Education Loan

HDFC Credila vs. SBI Abroad Education Loan

HDFC Credila vs. SBI Abroad Education Loan

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Read GyanDhan’s comparative guide on HDFC Credila vs SBI abroad education loans to choose the right option for you. Compare the interest rates, loan amount, repayment terms & more.

GyanDhan
Updated on:  22 Feb 2024  | Reviewed By: 
Aman 
| 3.81K | 9  min read

Education loans have been witnessing remarkable growth from both Non-Banking Financial Companies (NBFCs) and public banks in recent times. In the fiscal year 2021-22, public banks in India disbursed over 7500+ cr in abroad education loans, as reported by the Ministry of Finance. Simultaneously, CRISIL ratings predict a substantial 40% increase in abroad education loans from NBFCs for the fiscal year 2023-24. Clearly, students are turning to both public banks and NBFCs for financial support when pursuing education abroad.

 

Among the prominent options available, SBI, a well-known public sector bank, and HDFC Credila, a reputable NBFC, stand out for their comprehensive offerings. The primary distinction between the two lies in their regulatory framework, range of operations, and services provided. While SBI operates under the regulation of central authorities like the Reserve Bank of India (RBI), HDFC Credila is subject to oversight by different governing bodies.

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Comparative overview of HDFC Credila vs SBI education loan

Basis of difference State Bank of India (SBI) HDFC Credila

Type of lender

Public sector bank

NBFC

Loan quantum

Up to INR 1.5cr

Up to INR 65 Lakh

Collateral requirement

Required for all types of courses

Collateral is mandatory for bachelor courses

Rate of interest
(As of July 2023)

Male - 11.15%
Female - 10.65%

11.25 - 13.3%

Financial co-applicant

Not required

Required

Margin money

10% of the loan amount

No margin money

Processing fee

INR 10,000 + GST

0.5 - 1%

Moratorium period

Course period + 6 months

Course period + 6 months

Repayment tenure

15 years

15 years

Repayment during course period

Not mandatory

Simple / Partial interest

Income tax benefits under section 80e

Yes

Yes

Loan approval basis GRE / GMAT? 

No

Yes

 

Having provided an overview of the differentiating factors between HDFC Credila and SBI as education loan providers, let's now delve into a comprehensive discussion of each aspect to gain a deeper understanding and make an informed decision.

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Maximum loan amount offered by HDFC Credila and SBI

Selecting a particular lender for an education loan involves considering various factors and one of the most important factors is the loan amount the bank/NBFC is willing to lend. It is crucial for applicants to ensure that the loan amount offered aligns with their financial requirements. The cost of education varies based on the intended course and institution. Therefore, it is essential to assess whether the amount offered by the lender is sufficient to cover your tuition fees and living costs.

SBI offers funds up to INR 1.5 Cr or even higher depending on the student’s profile and HDFC Credila offers loan amounts up to INR 65 Lakh. The maximum loan amount offered by HDFC Credila varies depending on the course, institute, and country.

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For aspiring candidates applying for a master's course, SBI proves to be a more favorable choice due to its provision of funds up to INR 1.5 Cr, effectively covering the significant expenses associated with studying abroad at the master's level. On the other hand, for individuals planning to undertake a bachelor's or diploma course with lower education costs, opting for a loan from HDFC Credila is advisable, as it can sufficiently cover the expenses related to education and other associated costs.

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Difference in interest rates of SBI and HDFC Credila

Interest rate refers to the percentage charged by the lender on the sanctioned amount. It represents the cost of borrowing an education loan. It is the percentage of the loan amount that is added to your loan balance over time until you fully repay the loan.

Interest rates play a crucial role in determining the overall cost of an education loan. HDFC Credila and SBI offer competitive interest rates, but the specific rates differ. 

  • list items HDFC Credila’s current rate of interest is 11.25% per annum.
  • list items SBI’s current rate of interest is 11.15% per annum

 

Apart from this, SBI offers a 0.50% concession for students availing of the SBI Rinn Raksha policy and a 0.50% concession for female students.

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Collateral requirement by HDFC Credila and SBI

Collateral refers to a valuable asset or property that a borrower pledges to the lender as security for the loan. Collateral provides a form of assurance to the lender, reducing their risk in case the borrower defaults on the loan. It acts as a guarantee for the lender that they have something of value. 

  • list items For education loans above INR 7.5 Lakh from SBI, collateral is mandatory. Collateral can be houses, flats, plots, and shops. SBI accepts third-party collateral as well.
  • list items HDFC Credila also offers collateral-based loans. Collateral is mandatory for undergraduate courses. HDFC Credila does accept collateral that belongs to the candidate's immediate family only.


Well if you are planning to secure an education loan from SBI, remember it requires an extensive list of collateral-related documents including 30 years of sale deed of the property and many more. So if you lack all the documents related to your collateral then HDFC Credila is a viable option as it requires less complex documentation.

