HDFC Education loan: Interest rate and its Pros and Cons
As the number of students pursuing education abroad is increasing, many banks have started lending educational loans with attractive schemes to these students for studying overseas. One such popular educational loan scheme was offered by Credila which was then taken over by HDFC to form HDFC Credila education loan. The HDFC education loan helps students achieve their dream of studying abroad in more than 35 countries.
Eligibility criteria- HDFC education loan
- Both, you and your co-applicant must be an Indian citizen.
- The co-Borrower must have an Indian bank account with cheque facility.
- Proof of admission in a university prior disbursement.
Interest rate– HDFC education loan
The aspect that needs to be taken into utmost consideration while applying for an education loan is its interest rate. HDFC education loan has a floating rate of interest that is the sum of Credila’s CBLR plus Spread (similar to Public banks’ MCLR plus spread). HDFC changes the spread with your profile and can be as low as zero and hence CBLR is the minimum possible loan. It lies from 11% to 14.5%, check current CBLR here. Currently, it has a lending rate of 12.10% per annum on an average. HDFC Credila education loan interest rate is subject to change from time to time.
Expenses covered- HDFC education loan
HDFC Education Loan covers tuition fees, living expenses, travel expenses and expenses such as examination fees, laboratory fees etc.
Lending limits- HDFC education loan
Under HDFC education loan scheme for foreign education, you can avail a loan starting from INR 1 lakh. It does not have an upper limit for the amount of loan that can be sanctioned.
Repayment tenure– HDFC education loan
You need to start repaying immediately after disbursement of the first installment of the loan amount. You can repay the loan amount up to 12 years after the moratorium period.
Collateral or non-collateral education loan – HDFC education loan
Depending on the loan amount that you need, you may be required to pledge collateral security either in the form of an immovable property such as, residential flat/house/non-agricultural land or in the form of liquid security such as a fixed deposit issued in favor of HDFC Credila. Usually, if you plan to take a loan up to 4 lakhs, then it is collateral free. If the loan amount is above 4 lakhs, then you may have to pledge collateral except for countries like the USA, Canada, Australia, and Germany.
Co-applicant requirements– HDFC education loan
As per the terms of HDFC education loan mentioned on their product profile, the co-applicant must be an earning individual in India – father/mother/brother/sister (married)/spouse. By earning member, it means that you need to provide a proof of income preferably in the form of ITR. In addition, a documented evidence must be presented to indicate the relationship that the co-applicant shares with you. Your maternal or paternal aunt or uncle; grandparents; first cousins; if you are married, then your in-laws are also eligible to be the co-applicant if any one of the aforementioned co-applicants fails to provide collateral.
Application process– HDFC education loan
You need to fill the online application form after which HDFC Credila education loan team will follow-up with you. A representative will visit your house and you have to provide the filled application form along with the supporting documents. Credit team will review your application and approve the educational loan. You will be required to sign the education loan agreement and thereafter, disbursement of funds will take place electronically.
Documents required– HDFC education loan
Following documents are required to apply for an education loan at HDFC bank.
- Filled Application Form
- Photos – Applicant and Co-Applicant
- Photo ID (Applicant and Co-Applicant)- Provide any one of the following
- PAN card, Aadhaar card, Driving license, Passport or voter’s ID
- Proof of Residence
- Proof of Admission (If available)
- Documents related to your Academics
- Financial statement
- Co-Applicant’s Income Proof
- Immovable Property Documentation, if the collateral is needed
Pros and Cons of choosing HDFC Credila Education loan:
- You can avail a loan without collateral, as high as INR 35 lacs for US and upto 20 lacs for other countries.
- You can avail 100% expense coverage. Other financial lenders that provide complete expense coverage, include NBFCs such as, Avanse and Incred whereas public banks always have a loan margin.
- HDFC education loan interest rate is quite high as compared to banks like Punjab National Bank, SBI, Bank of Baroda, Canara which have interest rates ranging between 9.45% to 10.5%. For more information, you could see Education loan interest rates- Comparison between public and private sector banks in India.
- You cannot avail an HDFC Credila loan if your co-applicant is retired
- A co-applicant with ITR is mandatory for Credila whereas nationalized banks does not have this requirement.
- Credila does not accept third party collateral security whereas banks like SBI do.
- As per HDFC Credila’s terms, you need to pay at least partial or full interest during your course of study.
- HDFC Credila charges a high processing fee which is equivalent to a certain percentage of the loan amount (usually 1% of the loan amount plus 18% GST on that).On the contrary, banks (both public and private) have a fixed processing fee that lies between INR 5,000 to INR 10,000.
Now, the choice is yours to make!