Educational Loan Providing An Edge In Current Scenario

22 Jan

Posted by Shyam as Loans

We all have seen an excellent student in our educational time converting in to an under-performer. This transformation may be due to financial crisis which makes him loose his confidence. Present education structure is not affordable for middle and lower section of society. The educational cost is so high, especially in cases of higher studies like, management, aviation, designing, etc that it becomes unaffordable to the mass section of the society. Educational loans provided by banks is the only solution left which acts like a backbone for the individuals who wish to opt for higher educational studies.

Well a quite number of banks provide this facility with different interest rates. On your part, look for banks offering attractive interest rates benefiting you along with other various other options. Following are some of the factors which have to be considered:

Interest rates: Interest rate differs from one bank to another. Some offer fixed rate while others offer floating rate of interest. In case of fixed rate the interest remains same throughout the loan period whereas, in case of floating rates the rates keep on changing as per current market scenario. Pick the best offering cheaper rates in comparison to other banks. Various websites and tools are available to provide a gauge on it.

Bank	Interest rates(applicable for loan amount between Rs 4-7.5 lakh)	Cumulative rate	Type of interest
Allahabad Bank	(Base Rate + 3%)	13%	Floating
Bank of Baroda	(Base Rate + 4%)	14%	Floating
Bank of India	(Base Rate + 4%)	14%	Floating
Bank of Maharashtra	(Base Rate + 2.75%)	12.75%	Floating
Canara Bank	(Base Rate + 2%)	12%	Floating
IDBI Bank	-	13.5%	Fixed
Indian Bank	-	14%	Fixed

Time-frame for making payments: Normally banks have a repayment period of 5-7 years. Whereas, for educational loans it starts after moratorium period which is normally 6 months after getting the 1^st job or 1 year after completion of course whichever is earlier. IDBI Bank provides a tenure of (5-7 years), UCO Bank (5-7 years),Canada Bank(7 years),etc.

Charges: Banks charge various charges like, processing fees, documentation fees, prepayment and pre-closure charges along with interest rates. The charges are different for different banks and also vary for individuals studying in India or abroad. Take care and pick the one imposing lower charges. UCO Bank, Bank of India, Axis Bank don’t charges any processing fees whereas, PNB charges 0.5%with a maximum of Rs. 5000 for abroad and nil if in India.

Processing time: Different bank have different processing time and is crucial to know as you by what time you get the loan amount. Be alert and look for the time provided by institute to submit the fees.

Discount, insurance and other freebies: Girl student taking admission in premier institutes can avail the benefit of discount. Look whether the institute is within the list of banks premier institutes and discount is available on the same. Few banks propose facility of free insurance along with loan and reduce the same along with loan EMI. Well some banks like Allahabad Bank offer free debit card, IDBI offer discount on interest rates for physically challenged students, OBC offer personal accident insurance for Rs. 20 lakh, etc.