Quality education is an essential investment that helps secure your future. However, it might not be easy for everyone to afford higher education because of the high cost. This is where an education loan for abroad studies can help bridge the gap between quality and affordable education.
Education loans help students looking to pursue a course from a foreign university. This blog provides all the details you need to know if you are thinking about financing your abroad education through a student loan. Read on!
An education loan helps finance higher education and related expenses. Education loans cover the costs of books and supplies, tuition, living expenses and other expenses. Monetary assistance in the form of an education loan helps students to pursue their studies and meet all their expenses at an affordable price.
These loans do not require immediate repayments since most education loans come with a moratorium period and the repayment starts only after the moratorium period is over. The repayment periods and the interest rate for these loans can vary for each lending institution.
Monetary sums borrowed to sponsor higher education in foreign countries are termed an education loan for abroad studies. It takes off the immediate burden of financing foreign education. Several banks and non-financial organisations offer student loans to fulfil foreign educational dreams. The loans can be secured or unsecured, depending on the lender’s policy.
Unsecured loans or loans given without collateral are given to several aspiring students from top-tier institutions in the USA, Canada, Australia UK, European countries, etc.
The two major types of student loans for abroad are:
Collateral loans are where the borrower is required to pledge collateral of equal or higher value as security for getting a loan. Collateral loans do not require you to liquidate your financial investments. The loan is granted against the asset pledged as collateral for the loan. The collateral is released by the lender when you finish repaying the loan. Collateral loans can be categorised as follows:
However, remember that you might lose your collateral asset if you cannot repay the loan borrowed. The procedure to acquire this type of loan is also cumbersome and time-consuming as the documentation and verification are complicated.
An education loan for abroad studies without collateral is termed an unsecured loan. These loans do not entail the borrower to pledge for security. The loans are given out to the students after evaluating the borrower’s creditworthiness and are thus free from providing collateral. Upon applying for such loans, the lender verifies the eligibility criteria of the individual and only then issues the loan. Here are some of the major benefits of an abroad education loan without collateral:
|Bank Name||Interest Rate||Maximum Amount (Rs.)||Repayment Time|
|IDBI Bank||15-18%||20 Lakh||10-15 years|
|State Bank of India||15%||30 Lakh||1-15 years|
|Axis Bank||16.5-17.5%||20 Lakh||10-15 years|
|Canara Bank||15%||20 Lakh||15 years|
|Bank of Boroda||15%||20 Lakh||15 years|
|Oriental Bank of Commerce||15-17%||30 Lakh||10-15 years|
|ICICI Bank||11.5-18%||40 Lakh||8 years|
The general eligibility parameters for study-abroad education loans are:
Certain documents are needed for proof and verification of your foreign education loan. Most commonly requested documents include the following:
Here is how you can apply for an education loan to pursue higher education abroad:
Here are a few things you should keep in mind while applying for a student loan:
Determining the amount you need for your studies helps you borrow only the amount that you actually need instead of going overboard and availing of a loan amount that may be higher than your requirement. Note that the EMI value increases with a higher quantum of loan.
Reading the fine print and understanding the legality that binds the loan agreement is vital. Getting an expert to help you decode the technical details will help you understand if you can afford the loan and what are the norms you are bound by. Reading the fine print helps you stay on top of things while making the repayment process easy.
The interest rates, grace period, lending amount, etc., are dynamic and depend upon the lender’s discretion. You will be entering a long relationship with your financier. Thus, it is important to understand and consider even the minutest details. Ask and clarify even the smallest of doubts before you settle on a lender to finance your foreign education.
The grace period might be a blessing for the students. However, it is important to stay on top of this to ensure that you repay your loan on time. The interest amount only increases with time, so it is important to have control over your repayment plan.
Student loans are a blessing and are perfect when handled properly. Foreign education loans are the best way to pursue your academic dreams without the financial burden on your shoulders. Check the eligibility criteria and do thorough research before applying for an education loan with a financial institution.
In case your loan application gets rejected or takes time to process, you can apply for a cash loan with Navi to finance your education abroad. Its 100% paperless and instant disbursals make Navi Cash Loans one of the best lending apps. Just download the Navi App and apply!
Ans: Banks and other lending agencies set no predefined limit for offering education loans to students wanting to study abroad. The lending amount is dependent on the lending institute. Most banks and lending agencies offer loans up to Rs.40 lakh. In case a greater amount is lent, a higher interest rate may be charged.
Ans: Student loans for abroad studies are offered for both undergraduate and postgraduate programs in almost every subject.
Ans; The best banks for student loans depend on your requirement. It is important to understand that every lending institution has certain advantages. All the loan offerings must be studied and the best- fit must be chosen based on the convenience of the borrower.
Ans: Yes, they may have higher interest rates. Non-collateral loans are unsecured loans. Although these are easier to procure, they may come with a higher interest due to the lack of collateral. The risk factor involved is the major reason for a higher rate of interest. The eligibility for this loan is anyway dependent on the credit history of the borrower.
Ans: Generally, study loans are not interest-free. However, you can apply for various scholarships, check for government subsidies, or even private scholarships to get an interest-free education loan. However, there is a certain section in the Indian Income Tax Act that allows education loan borrowers to claim a rebate on the interest amount paid.
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