Embarking on overseas higher education can be transformative, yet it frequently entails substantial financial challenges. To overcome the disparity between your ambitions and financial resources, considering education loans proves to be a practical solution. Opting for collateral as security can be a strategic decision when aiming for substantial loan amounts or favorable terms.
Types of education loan
Before proceeding, let’s briefly grasp the available types of education loans. Two primary categories include:
- Secured education loans: These necessitate borrowers to offer collateral as a safeguard for the loan.
- Unsecured education loans: These, on the other hand, don’t mandate collateral from the borrower. Nevertheless, a co-applicant is required for these loans.
Features of education loan with collateral
For an education loan requiring collateral, either tangible or intangible security is essential. Secured education loans provide elevated loan amounts, reaching up to INR 1.5 crore, with lower interest rates commencing at 8.85%. The interest rates for collateral-backed loans are generally more favorable than those without collateral. Utilize GyanDhan’s Education Loan Interest and EMI calculator to estimate monthly installments and overall interest. While proof of parental income isn’t obligatory, a robust income can be advantageous. Extended repayment durations are accessible for education loans with collateral. Certain banks, such as SBI or BoB, may offer deferred repayment during the study period with accumulating interest. Tax benefits under Section 80E may apply to secured loans. GyanDhan facilitates document pick-up services and connects applicants with bank branch managers or relationship officers.
SBI study abroad loan
The key information regarding SBI study abroad loan, encompassing loan amounts, interest rates, fees, and various other loan terms. The loan amount spans from INR 7.5 Lakh to INR 1.5 Crore. The interest rate, set at 11.15%, is variable, providing female applicants with a 0.5% concession. There is a non-refundable processing fee of INR 10,000 + GST. Margin money requirements differ: 15% for amounts between INR 7.5 Lakh and INR 20 Lakh, and 10% for amounts exceeding INR 20 Lakh. Property evaluation charges, approximately INR 7,500, may change based on location and property specifics. The moratorium period aligns with the course duration plus an additional 6 months. Repayment tenure allows for an extension of up to 15 years.
UBI study abroad loan
Loan amounts include a secured option, expandable up to INR 1.5 crore based on the student’s profile, and an unsecured option capped at INR 40 lakh. The Union Bank of India (UBI) Education Loan interest rates for secured loans range between 10-10.5%, while unsecured loans carry a fixed rate of 9.8%. A refundable processing fee of INR 5000 is applicable, contingent on disbursement within 3 months of sanction. Margin money requirements differ 10% for secured loans in listed universities, 15% for those in non-listed universities, and 15% for unsecured loans. The moratorium period spans the course duration plus an additional 12 months, and the repayment tenure extends up to 15 years.
Eligibility for secured education loans
The applicant is required to possess all documentation related to the security intended for attachment. Eligibility mandates that the applicant, who must be an Indian national, can also be an NRI with an Indian passport, extending education loan access. However, OCI students are eligible for loans only for studies within India, given their non-Indian citizen status. It is imperative for the applicant to secure admission to a recognized institute, and lenders typically request a copy of the acceptance letter along with the loan application. Additionally, a commendable academic history, evidenced by relevant mark sheets, is a prerequisite. Most lenders also consider a favorable CIBIL score when approving education loans.
Benefits of secured education loan
Opting for a secured education loan for studying abroad, where collateral is provided, offers several advantages over an unsecured loan. These benefits include:
- Increased Loan Amount: Providing collateral as security enables you to access a larger loan amount. Lenders are more inclined to offer substantial loans when backed by an asset, facilitating sufficient funding for your overseas education.
- Reduced Interest Rates: Secured loans typically come with lower interest rates compared to unsecured counterparts. Collateral mitigates the lender’s risk, leading to lower interest rates and significant cost savings throughout the loan term.
- Extended Repayment Terms: Secured education loans often offer longer repayment periods, providing flexibility and easing financial stress during your study and early career phase.
- Enhanced Loan Approval Odds: Collateral-backed loans simplify the approval process, especially for individuals with limited credit history or lower credit scores. The presence of collateral provides assurance to the lender, increasing the likelihood of loan approval.
- Collateral Flexibility: Depending on the lender, you may have the flexibility to choose collateral, such as property, investments, or valuable possessions. This allows alignment with your financial situation and preferences.
- Credit Building Potential: Responsible management of a secured loan, including timely repayments, contributes to building a positive credit history. This can be advantageous for future financial endeavors, including applying for other loans or credit cards.
In conclusion, secured education loans for studying abroad, exemplified by offerings from SBI and UBI, prove instrumental in overcoming financial challenges. With collateral, applicants gain access to larger loan amounts at favorable interest rates, extended repayment terms, and increased approval odds, particularly beneficial for those with limited credit history. The flexibility in collateral options, coupled with potential credit-building opportunities, adds a strategic dimension. These loans stand as crucial financial tools, bridging the gap between educational aspirations and financial realities, and fostering academic pursuits with substantial funding and advantageous terms.
