{"id":4820,"date":"2021-07-29T06:07:54","date_gmt":"2021-07-29T00:37:54","guid":{"rendered":"https:\/\/www.universityliving.com\/blog\/?p=4820"},"modified":"2024-08-06T15:50:07","modified_gmt":"2024-08-06T10:20:07","slug":"decoding-the-interest-rates-of-abroad-education-loans","status":"publish","type":"post","link":"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/","title":{"rendered":"Decoding the Interest Rates of Abroad Education Loans"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#The_difference_in_the_rate_of_interest_for_study_abroad\" >The difference in the rate of interest for study abroad:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#Comparison_in_the_rate_of_interest_for_overseas_students\" >Comparison in the rate of interest for overseas students:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#Different_types_of_Interest_Rates\" >Different types of Interest Rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#Types_of_Interest_Rates_offered_by_different_banking_institutions\" >Types of Interest Rates offered by different banking institutions:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#Public_Sector_Banks\" >Public Sector Banks:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#Private_Sector_Banks\" >Private Sector Banks:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#NBFCs\" >NBFC\u2019s:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#How_to_calculate_an_EMI\" >How to calculate an EMI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#How_is_the_rate_of_interest_calculated_for_education_loans\" >How is the rate of interest calculated for education loans?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.universityliving.com\/blog\/student-finances\/decoding-the-interest-rates-of-abroad-education-loans\/#When_does_the_rate_of_interest_in_an_education_loan_begin\" >When does the rate of interest in an education loan begin?<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">The rate of interest is the sum of money levied on the principal loan amount by a lender. If a person borrows money from someone, one has to pay a monthly sum that is more than the principal amount. In literal terms, it is the price of borrowing money from a bank or any other financial institution.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_difference_in_the_rate_of_interest_for_study_abroad\"><\/span><b>The difference in the rate of interest for study abroad:<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As far as abroad education loans are concerned, even a small difference in the rate of interest per year can make a noteworthy difference in the total amount repaid!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Comparison_in_the_rate_of_interest_for_overseas_students\"><\/span><strong>Comparison in the rate of interest for overseas students:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As in 2021, the leading banks have the following starting rate of interest. Depending on the borrower\u2019s profile the <\/span><span style=\"text-decoration: underline;\">education loan interest rates<\/span><span style=\"font-weight: 400;\"> differ and secured loans have a lower rate of interest than unsecured loans:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">State Bank of India &#8211; 7.65 % p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bank of Baroda &#8211; 7.75% p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Axis Bank &#8211; 11.25% p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">ICICI Bank &#8211; 11.5% p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">HDFC Credila- @ 11.0% p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Avanse &#8211; 11.75% p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">InCred &#8211; 11.75% p.a.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Auxilo &#8211; 12.7% p.a.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Different_types_of_Interest_Rates\"><\/span><b>Different types of Interest Rates<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Interest rates can be classified into floating and fixed interest rates:\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If <\/span><b>floating<\/b><span style=\"font-weight: 400;\"> the rate of interest can:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">increase or reduce through the loan duration.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Market conditions determine changes in interest rates.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Less volatile interest rates are offered by public sector banks.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If <\/span><b>fixed<\/b><span style=\"font-weight: 400;\"> the rate of interest:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cannot change during the loan tenure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">EMIs stay the same amount.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It is easy for the borrower to budget due to the certainty element.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Types_of_Interest_Rates_offered_by_different_banking_institutions\"><\/span><b>Types of Interest Rates offered by different banking institutions:<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Public_Sector_Banks\"><\/span><b>Public Sector Banks:<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The two most popular ones are:<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>State Bank of India<\/strong>: 8.65% per year, with an extra 0.50% subsidy for girl candidates, and an additional 0.5% for\u00a0Rinn Raksha\u00a0credit life insurance.<\/span><\/p>\n<p><b>Bank of Baroda: <\/b>The interest rates can be further classified into two categories<b>:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">8.25% annually for boys and 7.75% for girls for <\/span><b>listed institutions.