Planning an overseas academic voyage is a significant endeavour, but due to its overwhelming cost it often requires financial assistance such as scholarships, working part-time, etc. However, these financial aids can be a bit tricky to enable because of their competitive nature. Thus, opting for an overseas education loan can be a great option since it will keep your savings intact.
There are numerous financial institutions that offer secured and unsecured overseas education loans to study abroad, but it is important to carefully understand the hidden details within the terms and conditions of the loan agreement. While the initially appealing interest rates may catch your eye, a closer look reveals concealed fees and charges that can notably impact overall repayment obligations.
In this article, we will help you to understand the hidden charges of a foreign education loan and tips to manage them efficiently. So, stay glued and read further.
Hidden & Additional Charges in Overseas Education Loans
1. Processing Fees
One of the most typical hidden charges in an overseas education loan is the processing fees. This is the fee that the financial lenders charge for the administrative work involved in processing your loan application. The amount varies among different banks, reaching up to 2% of the loan with GST.
Tip – Before signing on the dotted line, you need to be vigilant and inquire about the processing fees for your education loan.
2. Currency Conversion Costs
Pursuing your higher education abroad means dealing with different currencies. But when it comes to the currency conversion charges offered by financial institutions, some lenders may apply more charges for converting funds from your home currency to the one used in the host country you are planning to study.
Tip – Explore options that offer favorable currency exchange rates or attend free online counselling for study abroad loan from leading overseas loan advisors.
3. Late Payment Fees
Life is unpredictable, and sometimes, payments might get delayed. Late payment fees are standard across various loans, but the extent of these charges can vary among different financial lenders. Typically, lenders impose a fee ranging from 2% to 3% of the EMI amount, along with GST.
Tip: Prioritize lenders with reasonable late payment fees and, more importantly, establish a realistic repayment plan to avoid such situations.
4. Insurance Costs
Loan insurance acts as a shield for borrowers, guarding against unforeseen events that might hinder loan repayment. While this might seem like a thoughtful inclusion, it often comes at an additional cost, where lenders might raise your interest rate unless you secure insurance for your education loan. Nationalized banks usually charge 0.05% to 0.25%, while private banks can go up to 2%.
Tip – Understand the insurance coverage provided and explore if there are more cost-effective options available in the market.
5. Mortgage Creation Charges
Mortgage creation charges are fees imposed by banks when borrowers pledge collateral for an education loan. Typically ranging from 0.25% to 0.5% of the loan amount, these charges contribute to the processing of the mortgage. It’s essential for applicants to be aware of these charges, as they can impact the overall cost of the loan.
Tip – Know the mortgage creation charges from your lender, as they can significantly impact your repayment amount.
In a Nutshell
It is important to note that the goal is not just to secure a loan but to have a clear understanding of the hidden costs. By staying informed and vigilant, you can ensure that your overseas education journey is financially sound, allowing you to focus on academic and cultural experiences. For more insights on how to get education loan for abroad studies without collateral or with collateral reach out to the top overseas education loan advisors for more guidance. Good luck!