Can a Student Apply for a Personal Loan?
By Anupama Deshpande | Sep 12, 2018

Personal loan is a type of loan used by the people for meeting the personal needs of the borrower. There are no restrictions as to how and where the funds taken as loan can be utilized in case of Personal Loan. It can be used for any business purpose, for personal use such as purchase of any asset, marriage expenses, medical emergency, children education, foreign trip, etc.

Personal Loan is categorised as an unsecured loan which means that there is no collateral being mortgaged by the bank and is given on the personal guarantee of the individual.

Firstly, Student Personal Loan, being an unsecured loan, is offered to you against your present income and credit score. If you are a student and you do not have any income to show, then you may not qualify for student personal loan from the banks or any lenders.

Personal Loan can be availed by following categories of persons:

• Salaried Individual
• Self-employed Professional
• Self-employed Businessman

Further, there are some restriction related to the age of the borrower of a personal loan such as A salaried person, aged 21-58 years or a self-employed professional or businessman aged 25-65 years having some minimum income can apply for a personal loan.

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Being a student with no income, you may go for following types of loans:

1. Education Loan: You can avail this loan with your parents or guardian, who will act as a co-applicant and the primary debtor. Further, as a security, a third party guarantee & collateral is required by the lender. This loan will be easily availed by you.
2. Loan against Property (LAP): In case, you own a property in your name, you can keep it as security with the lender and avail the loan against such property. The lender may assess the current market value of the property and offer you the loan accordingly which will be around 60% to 70% of the property value.
3. Gold Loan: In case, you have gold to pledge against the loan, you can take a gold loan by keeping your gold as a security with the lender.

The basic criteria to apply for a personal loan, is to have some regular source of income. If you don't have any income, you are not eligible for applying for a personal loan in your name. In such cases, you may avail a personal loan in joint name where the other person is earning.

A person who has some income, he/she can apply for a personal loan, even if he/she is a student. If you are a student and you are working somewhere as well, then you can apply for a personal loan without any problem.

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It may be the possible that you are an employee and also pursuing your studies side by side, in this case also, you are free to apply for a personal loan as you are having an income.

One primary point to note is that before applying for a Personal Loan from any lender, you should compare all the banks, financial institutions and NBFCs to select the best lender that offers you a Personal Loan at a lower interest rate, minimal documentation and some additional offers/ benefits such as "no prepayment penalty".

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