Dreaming to pursue your higher education in abroad? In India, there are around 80 – 85 percent of students, who want to pursue their graduation or post graduation according to their choice, acquire a degree from one of the top universities abroad. Earlier this dream was nearly impossible for students who belong to middle class family as it requires a lot of money.


Today, there are many banks that are offering education loan to people to meet their dream of pursuing education in abroad. As there are a number of banks that offer education loan at competitive rates, you need to be aware of six important factors before applying for education loan.


1. Interest Rates

Different banks offer different interest rates on education loan, and it totally depends upon the loan amount you opt for. You need to do a market survey and check that which bank offer lowest interest rates. Also, check whether the interest rates are fixed or floating. It is always better to opt for floating interest rates as you can hope that rates will fall in the coming years. Therefore, always compare the rate with all banks before applying for a loan.


2. How is interest charged?

Always enquire about the interest rates being charged by your bank. Also check the criteria on the basis of which interest rates are calculated like on daily or quarterly basis. If you do not enquire about the rates, then you might be ending up with more interest at the time of repayment. So, investigate properly to reduce the burden of repayment.



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3. The Waiver Period

There are many banks that provide the facility to repay the loan once the student completes the education and joins a firm. This facility helps students to repay the loan amount in installments after you receive your salary. Check if your bank offer this facility as it will make you tension free until you finish off your studies.


4. Minimum Fees And Other Costs

There are many charges associated with education loan like processing charges, administrative charges and others. Processing fee includes search fees, document preparation fees, underwriting costs, fees for lawyers, cost of employment verification and more.


5. Check For Collateral, Guarantee Or Security

Collateral is something that the lender requires from the student after granting loan. If the loan amount you applied for is up to 4 Lakhs, then there is no need of security. But in case this loan amount exceeds 4 lakhs, then bank demands a security to put as collateral. Always investigate thoroughly about the security features before your bank grant you loan.


6. Down Payment

Down payment is the amount that the borrower needs to pay as the bank does not offer the 100 percent on the loan.  The money you put as down payment vary from bank to bank. Usually the amount you need to pay as down payment ranges from 5 to 25 percent. There are few banks that demand high down payment which makes loan unaffordable.