FAQs on Education Loan Transfer

Education loan transfer or refinance is an important financial tool that helps you to make your loan cheaper by reducing the interest rate. Education loan transfer means getting your education loan overtaken by another bank in order to reduce interest rates and get better repayment terms. Many students are in dilemma about when to refinance the loan, which bank will be suitable etc. Let’s discuss some of the most common FAQs on Education Loan Transfer.

What is an Education loan transfer?

When you transfer your education loan to another lender or bank and foreclose the loan with the existing lender with the funds received from the new bank, it is called refinancing. After transferring the loan you will be paying monthly EMIs to the new bank or lender. Loan refinancing or transfer is done to get a low-interest rate that will make the loan cheaper and to get better repayment tenure. 

Also read: Have you mortgaged assets for a loan? Check here all the details on Collateral-free loan transfer through Fly Finance

Why should I consider refinancing my education loan?

Most bank provides education loans at a floating rate of interest which is subject to revision every quarter. When the inflation rate is high, the banks increase the interest rate on loans which makes it costlier. Hence, in order to make your loan cheaper by reducing the interest rate, education loan refinance is one of the best options. 

Can I transfer my education loan after 2 years of repayment?

Yes. You can easily transfer your existing loans to another bank or lender. Your EMI shall reflect regularly in the books of the existing lender and there shall be no pending disbursement. The entire loan amount must have been paid by the bank. Also, the repayment application shall be a first-time application i.e. the loan shall not have been transferred earlier to any lender. 

Also Read: Interest rate increase by bank for education loan? Check here all the details on how to refinance education loan and when should you consider it

What factors should I consider before making a loan transfer?

Always compare the banks or lenders on the basis of repayment period, interest rate offered, customer service review, track record etc before deciding to transfer the loan. You can also talk to your existing bank about reducing the interest rates and increasing the repayment period.

Can I transfer my loan if I have just started my university education abroad?

Yes. As per the eligibility criteria prescribed by most banks, you are eligible for loan transfer if:

• Existing banks have disbursed the complete loan amount
• Your credit score is good
• The repayment should be regular in the books of the existing bank (if applicable)

What are the documents required for loan transfer?

You need to produce documents like an Aadhaar Card, Driving License, Voter ID, existing loan details, university approval letter (if required), income proof etc. Contact the bank for documentation of co-applicant if existing. All the documents shall be self-attested and authentic.

Can I transfer my education loan to a foreign bank?

Yes. You can transfer your education loan to any bank operating in India and work as per the guidelines of the Reserve Bank of India. It depends on the bank how they present the offer and process your application. In case the bank is not entertaining your application even if everything is proper, you can raise the grievance through the RBI Ombudsman Scheme for quick resolutions. 

How to get low interest on loan transfers?

Compare different banks and negotiate with them for better interest rates to make your loan cheaper. Choose the bank that is offering the lowest rate of interest. Usually, government banks offer lower rates on education loans as compared to private banks and NBFCs. 

Are loan refinance and loan consolidation the same?

Loan refinance is different from loan consolidation. A debt consolidation or loan consolidation is a process in which you close multiple existing loans by taking a personal loan and paying the EMIs for only that particular loan. This is popularly known as a personal loan for debt consolidation. However, loan refinance means to transfer your existing loan to a new bank in order to get a low rate of interest and better repayment terms. 

Will the repayment period increase or decrease in a loan transfer?

The change in the repayment period depends on various factors such as your monthly income, debt-to-income ratio, remaining balance of the loan amount etc. Negotiate with the new lender or bank to get the repayment period as per your financial capability. 

Are there any tax benefits associated with education loan transfers?

Yes, the interest paid on education loans is eligible for tax deductions under Section 80E of the Income Tax Act. Ensure that the new lender provides the necessary documentation for claiming these benefits.

Which bank is best for education loan transfer?

There are a lot of public sector banks that provide education loan transfer services at lower interest. One of the best examples is the SBI Takeover of Education Loan scheme. You can also approach private banks that have dedicated offers for loan transfers such as IDFC First Bank education loan transfer, Yes Bank education loan transfer etc. 

Knowing the process of education loan transfers for studying abroad will help you to make informed decisions. Always remember to consult with financial experts and lenders about loan transfers before applying for the same.

To know more about the loan application process, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience. ;

Related Blogs

Best Time to Apply for Education Loan Refinance

All About Education Loan Refinancing

How to Secure Good Education Loan at Low Rate of Interest

Follow Us on Social Media

• Instagram
• LinkedIn
• Twitter
• Facebook