Financing is a major hurdle in your study abroad dream. As India’s first education loan startup, we have tied up with several banks and Non-Banking Financial Companies (NBFCs) to bring the best education loan options to you.
Ideally, the best loan to opt for is a secured loan from a public sector bank because not only do you have a security backing you, but also the interest rate is comparatively lower. Also, loans from public sector banks are eligible for tax benefits. An NBFC comes to your rescue when you have a low CIBIL score and weak academic profile. In such cases, you can rely on getting an education loan from NBFCs, but you will have to pay higher rates of interest.
NBFCs charge a high rate of interest because they borrow funds from other lenders like public sector banks and private investors. The average cost of borrowing is 9.5%. To get their margin, they charge more than 9.5% from the students. NBFCs offer unsecured education loans to students which further pushes up the interest rate. Unsecured educations loans are riskier than secured education loans and therefore, cost more in terms of interest rate and processing fees.
A secured education loan with margin money is a better option than a 100% loan cover from NBFCs. Unsecured education loans generally cost students more than secured loans. The rate of interest, total interest that you’d pay are on the higher side in the case of NBFCs. Margin money would be at best 10% in a secured education loan. For example, you take an education loan of INR 40 lakhs. The margin money would be INR 4 lakhs. Whereas, the interest you’d pay in an unsecured education loan would be more than INR 4 lakhs. You can calculate the total interest that you’d pay on GyanDhan’s EMI Calculator.