• Education Loans
Impact of CIBIL on interest rates, disbursal TAT & Loan Amount
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Education Loan is one of the tools used by international students to fund their foreign education. The CIBIL score is one of the factors that affect education loans. Read this article to know how a high CIBIL score can get students a higher education loan with a lower interest rate and how students can improve their CIBIL score to get a study loan at an affordable rate.
Table of Contents
- • Reasons to Study Abroad
- • Benefits of a High CIBIL Score
- • How to improve your CIBIL score?
- • How are interest rates determined by banks?
- • Interest Rates of Different Banks for Study Abroad Education Loan
- • How does the CIBIL Score impact interest rate?
- • How does CIBIL Score impact the amount of loan?
- • What impact does CIBIL have on disbursal TAT?
Reasons to Study Abroad
Reasons to study abroad | Description |
Life Experience | For many international students, this could be one of the longest distances they would travel, and for many international students, it would be their first time. Students can take this opportunity with both hands and make the most of it by learning about culture and traditions, making new friends, learning new languages, and visiting the country's best locations. |
More Career Opportunities | Students can find ample job opportunities in various fields after studying at a top university in a popular destination like the USA, UK or Canada. This is because they get to learn in-demand skills. |
New Cultural Experience | While studying abroad, students will be able to experience the culture and traditions of that country. They will get the chance to explore fresh food and places. For example, students can go to the beaches while studying in Australia. |
Personal Development | Studying in a foreign country makes students mature as they care for their food, clothes and many other things. They become more responsible as they have to live on their own. The new place might initially overwhelm them, but later, they get used to it. |
World-Class Education | Studying in a foreign country like the USA, UK, Canada, and Australia allows students to study at top universities in the world. The faculties of these universities teach real-life skills to students and make them job-ready after graduation. |
Benefits of a High CIBIL Score
How to improve your CIBIL score?
Have a mix bag of loans | If a borrower takes too many unsecured loans then the bank sees it as negative and may even decline the loans. Therefore, one must have both unsecured loans and secured loans. |
Monitor CIBIL Score Regularly | All credit rating agencies provide annual free credit report by looking at which students can check for any errors. They will get to know if they have forgotten any loan payment. One can make sure that they have a good credit history. |
Never withdraw cash with credit card | Many times students might think that withdrawing cash with credit card is same as debit card but it’s not true. Students might be charge a higher interest rate for the money withdrawn through credit card. |
Timely Repayment | 33% of the credit score comes from the payment history hence one must make the timely payments. One can also download apps that remind them of the payment. Another way to avoid delay payments are to set up automatic payments through which the payment will automatically be deducted from the account. In this method you just have to make sure that there is minimum balance. |
How are interest rates determined by banks?
CIBIL Score | CIBIL score is the primary factor considered when giving loans to borrowers. A high CIBIL score lets the borrower get an education loan at a lower interest rate. |
Repayment Tenure | While it doesn’t apply to all the banks some loan providers may charge interest rates if it requires a long duration. |
Relationship with the bank | Banks or financial institutions may offer lower interest rates for existing customers. |
Type of Loan | The interest rate also varies according to the type of loan the borrower is availing. Further interest rates also vary whether the loan is secured or unsecured. |
Interest Rates of Different Banks for Study Abroad Education Loan
Name of the Bank | Interest Rate Offered | Maximum Loan Amount | Repayment Tenure |
ICICI Bank | 9.50% to 14.75% | Rs. 2 Crore | • Up to 10/12 years for Under Graduate • Up to 12/14 years for Post Graduate |
HDFC Credila Bank | 13.80% | No Upper Limit | 12 years |
Axis Bank | • 15.20 Upto 4 Lakhs • 14.70 for loans between 4 lakhs and 7.5 lakhs • 13.70 for loans greater than 7.5 lakhs | No Upper Limit | 15 years for unsecured loans |
How does the CIBIL Score impact interest rate?
How does CIBIL Score impact the amount of loan?
What impact does CIBIL have on disbursal TAT?
Speedy Approval | A high CIBIL score indicates the creditworthiness of the borrower, ensuring trust and speedy approval of loans. |
Lower Interest Rates | Borrowers with high CIBIL scores can get loans at much lower interest rates. |
Flexible Repayment Options | A good CIBIL score allows the borrower get flexible terms of repayment schedule and loan duration. |
Repayment Ability Indicator | Banks use the CIBIL score to determine the repayment ability of the borrowers. |
Conclusion
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