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About Education Loan

A barebones explanation for an education loan is thus, funds offered by financial institutions to meritorious and deserving students so that the latter can pursue their basic or higher education in India or abroad. Almost all banks & some NBFCs in India offer education loans, and the demand for it has remained stable with the Indian student community.

Features & Benefits

Tax Concession

One of the benefits of education loan is the deductible interest rates on your education loan from your taxable income till 8 years as per the Section 80E of the Income Tax Act, 1961....more

Easy online loan approval process

Online application platform like Afinoz provides faster loan approval application process with zero processing fees....more

Marginal Interest Rates

Low and fixed interest rates are offered by nationalized banks which do not fluctuate during the repayment timeline of the loan.

Flexible repayment options

There is no need to start the repayment of the loan immediately after completing your studies. ...more

Security

Most of the banks offer you with an option to take insurance on your education loan wherein ...more
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Eligibility & Documents Required

Education Loan Eligibility Criteria

For an individual to be eligible for education loan in India, certain eligibility criteria must be fulfilled:

Citizenship
Age
Good Marks
Co-applicant eligibility
Employment
Eligible courses
For Studies in India
For Studies Abroad

Citizenship

Any individual applying for an educational loan must be a citizen of India.

Documents Required For Education Loan

You would need to submit the following documents along with the completed application form for the education loan process:

Identity proof
Residence proof
Admission proof
Co-applicants documents
If Salaried
If self-employed
Students Academic Score Documents

Identity proof

(Any one) Aadhar Card / Voters ID / Passport / Driving License / PAN Card of the applicant and co-applicant.

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Interest Rate & Charges

At Afinoz you can avail the best in class education loan products, not only at a competitive price but also keeping in mind many other benefits that you can take advantage of. Rates of some of the major institutions providing education loan are given below.

Bank
Interest Rates*
Processing Charge
Axis Bank 13.5% – 15% NIL
HDFC Bank Ltd 9% - 13.75% Up to 1% of the loan amount
ICICI Bank Ltd 10.75% - 11.75 NIL
TATA Capital 11% - 15% Max. up to 1% of the loan amount
RBL Bank Ltd. 14.15% - 15.15% NIL
Kotak Mahindra 11.5% - 24% 0.5% of the loan amount
IIFL 13.50% - 18% N.A
Avanse 11.50% - 14.50% Up to 1 % of the loan amount
Aditya Birla capital 11.75% - 13.75% 1% of the loan amount ( one time)

Disclaimer:*Rates are subject to periodic changes. Education loan interest rates & other fees/charges are subject to regular reviews and can vary with every customer. These can differ depending on a few factors. The final interest rate will be based on different criteria including the bank’s internal policies & applicable rates at the time of approval. Please note that the interest rates provided here are based on market research. To facilitate the comparison insight, certain sets of data has been reorganized/restructured/tabulated. It is advisable to recheck the same with the individual companies / organizations. This website does not take any responsibility for any sudden or uninformed changes in interest rates. Banks or Financial Institutions can contact us at info@afinoz.com for inclusions or updates.

For any further query, please visit us at afinoz.com, contact us at +91-9899889816 or email us at info@afinoz.com .

FAQ's

Q.
What are the benefits of an education loan?
Benefits of Education Loans:

Pursue higher studies: Best way to get higher education in India or abroad while avail financial support is by applying for an education loan.

Easy availability: Applying for educational loans through online service providers like Afinoz, has made it easy to process and get loans approved in no time.

No penalty for early repayment: No charges/penalties against pre-payment of the loan.

Deductible Interest rates: You can deduct the interest you are required to pay from your taxable income and reduce some of your burdens.

