Transfer the student loan to PSB for better rates
Many students pursuing studies in India are looking to transfer their student loans to public sector banks (PSBs) to reduce their expenses.
“On average, the student borrower saves around 4% when doing a balance transfer,” said Arjun Krishna, co-founder of WeMakeScholars.com, an online consultant for loans and scholarships.
According to Krishna, public sector banks offer loans of around 9.3%, and students who already have loans from private non-bank financial corporations (NBFCs) pay around 13-14%.
Government banks also charge lower rates for leading institutions such as IIT (Indian Institute of Technology) and IIM (Indian Institute of Management).
Many utility organizations waive the processing fee when they take over the education loan and offer longer repayment terms.
When taking out a new loan, private lenders are more flexible. They offer higher loan amounts and for a variety of courses. PSBs offer lower interest rates but have a list of institutes to which they lend.
It is also possible to obtain a moratorium on PSBs during the course of the course. In the case of private lenders, they charge a portion of the interest shortly after disbursement.
“Government banks take over the loans once full repayment begins. The student borrower does not benefit from any moratorium on loan transfer. The main reason for postponing the loan is the interest rate differential, ”Krishna said.
Eligibility, however, varies from government bank to government bank. For example, the State Bank of India supports loans up to ₹1.5 crore and offers a repayment term of 15 years. However, it requires the minimum amount of the current loan. ₹10 lakh and guarantee covering 100% of the loan amount.
If you have collateral with the existing lender, it will be transferred to the government bank. If there is no collateral, the student borrower will need to provide a new collateral that covers 100% of the loan amount.
The borrower will also need a co-borrower, who acts as a guarantor.
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