Most banks require you to mortgage any of your assets like house papers, fixed deposits/ long-term financial instruments, shares, bonds, etc to get an instant loan. A security mechanism will clearly save in case of a financial default so that the lender can recover its lending amount by selling out the pledged asset. This security put at stake is known as a collateral guarantee. However, you can easily have an education loan, available at zero money down.
An education loan can be one such borrowing type which can be taken without pledging. There have been various plans launched by Central Government to save straight-up money on education loan. Under the Credit Guarantee Fund for Education Loans (CGFEL) Scheme, you get an easy loan amount up to Rs 7.5 lakh without providing any third-party assurance.
Treatment of Education Loans
Though, all the banks vary in providing loans under different schemes as per their own internal rules. A few may essentially expect third-party guarantee or tangible collateral security, depending on the loan size.
Some banks do give security free loan options to students/freshers looking to pursue higher education from premier institutes in domestically or internationally. It definitely is the bank's discretion to waive off third-party guarantee or tangible collateral security norms looking at prevailing circumstances.
Typically, lenders offer you to get a zero payment financing offer to increase their monthly sale, however, this kind of financing enables you to make a purchase even when you’re out of cash. An education loan doesn’t have an offer as such, but it’s definitely paid later in time. This is unlike what a typical loan structure looks like where you have a monthly EMI to pay.
Zero money down loans is good for seasonal shoppers who have already overspent their budgets so that at the end of the cycle, they can pay using a financing plan with no down payment.
This is an attractive offer when you’re planning to buy home appliances like a washing machine, refrigerator, television, etc. without having to wait for personal finances. This plan can also be brand specific. This makes it easier to shop for customers and boost their sales too.
Here’s what you must know about this financing facility.
What is zero down payment financing?
Payment by zero down facility allows the financier to pay the entire product cost, without the need to pay anything immediately. requiring you to pay anything upfront. Here, generally, you have to pay a down payment between 5-20% on the product price and the remaining as EMIs. So under this facility, you save a lot more. Now that you know what is 0% financing in terms of down payment, let us discuss the merits & demerits
A zero down payment plan helps to buy products which are expensive without shelling money immediately. This way you’re in a good position to buy products of your choice. This mode of financing frees up your cash for urgent needs. On the flip side, zero down payment clarifies that as you pay larger EMIs, your interest is also equally large. So, here you’re paying for convenience!