Confused Between Education Loan from Bank or NBFC? Clear All Your Doubts Here! | GyanDhan

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.

This is a companion discussion topic for the original entry at

How preferable it is to take a loan from an NBFC?

Is it possible to get an unsecured loan for PG diploma for Canada for more than INR 25 lacs from a private bank?

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.

No. Private banks do not provide unsecured loans for PG diploma in Canada. You can try for an education loan from NBFC.

Why do NBFCs charge a high rate 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.

Which is better - secured loan with margin money or 100% loan cover from NBFCs?

The loan amount is disbursed in which currency? INR or foreign currency?

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.