Getting an education of your choice is your birthright. Often students who wish to pursue their studies abroad have to go through a long procedure of getting a study loan from the bank to get an admission to their dream university. They have to gear up for both the admission process and the loan approval. This article will make you aware of some of the facts regarding getting a loan to study abroad.
There are many recognised institutions abroad that offer programs in higher education. For those institutions, banks offer a minimum of Rs 20 lakhs of loan for studying abroad. Depending on the bank, the amount offered may be larger. India Overseas Bank, for example, offers Rs 25 lakhs for higher studies abroad and State Bank of India can give up to Rs 30 lakhs.
Here are some of the facts regarding getting a loan to study abroad:
The first and foremost fact to go through while getting a loan to study abroad is checking the interest rate. The interest rates vary for every bank, so need to make an overall check before applying for the loan. Currently, the interest rates are between 11% to 14% and moreover, you will be offered the loan on floating rate basis which means they can increase or decrease in future depending upon the bank policies. So, you need a perfect go through for interest rates to avoid certain not so good surprises. Usually, private banks offer you more money on loan than govt banks.
- Bank of Baroda offers loans of up to Rs 20 lakhs with a rate of interest per annum of 12% for loans above Rs 4 lakhs.
- Canara Bank offers up to Rs 20 lakhs with a rate of interest per annum of 12% for loans between Rs 4 and 7.5 lakhs and 9.5% for loans greater than Rs 7.5 lakhs.
- Axis Bank offers up to Rs 20 lakhs and its rate of interest per annum ranges from 13.75% to 15.75%.
- Credila (of the HDFC Bank Company) offers up to Rs 20 lakhs and its rate of interest per annum is 13.5%.
- ICICI Bank offers up to Rs 20 lakhs and has an annual interest rate of 15%.
- Indian Overseas Bank offers up to Rs 40 lakhs and charges an annual interest rate of 15%.
- State Bank of India offers up to Rs 30 lakhs with an annual interest rate of 13.75% for amounts between Rs 4 – 7.5 lakhs and 11.75% for amounts above Rs 7.5 lakhs.
If by any chance you loan exceeds 4 Lakhs, you will have to pay the bank a margin money which is usually 15% of the loan amount. But the amazing fact is that, they accept the scholarship money too as the margin money. For getting a loan to study abroad between Rs 4 to 7.5 lakhs, all you need is a guarantee of a third party but for loans over Rs 7.5 lakhs, you will have to provide the bank with an LIC policy or documents of immovable property you possess.
The bank approves the loan only if you have a cosigner. He/she is the person who has to sign the loan with you and agree to pay the debt if you failed to do so. This is a very big commitment on his part and he will be on the hook of the bank for the debt. You need to have a cosigner, if your loan amount exceeds 5 Lakhs.
While getting a loan to study abroad, one must consider the value of the currency at that time. The amount you will be offered will depend on the value of Rupee at the time of disbursement, so you need to be prepared to see a somewhat small decline in the value. Bank will only offer you that currency rate which is valid at that current time.
One of the important fact you have to keep in mind after getting a loan to study abroad is that it is not your personal holiday fund. Most banks offer you a holiday period, the period after which you need to start paying the EMI. It generally lasts up to the time you find employment. It is highly advisable to start paying the EMIs from the very month after the end of holiday period to avoid a pile of interest and hikes. This will ensure that you remain stress free during the course of your graduation by paying the small EMIs and not piling them up to pay at large scale later.
All the loan applicants have to fill up the Know Your Customer form. It contains all the necessary details about your education abroad and your background here. This is just to ensure the bank that you can pay off the loan in time with interest.