Each step taken towards abroad education has its individual importance. Some of such important steps include scoring well in the tests like IELTS, TOEFL, GRE, etc., shortlisting university, securing funds, getting the visa, etc. Abroad education loan is the best way to secure your funds for abroad studies but it is also one of the toughest to understand.
Government banks, private banks, and NBFCs in India have made getting the education loan process relatively simpler to help students get the benefit of the loan schemes. If a student takes a little assistance and does some research, he/she can also select a suitable loan along with saving big in the longer run. Here are some of the major points and steps to choose the best education loan product for you.
Pick the loan lender
There is no dearth of loan lenders in India offering abroad education loans. This abundance has made it easier for study abroad aspirants to secure an education loan. However, this profusion has also made choosing the apt lender a bit complicated process.
There are majorly three types of lenders in India that provide abroad education loans- government banks, private banks, and NBFCs. Every loan-lender has its own upsides and downsides and you must compare all of the options available to you along with the terms and conditions to make an informed and smart choice.
Select the type of loan
There are two types of education loans offered- Loans with collateral (secured loans) and Loans without collateral (unsecured loans). In the loans with collateral, you have to pledge collateral or security for backing up the loan amount borrowed.
As there is low risk involved for the lender, the amount that can be borrowed can be higher (depending upon collateral’s value of course) and the interest rates are way lower than the unsecured loans. In the case of unsecured loans, one can borrow up to INR 40 Lakhs at an interest rate starting from around 11%. The loan eligibility in unsecured loans depends upon the co-applicant’s income and CIBIL score.
Estimate theamount required to cover all your expenses abroad
Analyze your expected expenses such as tuition fees, living expenses, equipment purchase, etc. to get a rough idea of the amount you’d need while studying abroad. Most lenders give education loans for 100% of the expenses.
Go for the lowest interest rate possible
Interest rate is among the vital elements of an education loan determining the magnitude of your financial burden. Government banks provide the lowest interest rates starting from around 8%. On the other hand, private banks and lenders tend to charge a little higher. Choose the lender with the lowest interest rate possible as even the slightest difference in the rates can make a huge difference in the longer run.
Some of the other major elements of the study abroad loans are:
- Loan tenure
- Moratorium period
- Processing fees
- Pre-payment penalty
Evaluate your eligibility
The eligibility for a loan can fluctuate from case to case and lender to lender basis. In an abroad education loan with collateral, the market value of the collateral sworn should be more than the amount required. In an education loan without collateral, the monthly salary or income of the co-applicant should be enough to make the interest payments.
Apply for the education loan
After deciding on the type of education loan, lender, and the loan amount, you can proceed to apply for the loan. To make this process easy and simple, you can approach GyanDhan. It’s an education-financing-focused platform that helps students get abroad education loans from the right lender be it a government bank, private bank, or NBFC. The loan assistance service provided by GyanDhan is absolutely free of cost!
Guest Blog by GyanDhan