9 January 2022
Education loan plays an important role when it comes to studying abroad. After all, not all students can afford to study in other nations. The lack of financial assistance often forces them to quit their dream to pursue education abroad. With education loans, parents can send their children abroad for higher education. In India, many banks are offering an educational loan to study abroad to students looking for higher education in other nations. But it is important to keep in mind that not all lenders are the same.
The processing fee, interest rate, pre-payment terms, tax benefits, repayment tenure, and conditions vary from bank to bank. It is quite stressful to choose the right lender to fund your study abroad mission.
Therefore, it is important to consider some important factors while choosing the bank for an education loan for your higher education overseas. HERE’S HOW…
Interest Rate:
Interest rate is the most crucial factor to keep in mind while choosing a bank for an education loan. Even a small difference in interest rate can help you save a lot. Understand the difference between the fixed and floating rate of interest as well as compare the interest rates offered by various lenders, banks, and financial institutions to choose the right one.
Tax Benefits:
Educational loan to study abroad provided by scheduled Indian banks are subject to tax deductions under Section 80E of the Income Tax Act of India, 1961. Tax deduction continues for 8 consecutive years right from the year the loan is taken.
Eligibility and Documents:
Most banks assess certain things before granting you any sort of loan. They review your academic background, family income, and creditworthiness. The amount of loan is also determined by the course, the university, and the job prospects after the course completion. And not all banks offer financial assistance for all courses so make sure to check your eligibility beforehand.
Ask the bank what type of documents they need to verify your application. It will give you sufficient time to collect your documents and file your loan application on time.
Generally, a bank asks for address proofs, mark sheets copy, passport size photos, and income proof of co-application. Some can ask for a confirmed admission letter from your university.
Costs Covered:
Some banks agree to cover the entire cost of education while some cover only a part of it.
Therefore, it is important to ask the lender about the cost covered in the loan. The cost includes tuition fees, library and examination fees, personal expenses, travel fare, lab and equipment charges, and other costs associated with overseas education.
Moratorium Extension:
Banks usually give a grace period of six months to one year once you complete the course before your prepayments start which is called the moratorium period.
This way, students get time to find a job and attain financial stability before they can pay off their education loans.
However, sometimes the moratorium period needs to be extended due to unavailability of employment or sudden financial emergency.
So make sure to ask your lenders about the extension of the moratorium period.
Prepayment Terms:
You can save on interest rates accumulating on the principal amount as soon as you pay back the loan. But paying off your loan before the due date, usually within the first three years of committing to the loan, can attract a prepayment penalty.
Ask if your lender will charge a penalty on prepayment. Based on the bank’s pre-payment terms and conditions, you can plan a strategy to repay the loan as soon as you can.
Loan Processing Time:
The loan confirmation letter is required to be shown as proof of funding while applying for admission and a visa. The loan processing time of lenders varies, therefore, make sure to ask in advance.
Still, Confused? Get in Touch With Our Study Abroad Loan Consultant Now!
Hope this piece of information will help you choose an education loan from the right lender. But it might be an overwhelming process for some candidates which is why we highly recommended you to opt for an expert choice. At Landmark, we offer guidance over study abroad loans in a friendly manner.
Here’s what we offer…
- Education Loan-related complete information and guidance
- Recommending Scholarship beneficial study abroad programs and Universities.
- Tie-up with reputed banks
- Simple and hassle-free education loan processing
- Assistance about disclosure of financial assets for Visa Application
