Can students without income apply for personal loans? A complete guide

Securing a personal loan as a student can be a practical solution to manage unexpected expenses or cover various personal costs. While most traditional loans require a steady income, there are ways for students to qualify with the help of a guarantor or alternative sources of income.

In this article, we will explore how students can apply for personal loans, the eligibility requirements, necessary documents, and key considerations to ensure responsible borrowing. Whether you're facing immediate expenses or need extra financial support, understanding the ins and outs of student personal loans can help you make informed decisions.

Understanding personal loans

A personal loan is unsecured, meaning it offers a lump sum to cover a multitude of personal expenses. They're not secured loans in which you would pledge your cash or real estate to collateralize the loan, but unsecured loans, just like mortgages or auto loans are. So, you do have flexibility in taking the loan to manage unwelcome costs.

How can students apply for personal loans?

Indian banks and fintech companies often do not offer student personal loans. In addition, most lending agencies require a steady source of income to approve personal loans. Here's how to still qualify if you're an unpaid student:

1. Guarantor: Most banks require a guarantor-someone like a parent, sibling, or other family member earning-a parent or sibling or other family earner-to co-sign the loan on your behalf.
2. Other sources of money: You can apply for a personal loan in your name if you have a side job, freelancing work, or another source of money.

Can students without income get personal loans?

Under some conditions, students without income can still obtain personal loans. Such as, if a parent or sibling acts as a guarantor for them or they are making money through freelancing or part-time employment. Students without a steady source of income may be eligible for immediate personal loans from some financial institutions.

Are student personal loans the same as education loans?

No, student loans are not education loans:

1. Student personal loans: It can be used for a variety of things, such as paying bills for living expenses, unexpected medical bills, or buying technology.
2. Education loans: These loans are specifically provided to fund tuition, books, and other expenses directly related to education.

How much can a student borrow?

The loan limit of a student is determined by several factors such as his income, credit score, and the restrictions of the lender. Most Indian financial institutions offer students without income personal loans up to ₹5 lakhs as long as the guarantor supports the loan.

Documents required for a student personal loan

These are some of the common paperwork requirements, but they are different for the lender.

1. Identity proof: Aadhaar card, PAN card, Driving license, Passport, Voter’s ID.
2. Address proof: Aadhaar card, PAN card, Driving license, Passport, Voter’s ID, Utility bill.
3. Income proof: Bank statement of last three months (required for guarantors and salaried individuals.)

In conclusion, there is a long list of the paperwork involved in securing a personal loan. With such expenses on the student's head, it could help them out with these expenses and let their path continue smoothly toward academics. But borrowing requires a prudent approach. A personal loan may bring you the money you will need to focus on fulfilling your academic goals if planned and borrowed responsibly.

(Note: Raising a loan comes with its own risks. So, due caution is advised)