Well, who doesn’t want to study abroad? But like you can almost guess, finances get in the way. But a simple Google search will tell you that basically everyone on the internet is fighting to fund your education. With banks and private lenders mushrooming in all directions, let’s take a moment to understand if the long-term commitment you’re about to make is the right one for you or not. In this blog, we will talk you through how to find yourself the right education loan for abroad. So, shall we?
IN THIS BLOG:
What to look for in your education loan for abroad?
So let’s get straight to it, how do you know your chosen education loan for abroad is a good one? Ideally, a good loan should cover the expenses you expect it to cover with a low-interest rate and comfortable payback options but what else?
Given Below is a Checklist for the Right Education Loan for Abroad:
If compound interest lessons have taught us anything it is that rate of interest should be a key factor while selecting a loan. Before you select a bank or an NBFC, shop around for better interest rates and evaluate between fixed and floating rates of interest to select the one that works for you. You can find some of the top education loan rates for 2022 later in this blog.
This goes without saying but your loan amount should cover expenses outside of tuition such as your rent, airfare, insurance, books, travel expenses, living cost, and more unless of course otherwise requested.
The loan amount you are eligible to receive also depends on a lot of factors like your academic history, your parent/co-applicant’s credit rating, the university you’re applying to, etc. Your education loan for abroad can cover both full and part of the total costs, choose the loan that best fits your needs.
Your bank or NBFC offers you some time after the completion of your course post which you are required to start paying towards your outstanding loan AKA moratorium period. The standard moratorium period is of 6 months to 1 year however it is really important to know the flexibility of the moratorium period and the charges for extension of this period due to circumstances like unavailability of jobs or a global pandemic for example. It is best to learn about these charges and policies for an extension well in advance.
We covered the worst-case scenarios and now let’s look at the best ones, what if you are able to pay the loan well before your term? There’s certainly no sense in dragging to accumulate interest and hence it is important to consider the prepayment terms of your education loan for abroad. Ask for details about the penalty on prepayment from all your loan options before making the decision.
The next thing to be mindful of is to make sure your lender is qualified to get you tax deductions on the interest at the time of payback. As per section 80E of the Income Tax Act of India, tax deductions can be claimed for a total period of 8 consecutive years or till the interest amount of your education loan for abroad is completely paid off. Isn’t this great news? And we’d hate to see you miss out on this gift so always ensure that your education loan for abroad is taken from a scheduled Indian bank or gazetted financial institution that is eligible for the tax deductions in the first place.
It is fair to be picky about choosing the right education loan for abroad but it goes without saying that loans are a form of investment for lenders and they are going to want to know if you are good for it. And how do they do it? (drumrolls) By checking your CIBIL score AKA your credit history. And if you have a good CIBIL score your chances of securing your education loan significantly improve provided other requirements are met.
Have you taken the GMAT before?
Bank of Baroda Abroad Education Loan
Bank of Baroda is famously known for its competitive rate of interest on education loans for abroad and in this section, we will cover exactly that:
|Bank of Baroda Abroad Education Loan||Male Students – Interest Rate (% p.a.)||Female Students – Interest Rate (% p.a.)|
|Prime University (MCLR + 1.25%)||8.25%||7.75%|
|Non-Prime University (MCLR + 2%)||8.9%||8.4%|
HDFC Abroad Education Loan
Another on the list of popular education loan for abroad is the HDFC bank. HDFC offers to cover the entire education cost with no upper limit with collateral. The bank also offers unsecured education loan for abroad i.e. loans without collateral of up to Rs 45 Lakhs.
|HDFC Abroad Education Loan||Effective ROI (% p.a.)|
|Education loan amount – 200,000||8.64%|
|Education loan amount – 2,000,000||8.64%|
If you need advice on getting a loan with a low CIBIL score or looking for sustainable financing options with low-interest rates and easy payback options, connect with our counsellors for a free 15-minute session.