Getting lowest-interest Education Loan in India - Complete Guide

MBA is one of the most coveted courses worldwide - it is a gateway to well-paying and respectable jobs. However, paying for an MBA course can be a costly affair. Thus, it is advisable to get an MBA Student Loan to reduce your financial burden.

Many banks offer Education Loans for MBA in India and abroad. As with any kind of loan, the interest rate plays a major role here. Find out how to get the lowest interest rate on your MBA Student Loan.

Getting the lowest interest rate on Education Loan

If you are planning to take a Study Loan for MBA, your main concern should be getting the desired loan amount at a minimal interest rate. Several banks offer Study Loans for an MBA in India. The interest rate is a combination of the repo rate and the spread. The repo rate is decided by the RBI and is common for all banks. It is revised every 3 months. The spread varies from bank to bank.

Do a thorough check and compare the lenders who offer good deals on Education Loans for MBA. For example, Axis Bank offers an Education Loan for MBA at an interest rate of 13.7% p.a. for an amount above ₹7.5 lakh. For premier courses abroad, it offers unsecured loans for amounts as high as ₹75 lakh and tenures up to 15 years. You can check the EMI Calculator for Study Loans for MBA to arrive at an amount and tenure that suits your requirements.

Low interest rate Student Loans: Eligibility criteria

Following is a list of some general criteria followed by lending banks for a Study Loan for an MBA in India-

• You should be an Indian citizen.
• You need to have a minimum of 50% marks in HSC and graduation.
• You should secure admission to a reputed MBA college in India or abroad based on an entrance exam or merit.
• Your co-applicant, like your parents, siblings or guarantor, must have a regular source of income and a credit score above 700.

How to reduce Education Loan interest rates

You can explore the below strategies to get lower interest rates on MBA Education Loans:

• Improve your credit score to be eligible for a lower interest rate
• Inquire about interest discounts on certain categories, for example, admission to top-tier colleges has lower interest rates.
• Negotiate with the lender as best as you can
• Avoid a loan without collateral as it might attract a higher interest rate

How to get the lowest interest Education Loan in India

Here are a few ways that will help you get an Education Loan for an MBA in India at the lowest interest rates -

Loan against collateral: A collateral is a security instrument like a property, Fixed Deposits or shares against which you can take an Education Loan in India. If you take a Study Loan for an MBA without collateral, you might get a higher interest rate because it is unsecured.

Opt for a short loan tenure: Your loan tenure could be around 8 years if you take an Education Loan for an MBA without collateral security and 10-15 years if you provide collateral. A shorter loan term means you can save significantly on interest payments, but a longer tenure makes monthly EMIs more manageable.

Pay EMI during the moratorium period: Banks generally give a moratorium period of 6 months to 1 year after course completion. If possible, pay your full EMIs right from the start of your Study Loan for an MBA. Only simple interest is charged during the moratorium period. This can significantly reduce your loan burden from the start.

Tax advantage under Section 80E: You can claim a tax deduction for the entire interest portion of your Education Loan for an MBA for a period of 8 years. There is no maximum limit on this deduction. This applies to yourself, your spouse, your children and even a legal guardian.

Central Government Interest Subsidy Scheme for Education Loans

You can avail of a Government Education Loan for an MBA under the Central Government Scheme. Its salient features are as below -

• It is available for the Economically Weaker Section (EWS) category. You will be eligible for the interest subsidy scheme if your family income is under ₹4.5 lakh per annum.
• It applies to Study Loan for MBA in India only and the limit of the loan amount is ₹7.5 lakh.
• The list of colleges under this scheme is declared by AICTE and UGC and is published on their websites.
• Documents required for an Education Loan for an MBA under the scheme are an income certificate and a Bonafide Student Certificate.

Loan against property

Sometimes it may happen that the Education Loan amount may not suffice your MBA course fee requirements. In such a scenario, you may take a loan against your property.

• It might fetch you a higher loan amount. This can be used in place of an Education Loan for an MBA abroad, which is more expensive.
• You do not need to check if government agencies approve your college to be eligible for a loan.

Conclusion

Turn your dream of becoming an MBA graduate into a reality by taking an MBA Student Loan. You can use Axis Bank's Education Loan for MBA Calculator to calculate possible EMIs and arrive at a loan amount that satisfies all your requirements. To get the best interest rates on your Education loan for an MBA, you need to plan carefully and examine your financial needs and obligations.

Also Read: How to select the right Education Loan for you?

FAQs

Q1. Can I get an interest-free Education Loan?

No, all banks charge a certain interest which is linked to the repo rate. However, you may claim the interest amount for tax deductions for up to 8 years.

Q2. What does an Education Loan include?

Education Loans include fees for tuition, hostel and mess, examinations, library / laboratory charges, laptop / study material costs, instrument / uniform expenses, travel expenses (for abroad), etc.

Q3. How to get an Education Loan with less interest?

There are several ways to get a low interest rate loan, like taking a loan against collateral, keeping a good credit score, keeping the loan tenure short, and comparing various lenders.

Q4. When does the Education Loan disbursed amount appear in your account?

Once you submit all the necessary documents and pay the processing fee and margin amount, the bank will take 3-4 days for the disbursement of your loan.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.