Can I take two education loans from two different banks in India?
Last Updated : April 28, 2020, 11:17 p.m.
Yes, you can get 2 education loans from 2 different banks in Indian but for different courses. As banks disburse the loan directly to the college or university and not in your savings account, the loan from 2 different banks for the same course is nothing but impossible. Banks while disbursing the loan checks the credit profile of the applicant. While checking the profile, they could easily see the loan you might have taken for the said course, thereby leading to the rejection of the second loan application for the same course.
What you can do though is a balance transfer from your existing lender to the new lender if the latter offers you the facility at a lower rate of interest by the time you will be paying the loan. This will help reduce your EMI and interest payments over time. But the existing lender won’t allow balance transfer before specific periods of repayment. Plus, you could be levied a balance transfer fee. So, factor in all and decide whether to go for a balance transfer. Meanwhile, you can check the benefits of education loan balance transfer in this post.
How Much Can You Save on a Balance Transfer of Education Loan?
Suppose, the existing education loan runs at an interest rate of 13.00% on your borrowed amount. But if you get a balance transfer offer from another lender at a lower rate of 13%, how much can you save from the transaction?
| Repayment Schedule | Details |
|---|---|
| Loan Amount | INR 15 lakh |
| Current Interest | 13% per annum |
| Tenure | 15 years |
| EMI @ 13% | INR 18,979 |
| Interest Payment Likely Over 15 Years | INR 19,16,154 |
| Interest Paid Over 5 Years | INR 9,09,801 |
| Outstanding Balance after 5 years | INR 12,71,082 |
| New EMI after transfer @ 10% | INR 16,797 |
| Interest Payment After Transfer | INR 7,44,611 |
| Interest Paid + New Interest over 10 years | INR 16,54,412 (9,09,801+ 7,44,611) |
| Savings on EMI | INR 2,182 |
| Savings on Interest | INR 2,61,742 (19,16,154-16,54,412) |
List of Banks Where You Should Look to Transfer Your Education Loan
If you don’t get the education loan from any of these banks, you can at least get the balance transferred to them. These lenders will do a credit appraisal to see how you have been paying your EMIs. They would like to see a timely payment track. If that is ensured, you will most likely have a good credit score of 750 and above.
| Bank | Interest Rate | Loan Quantum (INR) | Transfer fee |
|---|---|---|---|
| State Bank of India (SBI) | 6.90% - 9.30% | 10 lakh to 1.5 Crore | NIL |
| ICICI Bank | 11.25% - 11.75% | 20 lakh to 1 Crore | NIL |
| Punjab National Bank (PNB) | 6.90% - 9.55% | Need Based | NIL |
| HDFC Bank | 9.25% - 13.68% | 10 lakh to 40 lakh | 1% of the loan amount |
| Canara Bank | 7.40% - 9.40% | Need Based | NIL |
| Bank of Baroda | 6.85% - 9.95% | Up to 80 lakh | NIL |
| Bank of Maharashtra | 7.05% - 8.90% | Up to 20 lakh | As per bank rules |
| Bank of India | 9.05% - 9.85% | 10 lakh to 30 lakh | NIL |
Security on the Loan Transfer
The borrower will need to submit the mortgaged property, FD, or insurance to the new bank after the loan closure from the bank. Because if your loan is above INR 7.5 lakh bank requires a security deposit. And the collateral is necessary to provide to the bank to approve the loan. The list of documents required for the loan transfer is mentioned below.
- KYC proof such as Aadhar, Voter ID card, passport, etc.
- Academic details like 10+2 mark sheet, admission letter and fee structure for the course
- If the student course is completed, provide the copy of the result, mark sheet or certificate
- Bank statement for the last 6 months