Union Bank, Bank of India and Bank of Baroda offer the lowest rates on educations loans
Education loan rates start from 6.8 percent. SBI and IDBI Bank charge marginally higher rates
December 23, 2020 / 11:24 AM IST
It is best to fund your or your children’s education needs through savings. If you haven’t able to accumulate enough to meet the rising education costs of your children’s higher studies, then you can opt for education loans. Education loans are offered for tenures of 7-8 years. Stick to banks for education loans and check whether you are eligible for lower interest rates with better terms.
Public sector banks offer the lowest rates
As per data compiled by BankBazaar, public sector banks offer the cheapest education loans. Of the 23 banks’ data that BankBazaar compiled, the 15 of the cheapest rates belong to public sector banks.
Public sector major Union Bank of India offers the lowest interest rate in the education loan space currently, starting at 6.8 per cent for Rs 20-lakh education loans with seven-year tenures.
This is followed by Central Bank of India, Bank of India and Bank of Baroda charging 6.85 per cent interest rate on education loans for Rs 20-lakh education loans with seven-year tenures. The State Bank of India (SBI) charges 6.9 per cent for same loan amount and tenure.
The most expensive loan offer on the top ten cheapest education loans list is from Indian Overseas Bank (IOB) and comes at an interest rate of 7.25 percent, which is far lower than HDFC Bank, Axis Bank and ICICI Bank charging 9.55 percent, 9.70 per cent and 11.25 per cent respectively.
The interest that you repay as part of your monthly EMI qualifies you for an income tax deduction under Section 80E of the Income Tax act. While applying for education loan check the processing fees as it varies from bank to bank.
Also read: Want a loan for online coaching or certification classes? Be ready to pay higher interest
A note about the table
Bankbazaar.com has considered interest rates on education loans for all listed (BSE) public and private banks for the data compilation. Banks for which data is not available on their websites are not considered. Data collected from respective banks’ website as on December 17, 2020. Banks are listed in ascending order on the basis of interest rates i.e. bank offering lowest interest rate on education loan (loan amount up to Rs 20 lakh) is placed at top and highest at the bottom. Lowest rates offered by the banks on loan up to Rs 20 lakh are considered in the table. EMI, excluding GST, is calculated on the basis of interest rate mentioned in the table for Rs 20-lakh loan with tenure of seven years. Processing and other charges are assumed to be zero for the purpose of EMI calculation.