Education Loan

Best Bank for Abroad Education Loan

Best Bank for Abroad Education Loan

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Discover the top banks for abroad education loans. Compare interest rates, loan amounts, and terms to find the perfect fit for your study dreams.

GyanDhan
Rohit Gidwani
Updated on:  29 Feb 2024  | Reviewed By: 
Aman 
| 142 | 9  min read

Thinking about studying abroad but worried about the costs? You're not alone! Figuring out which bank is best for education loan abroad? can be as tricky as picking the right course. This quick guide cuts through the confusion, offering clear insights into securing the perfect education loan. Whether you're leaning towards a secured or unsecured loan, or deciding between a public bank, a private bank, or an NBFC, we've got you covered. Let's simplify your options and help you make a smart choice, so you can focus on packing your bags rather than fretting over finances. Ready to find your funding fit?

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Types of Abroad Education Loan

Pursuing higher education abroad is a significant aspiration for many, yet financial constraints are often a hurdle. Education loans play a crucial role in overcoming these challenges, offering essential support. They are mainly of two types: secured and unsecured, each tailored to meet various borrower needs based on eligibility, collateral, and interest rates.

Secured Education Loan

Secured education loans require the borrower to provide some form of collateral as a security against the loan amount. This collateral can be in the form of property, fixed deposits, or any other tangible assets. The main advantage of secured loans is their lower interest rates compared to unsecured loans, as the risk for the lender is significantly reduced by the collateral. Additionally, secured loans often come with higher loan amounts and longer repayment periods, making them suitable for those who need substantial financial assistance for their education abroad. However, the process of getting a secured loan can be lengthy and requires the borrower to have assets of significant value.

Unsecured Education Loan

Unsecured education loans, pivotal in deciding which bank is best for education loan abroad, do not require any collateral, making them a more accessible option for many students who do not have significant assets to pledge. These loans are granted based on the borrower's creditworthiness and potential future earnings. While unsecured loans offer the advantage of quick processing and disbursement, they usually come with higher interest rates than secured loans due to the higher risk involved for the lender. The loan amounts are generally lower, and the repayment terms are shorter compared to secured loans. This type of loan is ideal for students who need a smaller loan amount and are confident in their ability to repay the loan quickly after completing their studies.


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Types of Lenders for Abroad Education Loan

Selecting the right lender for financing education abroad, or figuring out which bank is best for education loan abroad, is as important as choosing the right university. The market offers a range of lenders—public banks, private banks, and Non-Banking Financial Companies (NBFCs)—each providing unique products, services, and terms to meet the varied needs of students.

  • list items Public banks: Public banks are government-owned institutions that often offer education loans at competitive interest rates. They are known for their reliability and the security they provide. Examples include the State Bank of India (SBI), Bank of Baroda, and Union Bank of India (UBI).
  • list items Private banks: Private banks are privately owned and tend to offer personalized services, quicker loan approvals, and disbursement. They might offer more flexible terms for education loans but generally at higher interest rates compared to public banks. Examples include HDFC Bank, ICICI Bank, and Axis Bank.
  • list items NBFCs: Non-Banking Financial Companies specialize in providing financial services, including education loans, without operating as traditional banks. They often offer unsecured loans with fast processing times and less stringent eligibility criteria but at higher interest rates. Examples include Credila (now part of HDFC), Avanse Financial Services, and InCred.

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Best Public Bank for Abroad Education Loan

Choosing the right public bank for an abroad education loan involves considering various factors such as loan amounts, interest rates, and repayment terms. Public banks are often preferred for their lower interest rates and extensive branch networks. These are often preferred for secured education loans over unsecured loans because of the higher loan amount. A few benefits and drawbacks of public banks are shown in the table below:

Benefits Drawbacks

Lower interest rates

Lengthy documentation and processing time

Higher loan amounts

Stricter eligibility criteria

Subsidy schemes available & Tax benefits

Limited personalized services

Now that you know the benefits and drawbacks let's look at some of the public bank options available for you to get an abroad education loan - 

Lender Name Maximum Loan Amount Approx Interest Rate Range

State Bank of India (SBI)

Up to INR 1.5 Cr

10.15% - 11.15%

Union Bank of India (UBI)

Up to INR 1 Cr

9.25% - 11.5%

Bank of Baroda (BOB)

Up to INR 1.5 Cr

9.7% onwards

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Best Private Bank for Abroad Education Loan

Private banks offer a blend of competitive loan products with the convenience of faster processing and customer service. They are often preferred for unsecured education loans over secured loans but both options are available in the majority of the banks. They have a list of universities that are a major factor in determining your loan amount. A few benefits and drawbacks of private banks are: 

Benefits Drawbacks

Tax benefits 

Higher interest rates than public banks

Higher unsecured loan amounts

Stricter on target universities

Flexible repayment options

Higher processing fees

Here are a few options available for you if you wish to choose public

Lender Name Maximum Loan Amount Approx Interest Rate Range

IDFC FIRST Bank

Unsecured - up to INR 75Lakh

Secured - up to INR 1 Cr

9.5% - 13%

ICICI Bank

Unsecured - up to INR 1 Cr

Secured - up to INR 2 Cr

9.9% - 12.75%

Axis Bank

Unsecured - up to INR 75 Lakh

Secured - up to INR 1 Cr.

