Floating vs Fixed Interest Rates in IDFC Education Loans

The IDFC is one of the top private banks that students apply to for an education loan for abroad studies. This is because of the interest rate options that the bank is offering on loans. 

IDFC not only provides education loans but also offers the flexibility of choosing between the floating and fixed interest rates.  

This sounds very simple, but knowing the difference can actually make a big difference in repaying the education loans. To make a wise decision, it is important to know the fine print of the interest rates of the education loans.

What are the IDFC Education Loan Interest Rates

IDFC offers both secured and unsecured education loans. IDFC offers education loans at a competitive interest rate in the education loan. The basic interest rates start at 9.5%. IDFC also allows students to choose between the floating and fixed interest rates. Knowing all about these interest rates can help students make informed decisions. 

Students can choose between:

1. Fixed Interest Rates

2. Floating Interest Rates

IDFC Fixed Interest Rates

As the term itself says, the fixed interest rates remain fixed throughout the loan tenure. The interest rates will not change and will remain the same from the beginning to the end of the loan tenure. The EMIs are fixed till the end of the tenure. Market fluctuations will not influence these interest rates; they stay fixed.

IDFC Products on Fixed Interest Rates

There is a special education loan product in IDFC where the student can choose a fixed ROI option. i.e., ROI won't change till the student repays the entire loan.

These categories are based on the listing and ranking of the universities. IDFC has a list of colleges based on the opportunities and the ranking of the universities. Students must make sure that their university falls under that list.

Pros

• Since the interest rates stay constant, it is easy for the borrowers to plan their finances and spend their money accordingly.

• The risk associated with these interest rates is lower than the floating interest rates.

• Even if there are any fluctuations in the financial market, the interest rate will remain the same.

Cons

• No benefits on interest rates if the financial market is low and the lender reduces the interest rates.

• Fixed interest rates are generally higher than floating interest rates.

IDFC Floating Interest Rates

The floating interest rates are fluctuating, which means the interest rates keep changing as per the financial market conditions. The interest rates and the EMIs can go up and down. This is because the interest rate is directly linked to the bank's internal Marginal Cost Lending Rates (MCLR). This MCLR is influenced by the repo rate, which means MCLR includes it.

MCLR is the minimum interest rate at which the bank can offer loans. Generally, banks mention their interest rates on their official websites as MCLR plus X%.

Let us understand this with an example:

• Let us assume that the current MCLR(including repo rate) is 7%
• Then today’s interest rate would be 7% + 2%(standard premium) = 9%

In case the MCLR changes, subject to market conditions like repo rate, and comes down to 6.5%

• The interest would be 8.5%,
• Similarly, if the MCLR increases to 7.5%, the  interest rate becomes MCLR + 2% = 9.5%      

Pros

• If the financial market falls, the EMIs change, and you can save more money by paying a lower EMI.

• The floating interest rates are lower than the fixed interest rates.

Cons

• There is always a higher risk that the interest rates will increase.

• The floating interest rates are volatile and unpredictable, which can make financial decisions more complex.

• The risk associated with these rates is higher compared to fixed interest rates.

Comparison Between the Fixed and the Floating Interest Rates

Factors to Consider

These are some factors that you need to check before choosing the interest rates:

• It is important to understand the basic market trends. This will help you decide if you can take market risk or choose another alternative.

• The financial condition must also be taken into consideration while choosing the interest rates.

• Consider the loan tenure to decide which interest to choose, which is one of the factors to choose the interest type.

• Ultimately, it is recommended that if the applicant is ready to face the financial fluctuations of the market, then they can go for floating interest rates.

• These interest rates are volatile, and they must pay the EMIs as per the revised EMIs of the bank. Whether the EMIs are higher or lower.

Eligibility Criteria to Secure an IDFC Education Loan

The eligibility requirements may vary slightly by student profile, loan type, etc. However, the general eligibility requirements may include:

1. Citizenship: Both the applicant and co-applicant have to be Indian citizens.

2. Admission Status: The student must secure admission from a recognised university or college.

3. Co-applicant Requirement: Most of the education loans require a co-applicant. A strong co-applicant can enhance education loan approval chances.

4. Age limit: Typically, students aged between 18 and 35 are eligible to apply for education loans

5. Collateral Requirement: As previously discussed, IDFC offers both secured and unsecured education loans. For secured loans, the student is required to pledge collateral to secure the loan amount.

 The Documents Required to Get an IDFC Education Loan

The documents required to secure an SBI Education loan vary based on the education loan scheme, type of education loan, students' profiles, etc. However, the basic documents list is as follows.

1. Application Form:  A filled-out loan application form provided by the bank.

2. Identity Proof: KYC Documents confirming the identity of the applicant and the co-applicant.

• • PAN card

  • Adhaar card

  • Passport etc

3. Admission Confirmation: A document confirming the admission status of the student.

4. Academic Records: Previous academic records of the students, such as 10th, 12th, graduate, post-graduate, etc.

5. Co-Applicant Financial Documents: Lenders check the credit history and financial status of the applicant and the co-applicant.

6. Collateral Documents: If the student is opting for a collateral education loan, the necessary collateral and other related documents, as requested by the banks, are to be submitted.

How to Apply for an IDFC Education Loan

You can apply for IDFC Education loans in various ways. 

• Visit the IDFC official website and research the education loan products.

• Check your eligibility and confirm that you meet the eligibility requirements mentioned by the bank.

• Know the document checklist.

• Arrange all the required documents and submit them to apply for a student loan.

To ease the loan application process and save time, students can also apply online through WeMakeScholars.

How to Apply Through WeMakeScholars

• Step 1: Visit the WeMakeScholars website and request a callback.
• Step 2: Within 1-2 days, you will receive a call from our financial officer assigned to you.
• Step 3: The financial officer, based on the details you provide, analyses your profile and suggests a loan type, documents required, etc.
• Step 4: A secure documents upload link will be shared with you to upload the necessary documents.
• Step 5: From here onwards, your financial officer takes charge and keeps you updated with the status of the loan and ensures a smooth and hassle-free education loan process.

Our financial officer negotiates better terms and shorter processing fees with the IDFC.

Conclusion

IDFC offers education loans at competitive interest rates. However, knowing the footprint of the interest loan pricing helps students make informed decisions about the education loans. In this blog, we have covered the IDFC education loan pricing and clearly differentiated between the floating and fixed rates of interest. This can help students save a lot of hard-earned money on interest rates and make them ready for unpleasant financial hardships.