All About Financial Institutions Granting Overseas Education Loans


Getting an Overseas Education Loan to finance higher studies is no trivial matter. There’s a huge amount of money involved, covering education fee and cost of living at the destination country which needs to be considered. This money needs to be sanctioned from the financial institution first and later repaid with interest. Hence, a lot of factors need to be considered so as to ensure that the entire process is conducted smoothly.
The financial agencies granting Education Loan for Abroad Studies are:

  • Nationalized Banks
  • Private Banks
  • Non-Banking Financial Companies (NBFCs)

Here are some examples of each type;

  • Nationalized banks: State Bank of India, Bank of Baroda
  • Private Banks: Axis Bank, ICICI Bank
  • NBFCs: Auxilo, HDFC Credila, InCred

Each institution follows a distinct process to evaluate the borrower’s profile and assess the amount to be disbursed on a case-to-case basis. The student is advised to have detailed knowledge about the criteria that the lending institutions take into account for loan disbursement. Through this article, we have tried to shed some light on the regulations and requirements of institutions granting education loans.
The first thing to be understood is that Nationalized banks have a separate set of rules for assessment and disbursement of loans while the NBFCs and private banks have slightly different criteria and features. There are distinct benefits of opting for each category.


Common Features:
Nowadays, all the financial institutions have the provision of Online Loan Application For Abroad Studies. Due to this, a lot of unnecessary hassle is avoided. The loan application can be done right from home by filling all the requested details correctly, without providing any misleading information. Post-application, there is waiting time during which the details are verified and the loan application is considered for approval. After verification of documents and valuation of property(if any), the institution decides whether to grant the loan or not. If the application is approved, the terms of disbursement are decided and an agreement is made between the lender institution and the borrower. Pre-visa loan is granted to secure a position at the desired university on the provision of an offer letter from the university.

Points of difference are stated between the Nationalized Banks on the one hand and Private banks and NBFCs on the other.

Nationalized Banks
For candidates looking for admissions into countries like Australia, New Zealand, and the UK, getting a loan from these banks is advised. This is because these countries accept loan a sanction letter only from nationalized banks.
Nationalized Banks rarely grant Unsecured Overseas Education Loan, which are loans taken without collateral. At most, Nationalized Banks in India grant unsecured loans for denominations up to INR 7.5 lakh. However, Nationalized Banks should be preferred if the borrower has an asset that can be used as collateral, since they charge comparatively lower rates of interest. Also, girl candidates get the benefit of a 0.5% concession in the rate of interest with Nationalized Banks. Secured loans are also granted for a higher amount, for eg., The State Bank of India has a cap of INR 1.5 Cr for secured overseas education loans.

Another point to be considered is the margin money. Nationalized banks usually grant a certain percentage of the total loan amount and the rest of the money has to be arranged from the borrower’s side. For example, a bank may have the policy of granting 90% of the total loan amount and the borrower will have to arrange for the rest of the 10% on his own.

Private Banks and NBFCs
These have certain advantages over nationalized banks such as;
·        Shorter processing times
·        Provision for getting unsecured loans for higher amounts
·        No margin money leading to 100% funding

However, certain factors need to be considered in addition to the advantages. The rate of interest is higher than that of Nationalized Banks. Unsecured loans from institutions other than Nationalized Banks would not be advisable for countries like Australia, New Zealand, and the UK from a visa perspective since the loan sanction letter will not be considered valid. Despite this, private banks and NBFCs are the best bet for people in need of unsecured loans for countries other than those stated above, especially the US.
  
The details provided above are sure to eliminate the question of which financial institution to choose for getting an overseas education loan. As for How To Get Education Loan For Study Abroad, expert consultants may be approached which would provide country-specific counseling for securing education loans for aspiring students. 

Read more:

Loan For Higher Education Abroad

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