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Co-applicant requirement in SBI and HDFC Credila

When it comes to applying for an education loan for studying abroad, both HDFC Credila and SBI typically require a co-applicant. A co-applicant shares the responsibility for loan repayment and is equally liable for any defaults or delays. Having a co-applicant strengthens the loan application by providing an additional source of repayment and financial support. 

Education loans from HDFC Credila require a financial co-applicant to study abroad. The co-applicant can be any immediate family member (parent, sibling, material and paternal relative, or spouse) with a stable source of income and a good credit history. 

Education loans from SBI do not require a financial co-applicant, however, a co-applicant is still required. The co-applicant can be a parent, guardian, or legal guardian. Having a co-applicant adds an extra layer of assurance for the lender and enhances the chances of loan approval.

So if you are going for an education loan but do not have a financial co-applicant with a stable income then SBI is a viable option. Abroad education loans from SBI are largely based on collateral value. Hence, a co-applicant is just required to co-borrow the loan and their income does not play an important role.

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Margin money of HDFC Credila and SBI

Margin money refers to that part of the total loan that the borrower needs to contribute from their own funds when applying for an education loan. 

  • list items SBI typically requires the borrower to contribute a margin money amount for education loans. SBI finances up to 90% of the total cost of education, meaning the borrower needs to contribute margin money of 10% of the total cost.
  • list items HDFC Credila, being an NBFC does not require any margin money and provides 100% finance towards the cost of education. Hence, HDFC Credila provides 100% financing to students.

 

Therefore, if you have sufficient funds and can contribute 10% of the loan amount to your total education expenses then SBI is the best-suited option for you but if you want full coverage then HDFC Credila is the right choice for you.

Apart from margin money, processing fee is another major factor of differentiation. Processing fees refer to the charges levied by financial institutions for processing and evaluating loan applications. The processing fee is a one-time payment, charged at the time of loan application, and is non-refundable, regardless of whether the loan is approved or not. 

  • list items SBI charges a processing fee for education loans. The processing fee for SBI is INR 10,000 + GST. 
  • list items On the other hand, HDFC Credila also levies a processing fee for education loans. The processing fee is the percentage of the loan amount and ranges from 0.5% to 1%, depending on various factors such as the loan amount, course, and institute. 
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HDFC Credila or SBI? The right lender

Both HDFC Credila and SBI provide their own set of advantages when it comes to abroad education loans. However, the final decision depends on collateral availability, student eligibility, and finance requirements. 

To help you make an informed decision, we have listed some points which will help you choose between SBI and HDFC Credila.

  • list items If you can pledge collateral then SBI is a viable option for you as they offer a lower interest rate on secured education loans.
  • list items If you lack collateral and want to avail of all the benefits of secured loans then HDFC Credila is a viable option as they offer similar benefits at unbeatable interest rates.
  • list items Where SBI offers a higher amount of loans at a lower interest rate, HDFC Credila provides unsecured loans with zero margin money. 
  • list items While HDFC Credila specializes in unsecured loans and customized financial solutions, SBI, as a renowned public sector bank, offers secured loans at competitive interest rates. 

 

At last, the ultimate decision is based on an individual's requirements. If you can pledge collateral and have sufficient funds for margin money then SBI is the best choice for you. Not only this, GyanDhan will additionally arrange a doorstep document pickup for you where our relationship officer will physically visit your house to collect documents and submit the same at the nearest SBI branch. On the other hand, if you have a co-applicant with a stable income and require 100% financing then HDFC Credila is the right choice for you. Not only this HDFC - Credila processes loans within 7 - 10 working days.

 

Now that you are aware of several differences between SBI and HFDC Credila, you can make an informed decision and start your abroad education journey by comparing each of the aspects with respect to your personal requirements. Take the first step towards your education abroad and find the perfect financing solution to fulfill your educational aspirations. With GyanDhan's seamless and hassle-free process, you can secure your education loan for studying abroad with ease from the comfort of your home. Don't let this opportunity slip away and check your loan eligibility now with GyanDhan.

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Frequently asked questions

Do HDFC Credila and SBI require a co-applicant for education loans?

Yes, both HDFC Credila and SBI typically require a co-applicant for education loans. However, HDFC Credila requires a financial co-applicant that can be a parent, spouse, paternal and maternal relative and their income and creditworthiness are considered during the loan evaluation process. On the other hand, SBI does not require a financial co-applicant.

What is the margin money for HDFC Credila on abroad education loans?

HDFC Credila does not require margin money and finances the entire portion of the total cost of education.

What is the margin money for SBI on abroad education loans?

SBI requires 10% of the cost to be borne as margin money by the borrower.

Which lender should I choose for my study abroad loan?

The choice between HDFC Credila and SBI depends on your individual preferences and requirements. It's advisable to compare factors such as loan terms, interest rates, processing fees, and customer support to make an informed decision that aligns with your financial needs.

Is there any pre-payment penalty by banks and NBFCs?

No, post 6 months of disbursement, no penalty is charged on pre-payment of education loans.

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