How to Get Education Loan at Low Interest Rate

It is well known that government banks offer education loans at low interest rates, but few people know how to secure affordable student loans from any bank or NBFC. Here are some practical tips that have helped many students borrow money at much lower interest rates.

Rohan (an imaginary name) is a student who wants to study abroad but has no budget to fund his higher studies. He applied for several scholarship programs, hoping for financial assistance, but received no response. Then he decided to apply for an education loan. Rohan researched this well and found that the interest rate on student loans is high. So, he decided to explore tips and tricks to secure education loan at low interest rate for studying abroad.

You are just like Rohan. Many students in India want to pursue higher education abroad. Expensive fees and high interest rates on study loans push them to put their dreams on hold. Well, there are some ways by which you can reduce the interest rate on your student loan. In this article, we will discuss all those practical tips to get an education loan at low interest rate. This will help you finance your education smartly and affordably.

Tips to Secure a Low-Interest Education Loan for Study Abroad

Securing a low-interest education loan for your overseas education is directly related to saving money. It requires careful planning and extensive research. A good credit score, admission to a reputed university, and applying for government education loans are some of the best ways to lower interest rates and minimize borrowing costs.

Here, we have mentioned 8 most common but lesser known tips to securing a low-interest education loan. These tips will help you to save lakhs on your interest repayment.

1. Opt for a Secured Study Loan: Choose to apply for an education loan with collateral. This will cover the loan amount and bank will offer you lower interest rate loan.
2. Maintain a Good Credit Score: If you have a good credit score, then it’s an advantage. A CIBIL score of more than 750 is considered good. It shows that you treat your money well.
3. Choose a Reputed University & Course: It is well known that pursuing a high-demand course or studying at a top-ranked university increases your chances of securing a low-interest education loan. Lenders consider students from reputed institutions as lower-risk borrowers, making it easier to get better loan terms and lower interest rates.
4. Apply with a Co-applicant: A co-applicant with a good CIBIL score can make you eligible for education loan at low interest rate.
5. Compare Lenders: Doing extensive research and comparing different lenders helps you find the best student loan with lower interest rates.
6. Check for Government Schemes & Subsidies: The State and central government offer interest-free education loans. Students can check such kind of government schemes to reduce their loan burden and secure better repayment terms.
7. Negotiate with the Lender: It’s the most important tip that you should use. If your negotiating skills are great, then you can secure a lower interest rate. Sometimes a lender’s representatives have the authority to reduce your low ROI.
8. Consider Balance Transfer Options: If you found a lender who is offering lower interest rate after taking a loan, you can opt for a balance transfer to reduce your repayment burden. National Banks and NBFCs provide loan transfer options, helping you save money on interest and making repayment easier.

Why an Education Loan at Low Interest Rate Matters?

USA, UK, Canada and Germany are some of the best countries to study abroad. Their top universities and reputed education systems are prior reasons behind this. However, the cost of living and studying is expensive than in India. You need lakhs or even crores to fund your studies. Borrowing an education loan at a high-interest rate can become a financial burden, making repayment challenging. Understand this in a point-wise explanation, mentioned below:

• Lower EMI Payments: A low interest rate means you will pay lower monthly installments.
• Faster Loan Repayment: Lower interest rates allow you to clear your education loan faster without excessive financial burden.
• Less Overall Interest Paid: You will save a significant amount of money.

Related Reads:

• How to Repay Student Loans Faster?
• Step by Step Guide to Education Loans

Factors to Decide ROI of Education Loan

• Type of Loan (Secured vs. Unsecured): The interest rate of secured loan is lower than unsecured loans.
• Credit Score & Financial History: With a good credit history and score, there is a high chance that you will get a loan at a lower interest rate. 750+ CIBIL score is considered a good score.
• Co-Applicant’s Financial Strength: If you have a financially stable co-applicant (parent/guardian), the education loan provided may offer lower interest rates.
• University & Course Reputation: If you have secured your admission in one of the best universities in the world or high-demand courses, then banks will offer you interest rates due to better job prospects.
• Lender Type (Banks and NBFCs): Public sector banks offer education loans with lower ROI than private banks.

Types of Education Loans

Banks and NBFCs offer study loans to students for studying abroad with different terms and conditions. They offer two types of education loans: secured loans and unsecured loans.

1. Secured Education Loans: Such type of study loan requires collateral. You need to pledge something such as property or fixed deposits to banks. The best thing about such loans is that they have lower interest rates. They are ideal for students who can provide security to reduce borrowing costs.
2. Unsecured Education Loans: These loans do not require collateral and come with higher interest rates. Banks offer a limited amount to students, and the approval is based on factors like the student’s academic profile, university ranking, and more.

It is known to all that low-interest education loans reduce the financial burden and make overseas education affordable. It is always suggested to compare the study loans offered by different lenders and their schemes.

Apply for secured study loans and choose reputed universities. With proper planning and informed decision-making, you can successfully secure an education loan at a lower interest rate and achieve your dream of studying abroad.