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Education loans for pursuing higher education abroad provide a viable solution, offering the necessary funds to cover these expenses. However, with numerous banks and financial institutions offering loans, finding the one with the lowest interest rate is crucial to minimise repayment costs.
This blog explores which bank has the lowest interest rate on education loans for studying abroad, comparing top lenders, their offerings, and key factors to consider when choosing a loan.
This Blog Includes:
Top Banks Offering the Lowest Interest Rates on Education Loans Abroad
The interest rate on an education loan directly impacts the total repayment amount and monthly instalments. A lower interest rate reduces the financial strain during repayment, allowing borrowers to focus on their studies and career development.
To identify which bank has the lowest interest rate on an education loan to study abroad, we’ve compared leading public and private banks in India based on recent data below. Highlights key lenders, their interest rate ranges, and notable features:
| Bank | Interest Rate (p.a.) | Loan Amount | Key Features |
| Indian Bank | 8.60% – 10.50% | Up to INR 1.5 crore | Lowest starting rate, flexible repayment, no collateral up to INR 7.5 lakh |
| Union Bank of India | 9.25% – 11.00% | Up to INR 40 lakh (unsecured) | Interest-free moratorium, up to 15-year tenure |
| Bank of Baroda | 9.45% – 10.40% | Up to INR 1.5 crore | No processing fees, 0.20% concession for female borrowers (non-premier institutes) |
| State Bank of India (SBI) | 10.15% – 11.75% | Up to INR 1.5 crore | 0.50% concession for female students, government-backed subsidies |
| ICICI Bank | 10.25% – 12.50% | Up to INR 1 crore | Pre-visa disbursement, 100% financing for premier institutes |
| Bank of India | 10.05% – 11.85% | Up to INR 40 lakh (unsecured) | Zero margin up to INR 7.5 lakh, 1% concession for female borrowers |
Also Read:
- Punjab National Bank Education Loan Interest Rates in 2025
- Central Bank of India Education Loan Interest Rate
Private Banks and NBFCs Interest Rates And Processing Time
Private banks and non-banking financial companies (NBFCs) often provide faster processing and more flexible terms, though their interest rates are generally higher than those of public banks. These lenders are ideal for borrowers prioritising the education loan process, like quick disbursal, minimal documentation, or loans for non-premier institutions.
Below is a detailed comparison of 10 private banks and NBFCs offering education loans, interest rates, and key features to study abroad:
| Lender | Interest Rate (p.a.) | Loan Amount | Key Features |
| ICICI Bank | 10.25% – 12.50% | Up to INR 1 crore | Pre-visa disbursement, 100% financing for premier institutes, minimal documentation |
| HDFC Bank | 9.55% – 13.25% | Up to INR 50 lakh | Flexible repayment, no collateral for select institutes, quick approval |
| Axis Bank | 13.70% – 15.20% | Up to INR 40 lakh (unsecured) | Customer-centric, pre-approved loans for existing customers, no collateral for premier institutes |
| IDFC First Bank | 11.00% – 14.00% | Up to INR 75 lakh | Simplified application, covers tuition and living expenses, no prepayment penalty |
| Kotak Mahindra Bank | 11.50% – 14.50% | Up to INR 50 lakh | Online application, customised loan solutions, no margin for premier institutes |
| Yes Bank | 11.25% – 13.75% | Up to INR 60 lakh | Fast disbursal, flexible tenure up to 12 years, covers 100% costs for select courses |
| HDFC Credila | 11.75% – 13.50% | Up to INR 75 lakh (unsecured) | Quick disbursal, no collateral for high-value loans, tailored repayment plans |
| Avanse | 11.00% – 15.00% | Up to INR 75 lakh | 100% financing, minimal documentation, supports vocational courses |
| InCred | 11.50% – 14.00% | Up to INR 60 lakh | Easy online process, covers tuition and living expenses, no prepayment penalty |
| Auxilo | 11.80% – 14.50% | Up to INR 60 lakh | Flexible terms, no collateral for select courses, supports diverse universities |
While these lenders may not offer the lowest rates, their customer-centric approach and faster processing make them suitable for those prioritising convenience.
Key Factors Influencing Abroad Education Loan Interest Rates
Several factors determine the interest rate offered by banks, affecting the overall cost of the loan. Here are the key factors influencing education loan interest rates:
- Loan Type (Secured vs. Unsecured): Secured loans, backed by collateral like property, typically have lower interest rates than unsecured loans to study abroad.
- Credit Profile: The co-applicant’s credit score and financial stability influence the rate offered.
- Institution Ranking: Loans for premier universities often come with lower rates due to lower perceived risk.
- Loan Amount and Tenure: Larger loans or longer tenures may have varying rates based on bank policies.
- Government Subsidies: Schemes like Padho Pardesh or Central Sector Interest Subsidy can reduce effective rates for eligible borrowers.
Tips to Secure the Lowest Interest Rate on Abroad Education Loan
To ensure you get the best possible rate on an education loan for studying abroad, consider these strategies:
- Compare Multiple Lenders: Research banks like Indian Bank, Union Bank, and Bank of Baroda to find the lowest rates and best terms.
- Opt for Secured Loans: Pledging collateral can significantly lower interest rates compared to unsecured loans.
- Check Eligibility Criteria: Meet all requirements, such as admission to a recognised university and a strong co-applicant credit score, to negotiate better rates.
- Explore Government Subsidies: Schemes like Padho Pardesh or Dr. Ambedkar Central Sector Scheme can reduce effective interest rates for eligible borrowers.
- Use EMI Calculators: Tools like fly.finance education loan EMI calculator
- or those on bank websites help estimate monthly payments and total interest, aiding in better financial planning.
Also Read:
- HDFC Bank Personal Loan Interest Rate: Types, Calculation
- Bank of Baroda Personal Loan Interest Rate
Choosing the right education loan involves more than just finding which bank has the lowest interest rate on education loans for studying abroad. Consider factors like loan amount, repayment tenure, moratorium period, and additional charges. For the latest rates and detailed terms, visit the respective bank websites or contact their loan advisors.
FAQ
Indian Bank provides the lowest starting interest rate at 8.60% per annum for education loans to study abroad, followed by Union Bank of India (9.25%) and Bank of Baroda (9.45%).
The secured education loan requires collateral (e.g., property or fixed deposits) and typically has lower interest rates (8.60%-10.50%). Unsecured loans need no collateral but come with higher rates (10.25%-15.20%).
Most banks require a co-applicant (e.g., parent or guardian) with a stable income or good credit score to ensure repayment. Some NBFCs like Avanse may offer loans without a co-applicant for premier institutes, but rates are higher.
Opt for a secured loan, choose a bank offering concessions (e.g., 0.50% for female borrowers at SBI), or apply for government subsidies like the Central Sector Interest Subsidy Scheme.
Banks like Indian Bank, SBI, and Bank of Baroda offer up to INR 1.5 crore for secured loans, while unsecured loans typically cap at INR 40 lakh (Union Bank) or INR 75 lakh (HDFC Credila).
Indian Bank is a top choice due to its low starting rate of 8.60% and flexible terms. Union Bank and Bank of Baroda are also strong contenders for their competitive rates and benefits, like no processing fees.
Government schemes like Padho Pardesh and the Central Sector Interest Subsidy Scheme provide interest subsidies during the moratorium period for eligible borrowers from economically weaker sections.
Repayment periods vary by bank but typically range from 7 to 15 years. Union Bank offers up to 15 years, while Indian Bank provides flexible tenures based on the loan amount and borrower profile.
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