9.99%% - 12.5%


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Best NBFC for Abroad Education Loan

NBFCs have become increasingly popular for their flexible and customer-friendly education loan products. These are yet another type of prominent lender with easier eligibility to meet with just a little additional interest rate. In a few cases, you will find yourself choosing NBFCs as they can provide you with the best abroad education loan. Some benefits and drawbacks of NBFCs are:

Benefits Drawbacks

Flexible eligibility criteria

Higher interest rates than banks

Quick loan processing and disbursement (mostly online)

Specific university list for which only loans can be provided 

Customized loan products

Repayment of interest during the grace period

The NBFCs are majorly preferred because of the unsecured education loan as people that have collateral to pledge prefer banks. Some of the NBFC options with their respective maximum unsecured loan amounts are shown below:

Lender Name Maximum Loan Amount Approx Interest Rate Range

HDFC Credila 

Up to INR 75 Lakh

11.75% - 12.75%

Avanse Financial Services

Up to INR 75 Lakh

12% - 13%

InCred

Up to INR 80 Lakh

11.85% - 13.25%

Auxilo

Up to INR 75 Lakh

12% - 13.50%

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How to Choose the Right Lender?

Selecting the right lender for your abroad education loan is not a one-size-fits-all decision. It requires careful consideration of your personal needs, financial situation, and long-term plans.

  • list items Interest rates: Compare the interest rates offered by different lenders to ensure you get the most affordable loan.
  • list items Loan amount: Ensure the lender can provide the loan amount you need to cover your education expenses.
  • list items Repayment terms: Look for flexible repayment options that align with your expected financial situation post-graduation.
  • list items Processing time & ease: Consider the processing time and the ease of the application process.
  • list items Collateral requirements: Understand the collateral requirements if you're considering a secured loan.

By evaluating these factors, including which bank is best for education loan abroad, you can choose a lender that best fits your unique needs and circumstances, ensuring your education journey is as smooth and stress-free as possible. Navigating the maze of education loans for studying abroad doesn't have to be a solo journey. With this guide, you've got a clearer path to understanding your options between secured and unsecured loans, as well as the pros and cons of opting for public banks, private banks, or NBFCs. However, the real secret lies in choosing a lender that aligns perfectly with your unique needs. Don't spend hours researching and comparing; let GyanDhan do the heavy lifting for you, free of cost. Check your eligibility with GyanDhan now and get matched with the best bank for your education loan abroad. Your dream university is waiting; let's make it happen!

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Frequently Asked Questions

What is a moratorium period, and how does it differ among banks?

The moratorium period is a grace period during which the borrower is not required to make any repayments. It typically lasts until the course completion plus an additional 6 to 12 months, depending on the bank. For example, the State Bank of India (SBI) offers a moratorium period until course completion + 6 months, while the Bank of Baroda offers a moratorium period until course completion + 12 months.

Can I get a loan without collateral, and if so, up to what amount?

Yes, several banks offer education loans without collateral. The maximum amount varies by bank; for instance, SBI offers up to INR 7.5 lakhs without collateral, while Axis Bank offers up to INR 40 lakhs without collateral for certain prime universities.

Are there any special benefits for female students?

Yes, some banks offer special concessions for female students. For example, the Bank of Baroda offers a 0.50% discount on interest rates for girl students under its Baroda Scholar loan scheme.

What is the significance of prime and non-prime listings of universities in loan schemes?

Banks like Axis Bank categorize universities into Prime A and B listings, affecting the loan amount and interest rates. Prime A listed universities may allow higher unsecured loan amounts and possibly better interest rates compared to non-prime or Prime B listed institutions.

Are there options for pre-visa disbursement and pre-admission loans?

Yes, some banks and financial institutions offer pre-visa disbursement options to help students prove their financial readiness as part of the visa application process. Additionally, lenders like Avanse provide loan sanction before admission based on GRE/TOEFL/IELTS scores, and also pre-disbursement of loans for securing I-20 forms

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