Does an education loan require security or collateral?

Collateral requirement of banks and non-banking finance companies (NBFCs) vary from one bank to another; however, the following is generally the thumb rule:

• For loans up to Rs. 4 lakh – No collateral or third-party guarantee is required.
• For loans from Rs. 4 lakh to Rs. 7.5 lakh – Collateral is not needed but third-party guarantee is required
• For loans above Rs. 7.5 lakh – Collateral is required.

Some of the key types of collateral accepted by banks include LIC/NSC/KVP, fixed deposit/s held with the lender, property documents owned by the applicant or co-signor.