financial institutions offer this type of secured loan. Under this type of secured loan, the assets or property of a third party can be kept as security. 

This could include a house owned by the loan applicant’s relatives or a vehicle. 

Secured vs Unsecured Loans 

Which one is better, secured or unsecured loans? Let’s determine that by drawing a comparison. The table below shows the difference between secured and unsecured student loans –

It is essential to mention here that a third option or kind of loan may be a partially secured student loan. Also known as an undersecured loan, the borrower can pledge any asset as collateral for a value lower than the loan principal. 

The remaining amount becomes an unsecured loan. Student loan suitability may differ based on assets, income, repayment abilities, and convenience. 

Conclusion 

Studying abroad is a dream for many students, and for good reasons. Even so, aspirants often abandon their goals because they need more financial funds. 

This need not be the case because banks and financial institutions offer secured, unsecured, and partially secured student loans to help meet educational expenses. This has enabled more and more students to pursue higher education abroad. 

This experience is worth it because foreign education opens up possibilities for a solid career and broadens one’s cultural and social horizons.