Bank vs Private Lenders: Where to Get the Best Study Abroad Loan?

Education Loan

However, studying abroad also comes with numerous expenses, which you can cover by taking out an education loan. In today’s world, several options are available for obtaining a loan from banks, lenders, NBFCs, and other financial institutions. If you are confused about where to get the best study abroad education loan? Here’s a quick guide for you.

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Understanding: Banks vs Private Lenders

Before applying for a study abroad education loan, it is very important to understand the basics about banks and private lenders. Banks are often traditional and are either operated by or backed by the government, while private lenders are operated privately or by Non-Banking Financial Companies (NBFCs). Here’s a table for your better understanding of your foreign education loan:

Particulars	Banks	Private Lenders
Operated By	Government / Banking Institutions	NBFCs or Fintech Firms
Interest Rates	Generally lower due to RBI	Higher due to risk
Security	Often need collateral as security	Offer unsecured loans based on a co-applicant
Approval Process	Longer processing (2-4 weeks)	Faster processing (3-7 days)
Best For	Students with a strong academic record and collateral	Students needing quick disbursement and a high loan amount

Key Differences Between Banks and Private Lenders

While taking out a study abroad education loan, there can be several differences between a bank and a private lender. Here’s how you can differentiate between banks and private lenders for your best education loan for abroad:

Differences	Banks	Private Lenders
Interest Rates	Changes in the repo rate by the RBI affect the interest rates charged for education loans	The interest rates remain the same, RBI repo rate does not affect it
Eligibility	Gives preferences to top universities and a strong financial background	Accept top as well as mid-tier universities, and assess students’ future earnings
Co-Applicant	Usually requires a co-applicant with a strong financial history	Often based on a student’s future income potential and university reputation
Loan Coverage	Usually covers tuition & basic living expenses	Often covers up to 100% of the cost of attendance and other expenses
Documents	Requires several documents, especially for secured (collateral) loans	Fewer documents for unsecured loans and quicker approvals
Customer Service	May lack personalized support to students	Often known for being friendly and student-focused
Processing Fees	Generally lower compared to private lenders	Usually charges up to 2% of the loan amount

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Popular Banks Offering Study Abroad Loans in India

Several Indian banks offer education loans for students to pursue studies abroad. The process of selecting a bank relies heavily on important aspects, including the amount borrowed, interest rates, and required securities. If you are wondering which bank is best for an education loan abroad, check the table below:

Indian Public Banks:

Bank	Loan Amount	Interest Rates
State Bank of India (SBI)	Up to INR 3 Crores	9.40% – 9.90%
Bank of Baroda (BOB)	Up to INR 1.5 Crores	Starting from 9.45%
Union Bank of India	Up to INR 1.5 Crores	Starting from 9.00%
Bank of India (BOI)	Up to INR 1.5 Crores	Floating: RBLR + 1.70% presently 10.35% – 10.55%Fixed: 12.20% – 12.40%

Indian Private Banks:

Bank	Loan Amount	Interest Rates
Axis Bank	Unsecured Loan up to INR 1 Crores	13.70% – 15.20%
HDFC Bank	Entire Cost of Education	Starting from 8.64%
ICICI Bank	Up to INR 3 Crores	9.50% – 14.25%

Bank or Private Lender: Which Is Right for Your Study Abroad Dream?

Studying abroad is a dream for many Indian students; however, deciding on a loan can be complicated. Each financial institution, whether a bank or a private lender, offers exclusive advantages over its competitors.

Bank loans offer lower abroad education loan interest rates and flexible payment terms, and they also include government backing for your funds. Private lenders provide high loan amounts at quicker processing speeds and do not require any security. A bank or private lender should be selected based on the desired loan amount and specific financial needs, as they offer diverse advantages.

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Frequently Asked Questions

Do Indian banks offer education loans for studying abroad?

Yes, several Indian banks offer education loans for overseas studies. Review all the loan criteria first, and ensure you gather all the necessary documentation to file your loan application correctly.

Which bank is best for an education loan for abroad?

Several banks are considered the best for education loans for studying abroad. The best bank depends on several factors, such as interest rates, repayment terms, loan amount, processing time, etc.

Can I obtain a 100% loan for my studies abroad?

Yes, you can easily obtain a 100% loan for studying abroad. However, you must provide all the proofs the bank asks and fulfill the eligibility requirements.

How can I avoid loan rejection for studying abroad?

Ensure you are not missing any important information or documents, and thoroughly fulfill the abroad education loan eligibility criteria. Consider having a co-signer or collateral to avoid rejection when studying abroad.

Can I get a student loan as an international student?

Yes, as an international student, you can obtain student loans to meet your needs. However, conditions may vary depending on the lender and their requirements.