If your goal is to reduce the EMI payments of your education loan, paying a lower interest rate should be on your list. Like any other loan, banks and NBFCs provide education loans on an interest rate, ranging from 9%-14%. However, unlike a fixed-rate mortgage, your education loan interest rate is negotiable.
Here are some tips for negotiating a better interest rate on your education loan: -
Build a profile. Your academic record, the college you go to (in case of MS), the college you choose to study in, will influence the rate of interest. Keep your profile impressive so banks will willingly provide low interest rate on loans.
Do your research. Before asking the bank to lower your interest rate ask yourself some questions. Can you provide a collateral? What is your co-signer’s income? What is the tenure of your repayment? Based on these factors interest rate can be negotiated.
Also, check the interest rates of various banks and NBFCs, find a bank/ NBFC with low interest rate and use it to negotiate with their competitors, if your profile is impressive enough banks will be willing to lower their interest rates.
Apply early. If your GRE score is good, apply to banks before securing an admission in a college. Students who apply early have the advantage to compare different banks and more time to negotiate to avail the loan with a low interest rate.
Calculate the expenses carefully. Try to calculate your expenses as precisely as possible. The loan amount can make a difference in the rate of interest. Higher the income higher the interest rate.
Balance transfer. Another suggestion is to transfer your education loan from one bank to another. If you're successful in getting a lower rate than the bank you would be transferring from after refinancing, you can save money.
The process of comparing banks and getting a lower interest rate can get tedious and confusing for students, to help students through this process Credenc provides a Single window platform i.e., students can compare different banks and NBFCs online.