Q.
What type of courses can I apply an Education Loan for?
Education loans can be availed for all graduation, post-graduation and professional courses approved from foreign universities or universities authorized by the state and central government of India.
Q.
If the loan request has been rejected by bank once, can I apply again?
Yes, you can re-apply for an education loan to a bank if you have fulfilled all the requirements and the necessary documentation of eligibility.
Q.
Will education loan cover my accommodation expenses for courses in India?
An education loan generally covers your tuition fees, books and library fees, examination fees, lodging charges, travel expenses and if necessary some other expenses granted you are not exceeding your loan amount limit.
Q.
How is the disbursement of an education loan made?
The educational loan will be disbursed in full or in installments directly to the educational institute or university depending on the specific requirements of the institute. While the other expenses related to the loan like books, the hostel will be disbursed in installments over the duration of the study and will be transferred to co-applicant’s account. For abroad courses, a third party service provider will be consulted for loan disbursement.
Q.
Do I need to provide security/collateral while applying for an education loan?
If the loan amount is less than 4 lakhs then security is not required, but you need to provide a co-applicant as a guarantor. However, for loan amounts of more than 4 lakhs banks demand a tangible property of suitable value as a security.
Q.
When do I start repaying my educational loan?
If you want you can pay your EMI's or interest servicing during the period of your course. Generally, banks in India provide repayment option of one year after the completion of your course or 6 months after the starting of your job, whichever is early.
Q.
What are the charges for processing an education loan?
Most of the banks and NBFC's do not charge any processing fee for education loan. However, some banks may incur a small processing fee of 1-2% of the total loan amount to cover the operational costs.
Q.
What is meant by margin money?
Usually banks do not sanction 100% of your required loan amount. Only a portion is provided by banks, while the rest 20% needs to come from your funds. In an education loan, the student's contribution is referred to as the margin money. For example, let’s just assume your course fee is 10lakhs and bank agreed to fund 80% of your total loan amount. So, the remaining 20% (4lakhs), which is margin, needs to come from your pockets.
Q.
How much fee will be funded by the bank?
  • For loans up to 4 lakhs : Entire loan amount will be sanctioned by the bank.
  • For loans above 4 lakhs: Studies in India: 5% margin needs to be funded by the student.
  • Abroad studies : 15% margin needs to be brought by the student.
Q.
Can management quota students avail the benefits of education loans?
Yes, even management quota students can get educational loans for pursuing higher studies. But the rate of interest charged will be slightly higher based on the student's academic records and the credit history of co-applicants.
Q.
What is the repayment schedule for an education loan?
The repayment would begin one year after the course period or six months after you get a job, whichever is earlier. You are expected to pay a minimum amount equivalent to the EMI on a monthly basis. However, you can choose to pay more than the EMI, and we do not charge any prepayment penalty.
Q.
Do I need a co-applicant?
If the loan amount is less than 7.5 lakhs then bank demands for a co-applicant as a guarantor instead of any security.
Q.
What is a moratorium period?
In education loan, it is not mandatory for you to start repayment of the loan from the day you finish your studies. Bank provides you certain waiting period called the moratorium period after which the repayment of loan commences.
Q.
Can I make repayments during the moratorium period?
You can repay the interest credited during your moratorium period to reduce the burden of EMI’s to some extent afterward.
Q.
Will the education loan application process affect my credit score?
Like any other loan, education loans can also impact your credit score depending on your repayment behavior. Not paying your credit card dues on time or delayed EMI payments can have a negative effect on your credit score.
Q.
Is there a penalty for repaying the loan early?
No penalty is charged on the applicant for early loan repayment.
Q.
Can I get an education loan in the second or third year of my studies?
The answer is yes. If your percentages are good then you can avail an educational loan during any time of your course studies.
Q.
What is the maximum amount of education loan, which I can avail?
For abroad studies, the maximum amount of loan you can get is up to Rs. 20 lakhs. While the maximum loan amount sanctioned for studies in India is 10 lakhs.
Q.
What is the mode of repayment?
You can draw a cheque in favor of the borrowed bank or if you have an account with the bank then the monthly EMI will be directly debited from your account on due dates.
Q.
What is the tenure of the loan?
The commencement of repayment starts after one year of course completion or 6 months from joining a job. The loan should be re-payed within the tenure of 5 to 7 years after the commencement of repayment.
Q.
What tax benefit do I get by taking an education loan?
As per the Income Tax Act Section 80E, you might be eligible for a deduction from your taxable income on entire loan interest. Given the loan was taken from a recognizable financial or charitable institution.