The interest rates have to be the first thing that students check while taking out abroad education loans because even a 0.5 percent difference in interest rates can have a significant impact on students in the long term.

The education loan interest rates offered by private lenders are subject to how good the students' profile is. Despite this, the interest rates offered by government banks are at least 2-3% lower than that of private lenders making them the cheapest student loan interest rate option available for students.

However, one thing which everyone needs to remember is that the abroad education loan interest rates of various lenders depend on a lot of factors. This article aims to shed light on these factors, as well as list the latest values of the education loan interest rates charged by the various types of lenders in India.

You can find all the latest interest rates by watching the latest episode of Loanflix Inshorts below.

How are the values of an abroad education loan interest rate decided?

The abroad education loan interest rate in India is determined by lenders on the basis of something called the MCLR, or Marginal Cost of Funds-Based Lending Rate. This figure is often considered to be the benchmark on the basis of which most Indian lenders of education loans calculate the abroad education loan interest rates. The MCLR is calculated by taking into account various factors such as the tenure premium, the marginal cost of funds, the operating cost, etc.

Government bank education loan interest rate

Government banks usually provide collateral education loans for abroad studies, and the interest rates for abroad education loans from major Government banks are-

Interest rate of education loan without collateral from Private Lenders 

NBFCs and private banks are some of the major providers of unsecured education loans in India. Since these loans do not involve collateral security of any kind, the interest rate of education loans without collateral is higher compared to those of government bank education loans interest rates. The interest rates for abroad education from major Private banks are-

NBFCs education loan interest rate

There are 4 NBFCs in India Auxilo, Avanse, Incred, and Credila that offers education loan to students for their abroad studies. Their interest rate is subject to case to case basis. The education loan interest rate charged by NBFCs varies depending on numerous factors. One of them is the country of study chosen by loan applicants. Here is an overview of the estimated education loan interest rate levied by NBFCs for the following countries:

Overall, the interest rate of education loans without collateral from NBFCs may roughly vary between 11% to 13.5%. The next category of lenders is of foreign lenders. Let us take a look at the education loan interest rates charged by them.

Abroad education loan interest rate of foreign lenders

Foreign lenders follow a different set of education loan policies. The same applies to their foreign education loan interest rates. The foreign education loan interest rates of foreign lenders are calculated on the basis of something called LIBOR or London Inter-Bank Offered Rate. LIBOR values vary almost every two months and this variation affects the final abroad education loan interest rate of foreign lenders. The difference in currency values also plays a significant role in determining their foreign education loan interest rate.

Foreign lenders levy education loan interest rates that vary between 8.5% to 11%. However, since the abroad education loan amount is in USD, this 8.5% is interpreted as 13.5% when you convert it in terms of the INR. This concept is clearly explained in the 10th episode of Loanflix. So do make it a point to watch the same.

When students directly approach lenders in India for an abroad education loan, various factors of the education loan schemes such as the abroad education loan interest rates, the education loan repayment terms, etc are often lost in translation.

This is when the guidance and assistance of organizations like WeMakeScholars come in handy. Students who apply for their unsecured loans through the financial team of WeMakeScholars get to avail an additional 0.5% waiver on their existing abroad education loan interest rates. So do request a callback at the earliest possible instance.