Planning to take an education loan? PSBs are cheaper but need collateral

Private lenders are flexible with education loans

•  An overseas education loan can be challenging to analyse and understand as lenders structure it differently
• Public sector banks (PSBs) usually work out to be cheaper compared to private lenders. The former also have a lower or zero processing fee
• Private sector lenders may insist on full or partial interest during the duration of the course. Many PSBs start the equated monthly instalment six months to one year after the completion of the course
• PSBs mandatorily ask for collateral if the loan value is above Rs 7.5 lakh. Some private lenders provide loan up to Rs 35-40 lakh without collateral
•  PSBs are selective about the country and courses they fund whereas private lenders are comparatively liberal
• For PSBs, the focus is mainly on collateral. Private lenders focus more on students’ scores and their parents’ incomes
• Government banks usually take over two weeks to sanction the loan. Private lenders usually take less than a fortnight