It is safer to finance the education requirements of your or your children by investments. If you have not been able to save enough to cover the increasing educational costs of higher education for your children, then you can go for loans for education. Education loans are provided for 7-8 years of term. Considering the same it is better if you go for a bank that offers you low interest rates and acceptable tenure based on your eligibility.
|Banks||ROI p.a. in %|
|Bank of India||6.85|
|Bank of Baroda||6.85|
|Punjab National Bank||6.90|
|Bank of Maharashtra||7.05|
|Indian Overseas Bank||7.25|
Union Bank of India currently provides the lowest interest rate in the education loan, starting at 6.8 percent for Rs 20-lakh education loans with seven-year tenures, as per the above table. With current interest rate of 6.85 per cent on Rs 20-lakh education loans with seven-year tenures Central Bank of India, Bank of India and Bank of Baroda are the next. Indian Overseas Bank (IOB) is the most costly loan deal on the top ten cheapest education loans list and has an interest rate of 7.25 percent, which is much lower than 9.55 percent, 9.70 percent and 11.25 percent, respectively, offered by HDFC Bank, Axis Bank and ICICI Bank. Under Section 80E of the Income Tax Act, the interest you reimburse as part of your monthly EMI enables you for an income tax exemption.
The processing fees must be verified by you while applying for education loans, and they range across banks. On the basis of interest rates, banks are classified in ascending order, i.e. banks with the lowest interest rate on education loans (loan value up to Rs 20 lakh) are put at the top and the highest at the end. The table considers the lowest rates provided by banks on loans up to Rs 20 lakh. EMI, except GST, is determined on the basis of the interest rate for the seven-year term and a loan amount of Rs 20 lakh loan. For the purpose of EMI estimation, processing and other fees are considered to be zero.