Advantages of taking loan from International banks:
- No Collateral required
- Flexible Repayment terms
- Online Application
- Paid directly to the student so that student may decide how to spend the money.
- No application fee
- Applying with a creditworthy cosigner may help you qualify and/or receive a lower interest rate.
Indian Banks offer following advantages:
- No Co-signer required
- No prepayment penalty
- Education loan offered at fixed as well as floating interest rate.
Indian versus International Banks
Loan Amount:
International student Loan funds are paid to you, not to the school. This is a great feature in that you can use the funds for living expenses.
However, most of the Indian banks pay the amount directly to the institution abroad.
Repayment Terms:
Repayment of an international student loan can be deferred while you are enrolled full-time, and for six months after you finish. After that, you will have up to 20 years to repay the loan, with a payment due every month. You are also eligible for hardship extensions if you run into unexpected circumstances that prevent you from being able to repay the loan for a short period of time.
Indian banks allow you to repay within 5-7 years after the commencement of repayment. Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.
Co-Signer:
International Student Loan: Typically students can borrow up to their school's cost of attendance. International students are required to have a US Citizen or permanent resident as a co-signer to apply for this loan. The co-signer must have good credit history, good employment history (or other income history if the co-signer is not employed), and must have lived in the US for the past two years. A good US co-signer is critical to getting your loan approved and priced reasonably. The better your co-signer, the better your rate. The co-signer is responsible for paying back the loan if you should default on it.
Indian Banks: Usually for loans up to Rs. 4 lakhs, no collateral security is required. For loans ranging from Rs. 4 lakhs to Rs. 7.50 lakhs, collateral in the form of a satisfactory third party guarantee is required.
For loans above Rs. 7.50 lakhs, collateral security of suitable value or co-obligation of parents/guardian/third party guarantee along with the assignment of future income of the student for the payment of installments may be obtained.
Interest Rates:
International Student Loans: Interest rates are variable, based on the LIBOR plus a margin. LIBOR is always several points below prime, so the margin is from 3.5% to 7.75%, and will be set by the lender based on the credit history of your co-signer and the repayment plan you select. LIBOR changes monthly, up or down, so the rate will be reset monthly. The interest rate will come to around 4-6%.
Indian Banks: The rate of interest for education loan differs from one bank to the other. However, it usually varies from 10 to 15 percent. Some banks offer a choice of fixed as well as floating interest rate. Generally, nationalized banks offer variable interest rates, while private and foreign banks charged fixed interest rates on education loans.
Sallie Mae Loan allows students to borrow up to the full cost of their education, less other aid received. The Smart Option Student Loan helps students save money, build good credit, and pay off their student loan faster. The Sallie Mae Smart Option Student Loan has interest rates that reward good credit.
Interest rates are variable and are reset monthly based on the one-month LIBOR Index.
For more information regarding International Student Loan Click here
To learn more about Indian Banks offering educational loan Click here
Summary
As not everyone can find a family member, friend or other US citizen or permanent resident to co-sign for them, for those that do, they can access private student loans on the same basis as US. So if you are fortunate to have a co-signer in U.S, it is always advantageous to opt for the loan from U.S due to lower interest rate and flexible repayment options. The interest charged is 4-5% compared to around 12% charged by Indian banks.
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