Many aspiring students wish to study at premium colleges in foreign countries. Boundaries are only a word for our students, who are limitless and fast-paced in their approach to higher education. However, higher education in foreign educational institutions comes at a cost that is comparatively more expensive, wherein currency differences play a major role. But why be concerned if relevant solutions are available in the market to let you fulfil your dream of studying abroad? An education loan for abroad studies is an appropriate solution for meeting all of the requirements that prevent students from applying to study abroad. It's like an investment students make to shape their future that will reward them later. At a young age, when we are able to pay for our own needs, it boosts our self-confidence and makes us more courageous to go further in achieving our goals.
An education loan abroad is beneficial for students looking for financial support to fund their education. When it comes to taking out an education loan for abroad studies, the most important factor that students consider is the interest rate. Interest rates are familiar to all of us; it’s the interest that is charged upon the loan a borrower has taken in exchange for the loan lent by the lender.
It is a matter of concern why everyone is so concerned about interest rates. Since a higher rate of interest will make it difficult to easily repay your loan, this is the reason why everyone is hustling over interest rates. Financial institutions provide loans at the lowest rate of interest possible to grab the attention of borrowers. A loan, particularly an education loan for overseas studies, includes a number of factors that influence interest rates and other relevant factors, such as student repayment options.
Unlike the old rigid banking norms, financial institutions such as banks and NBFCs are now much more flexible in terms of providing overseas education loans to students who wish to study at foreign universities. A variety of options are available to students looking for an overseas education loan. They can apply for both collateral-based and no collateral-based loans, depending on the conditions and eligibility criteria required by the bank. Despite the availability of options available for students to take out an education loan abroad, they always look for opportunities where they can get the lowest interest rates on their loan. Below are the factors influencing the interest rates on overseas education loans:
A student who is eligible for admission to prestigious universities abroad has a better chance of receiving lower interest rates on their study abroad loan. Banks will provide the loan to such students even without any collateral. This is a beneficial opportunity for students with an excellent academic record.
Leading public and private sector banks and NBFCs in India offer lower interest rates to female students under the slogan "empower the education of female candidates." This is to promote equal opportunities in education for female students in comparison to male students and also to support their dream of achieving excellence in education.
Students with a good academic profile have higher chances of getting loan approval from banks or NBFCs. Academic excellence will ensure that the student's application will be approved, and a loan will soon be sanctioned for the applicant. 10th and 12th marks are required, and if a student is able to secure admission to the college, he can get the loan quickly.
When applying for study abroad loan, parents can be joint applicants with their child. A good credit score will enable them to get a break on interest rates in comparison to the rate that is generally levied on every applicant. They will be considered creditworthy, and it will also reduce the bank's risk.
Collateral is the security borrowers are pledging to banks against their loan. Eligible properties are residential (house) properties, land (not agricultural land), insurance policies, and fixed deposits. These are the personal assets the applicant can mortgage in order to take the loan. If the applicant is mortgaging their house as collateral, they can get a reduction on the interest rates.
The longer the tenure, the more interest one has to pay for their loan. A shorter duration for loan repayment prevents the applicant from paying more for the interest rate.
A good CIBIL score for the applicant will help them secure some relief on the payment of interest rates. A good CIBIL score ranges from 720 to 900 and will benefit the applicant in many ways, such as resulting in the quick approval of their application, the lowest interest rates, and a higher amount of loan.
If you are taking a loan from a known lender or have a healthy relationship with them, then it is possible for you to negotiate about the rate of interest. There are several lenders who are open to negotiation over the rate of interest because they don’t want to lose their clients and want to please them in any way possible.
Despite the factors mentioned above influencing the rate of interest, we have also enlisted below the benefits of low interest on study abroad loans.
Interest rates will have a direct impact on the EMI. An applicant who pays low interest rates will also benefit from lower EMI payments. Let's look at an example: if you have a loan of Rs. 10 lacs at 9% interest and a repayment term of 3 years, your EMIs will be around Rs. 32k. A look at the image below will help to clarify this.
A higher interest rate will increase the amount you will repay to the lender, which is quite stressful for the borrower. A lower interest rate will make it easier to repay, so the borrower can live stress-free.
A higher cost of opportunity involves better use of resources. If you are paying low interest on loans, you will have a great opportunity to save or invest your hard-earned money in something relevant to you.
It will not only relieve your mental stress and financial burden, but it will also increase your chances of investing your hard-earned money in a better opportunity.
We have listed the names of financial institutions (government banks, private banks, NBFCs, and international lenders) in India that offer education loans for overseas education at low interest rates. It will help students make a better and more precise decision about their loan requirements.
Among the leading government banks in India, we have enumerated here the banks and the interest rates they are charging on education loans. However, it is important to keep in mind that interest rates are subject to change as per the changes in repo rates of the RBI. Banks are free to set their own interest rates for the loan services they provide to borrowers.
|
Bank |
Rate of Interest |
|
State Bank of India |
10.90 % |
|
Punjab National Bank |
10.75 % |
Just like government banks, student applicants can also head to private banks for their loan requirements. Below are the leading private banks in India that provide education loans at the lowest interest rates.
|
Bank |
Rate of Interest |
|
ICICI Bank |
9.50 % |
|
IDBI Bank |
9.40 % |
NBFCs (Non-Financial Banking Corporations) are private institutions that lend money with or without collateral. NBFC provides a variety of loans, including education loans. In recent times, many students have been heading towards NBFCs for their loan requirements. They are gaining popularity day-by-day and are becoming a strong option for students in terms of education loans.
|
NBFC |
Rate of Interest |
|
Avanse |
13.65% |
|
HDFC Credila |
12.80% |
Many students in India don’t have any co-signers or collateral to get the loan; for such students, international lenders are the best options. Among the leading international lenders in India, we have enumerated the names of those lenders providing education loans abroad to students at nominal interest rates.
|
International Lenders |
Rate of Interest |
|
M Power Financing |
12.74% to 14.75% |
|
Prodigy Finance |
12.22% |
The above-given information is an attempt to provide the most relevant information. However, it is always advisable for students, above any factor, to keep their dreams high over everything that is worthy and valuable.
Student loans for study abroad are a source of support for many bright students who are keenly interested in pursuing education at universities abroad. However, it's always clear and familiar to each one of us that interest rates are subject to change and are fluctuating in nature. Interest rates are never fixed; there is always a possibility that they will change whenever there is a change in the repo rate by the Reserve Bank of India or other economic factors influencing the interest rates and economy of the country. It is advisable for students to always check the interest rates on the official websites or get in touch with an expert like Education Loan Guru to make the best decision in the end.
If you are planning to study abroad and finances become a barrier, then contact Education Loan Guru for an instant student loan online.
By Education Loan Guru
