We are accepting loan applications for past, current, and future semesters (and now loans up to US$100,000!)

Uncollateralized loans for international students

Traditional collateralized loans are a significant barrier for international students because these loans often require borrowers to pledge assets like a house or vehicle. Sizeable physical assets frequently aren’t available or feasible for students from many parts of the world.

This is where uncollateralized international loans can help. Uncollateralized loans offer financial aid without the need for such security. This approach makes education more accessible and aligns with the aspirations of students seeking global educational opportunities.

Understanding uncollateralized loans

Uncollateralized loans are a form of international financial aid that doesn’t require physical assets as security. This is particularly beneficial for students who don’t have high-value assets to offer as collateral.

Here are some things to know about applying for an uncollateralized loan:

  • Creditworthiness and repayment capacity: Lenders assess the borrower’s credit history, income potential and academic credentials. They consider factors like past financial behavior, potential future earnings and course of study to gauge the borrower’s ability to repay the loan.
  • Interest rates and terms: These student loans often come with higher interest rates compared to collateralized loans. The interest rate and repayment terms are based on the perceived risk, the borrower’s credit profile and market conditions. The terms can vary significantly, with some loans offering flexible repayment options post-graduation.
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Benefits of uncollateralized loans

Uncollateralized loans are particularly meaningful for international students who might otherwise be unable to pursue higher education abroad. Other benefits include:

  • Simplified application process: Applying for an uncollateralized loan is generally quicker and less cumbersome without the valuation of physical assets.
  • Flexibility in usage: You have freedom to use loan funds for most expenses, including tuition, accommodation, books and health insurance, in the United States.
  • Assessment based on potential: Lenders often focus on the student’s academic track record and future earning potential.

Potential risks of uncollateralized loans

While uncollateralized loans offer numerous benefits, it’s important for those getting a student loan to understand the potential risks and considerations.

  • Higher interest rates: The absence of collateral means the lender takes on more risk, which is often reflected in higher interest rates. This can increase the overall cost of borrowing.
  • Impact on credit score: Failure to repay any loan, including an uncollateralized loan, can severely affect a student’s credit score, affecting future borrowing capabilities.
  • Borrowing limits: Loan amounts are usually capped and based on the borrower’s creditworthiness and potential income. This might limit the total funds available compared to collateralized loans.
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Why MPOWER?

MPOWER Financing opens doors for international students with uncollateralized, private international student loans.

Flexible funding options: MPOWER offers fixed-rate student loans from US$2,001 to US$100,000. You can get up to 0.25% off the interest rate when you sign up for  auto payments, and you can apply for an MPOWER loan even if you have other loans.

No cosigner or collateral needed: MPOWER offers international student loans based on future earning potential, without needing a cosigner or collateral. 

Fast and easy process: MPOWER’s online student loan application process is accessible and easy. You can check your loan eligibility in just 30 seconds.

Help along the way: If you need help, the MPOWER team is available from start to end.

Scholarships and mores: MPOWER also offers international scholarships for both undergraduate and graduate students. Benefits beyond funding include visa support and career services through their Path2Success program. Career services include internship and job search guidance for F-1, OPT and H-1B visa sponsored roles, a resume builder and a directory of F-1 eligible job roles for STEM and non-STEM degrees.

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FAQs

What are uncollateralized loans and how do they work?

Uncollateralized loans are loans that don’t require physical assets as security. Lenders give these loans based on your credit history, potential income and sometimes your academic performance. They’re a popular choice for international students who might not have assets to use as collateral.

Why are uncollateralized loans a preferred option for many international students?

Many international students don’t have the required assets in their home country or the host country to secure a collateralized loan. Uncollateralized loans eliminate this barrier, making it easier for these students to access funds for their education.

How do the interest rates of uncollateralized loans compare to traditional loans?

Generally, uncollateralized loans have higher interest rates than traditional collateralized loans. This is because lenders consider these loans as riskier since there are no assets to recover in case of default.

What are the risks associated with taking an uncollateralized loan?

The primary risks include higher interest rates. It’s essential also for borrowers to fully understand the terms and ensure they have a plan for repayment.

Can uncollateralized loans cover all educational expenses for international students?

While uncollateralized loans can cover a wide range of educational expenses, including tuition, accommodation and books in the U.S., the total amount available will depend on the lender’s assessment of the borrower’s creditworthiness and potential income.

 

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

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