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">8.9% for boys, 8.4% for girls for the <\/span><b>unlisted institutions<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><span style=\"text-decoration: underline;\"><b>Remember<\/b><\/span><span style=\"font-weight: 400;\">: Rate of interest is linked to MCLR<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Private_Sector_Banks\"><\/span><b>Private Sector Banks:<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The applicant\u2019s profile decides the exact rate of interest.<\/span><\/p>\n<p><b>Axis Bank: <\/b><span style=\"font-weight: 400;\">Their interest rates start at 11% a year.<\/span><\/p>\n<p><b>ICICI Bank:<span style=\"font-weight: 400;\"> Beginning at 10.50% annually.<\/span><\/b><\/p>\n<h3><span class=\"ez-toc-section\" id=\"NBFCs\"><\/span><b>NBFC\u2019s:<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Based on the candidate profile the exact rate of interest is decided:<\/span><\/p>\n<p><b>HDFC Credila: <\/b><span style=\"font-weight: 400;\">Starts at around 11% a year.<\/span><\/p>\n<p><b>Avanse:<\/b><span style=\"font-weight: 400;\"> They offer around 12.65% annually.<\/span><\/p>\n<p><b>InCred:<\/b><span style=\"font-weight: 400;\"> Their per annum rate of interest is 11.75%.<\/span><\/p>\n<p><b>Auxilo:<\/b><span style=\"font-weight: 400;\"> They charge around 12.70% annually.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_calculate_an_EMI\"><\/span><b>How to calculate an EMI?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The total sum repaid on a monthly basis is called Equated Monthly Installment(EMI).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The simplest way of calculating it is: <\/span><b>Principal Amount + Interest Amount =EMI <\/b><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_is_the_rate_of_interest_calculated_for_education_loans\"><\/span><b>How is the rate of interest calculated for education loans?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">There are two simple ways to calculate the rate of interest:<\/span><\/p>\n<p><strong>The formula for Simple Interest<\/strong><\/p>\n<p><b>Simple Interest = Principal Amount x Rate of Interest x Time\/100<\/b><\/p>\n<p><b>For Instance &#8211;<\/b><span style=\"font-weight: 400;\">\u00a0you borrow INR 50,000 for 1 year at a 5% rate of interest, then after applying the formula, it amounts to INR 2500 as interest. When returning the borrowed sum, an extra payment of INR 2500 as a fee has to be made.<\/span><\/p>\n<p><strong>Formula for Compound Interest<\/strong><\/p>\n<p><b>A = P (1 + r\/n) ^ nt<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Here, <\/span><b>A<\/b><span style=\"font-weight: 400;\"> means the compound interest total, <\/span><b>P<\/b><span style=\"font-weight: 400;\"> is the principal sum, <\/span><b>r<\/b><span style=\"font-weight: 400;\"> is the per year rate of interest, <\/span><b>n<\/b><span style=\"font-weight: 400;\"> signifies the number of times the interest becomes compounded annually, and <\/span><b>t<\/b><span style=\"font-weight: 400;\"> denotes the number of years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s suppose, the borrowed amount is INR 10 lakhs at a 10% interest rate for 5 years. The full interest on this sum is INR 4,97,916.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Total interest to be compensated &#8211; 4,97,916<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Total Payment = (Principal + Interest) &#8211; 14,97,916<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Per month EMI &#8211; 24,965<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The interest levied is an amalgamation of both in an education loan, During the course of study, simple interest is charged, soon after which, compound interest starts to incur.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"When_does_the_rate_of_interest_in_an_education_loan_begin\"><\/span><b>When does the rate of interest in an education loan begin?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The rate of interest on an education loan begins as soon as the amount is credited to the applicant\u2019s bank account. While the study course is in progress, most lenders levy simple interest. Six months after the completion of the study period compound interest is charged.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For abroad education loans, you can get in touch with <\/span><span style=\"text-decoration: underline;\">GyanDhan<\/span><span style=\"font-weight: 400;\"> and get guidance at every step of your loan process. Contact them now and ward off all your funds-related stress.<\/span><\/p>\n<p><em>Guest Blog by GyanDhan<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The rate of interest is the sum of money levied on the principal loan amount by a lender. If a person borrows money from someone, one has to pay a monthly sum that is more than the principal amount. In literal terms, it is the price of borrowing money from a bank or any other [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4821,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[975],"tags":[],"class_list":{"0":"post-4820","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-student-finances"},"_links":{"self":[{"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/posts\/4820","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/comments?post=4820"}],"version-history":[{"count":0,"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/posts\/4820\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/media\/4821"}],"wp:attachment":[{"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/media?parent=4820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/categories?post=4820"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.universityliving.com\/blog\/wp-json\/wp\/v2\/tags?post=4820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}