Interest rate is one of the major factors to be considered while taking an education loan. A lower interest rate will ultimately make your loan cheaper and you will save money eventually. Bank of Maharashtra is one of the leading public banks in India.
Bank of Maharashtra education loan to study abroad is provided at affordable interest rates. Students can get up to 100% finance for higher studies. Bank of Maharashtra’s education loan interest rate is calculated based on a lot of factors. Let’s check and understand what is the effective rate of interest and how it is calculated for education loans from this bank.
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What is the Bank of Maharashtra Education Loan Interest Rate?
The bank provides education loans at interest rates starting from 9.45% per annum. The interest rate also depends on various factors like the credit score of the co-applicant, loan amount, university, course selected etc. The maximum loan amount, as per the Bank of Maharashtra Model Education Loan Scheme, is INR 20 lakh. However, the maximum loan amount will be considered on merit and case-to-case basis, as specified by the bank. Check more details below:
- The bank will charge simple interest during the moratorium period
- After the moratorium period, the interest rate will be compounded monthly
- Bank of Maharashtra may provide a 1% concession in the interest rate if the repayment of the interest amount charged during the moratorium period is serviced regularly
- The rebate is applicable only for the moratorium period
Also Read: Looking for an education loan from a private bank? Check here all about HDFC Bank Education Loan to Study Abroad
Bank of Maharashtra Education Loan: Interest Rate Concession
Bank of Maharashtra is a government bank and follows the IBA model education loan scheme. The bank offers a discount on the overall interest rate applicable to the loan. Students can get discounts on interest rates from 0.25% up to 0.50% on various grounds. Check the details of the Bank of Maharashtra interest rate concession below:
| Parameter | Interest Rate Concession |
| For female students | 0.50% |
| Existing housing loan borrower | 0.50% |
| Meritorious Students | 0.25% |
Bank of Maharashtra Education Loan Interest Rate Calculation
The Bank of Maharashtra education loan interest rate is calculated by considering the RLLR and the spread determined by the bank. The RLLR and the spread also depend upon the loan amount. For loans below INR 7.5 lakh, the interest rate will be higher and for loans above this amount, the interest rate will be less. The Bank of Maharashtra education loan disbursement process is initiated after implementing the effective interest rate. Check more details on interest rate calculation below:
| Loan Amount | RLLR + Spread | Effective Interest Rate |
| Up to INR 7.5 lakh | RLLR + 2% | 11.30% |
| Above INR 7.5 lakh | RLLR + 1.65% | 10.95% |
Factors Affecting Education Loan Interest Rate
There are multiple factors that affect education loan interest rates. The bank may offer high or low interest rates based on factors such as credit score, loan amount, repayment period, economic condition, government policies etc. Check some of the major factors below on which the interest rate is determined:
Credit Score
Sometimes you may notice that an education loan is rejected even with a good credit score. In any type of loan, the credit score of the borrower plays a major role in determining the interest rate. You should always understand the importance of a good credit score on education loans. A higher credit score shows good repayment behaviour such as timely payments and manageable debt levels. This shows the bank that the applicant is a reliable borrower and so the bank offers a lower interest rate. Similarly, suppose your credit score is low and it indicates past issues with repayment or excessive debt. In that case, the bank may consider you as a risky borrower and charge a higher interest rate to cover this risk.
Loan Amount
The amount you borrow can significantly impact the interest rate on your education loan. A larger loan amount may be considered for a low-interest rate. This is because banks often perceive larger loans as less risky since they stand to earn more in interest over the loan term. The borrowers who are taking out larger loans may have stronger financial backgrounds or collateral so the interest rate offered is less as compared to an unsecured loan.
Also Read: Waiting for the loan to get processed? Check here all about Union Bank Education Loan Processing Time
Co-Applicant
Having a co-applicant with a good credit history can positively influence the interest rate on the Bank of Maharashtra education loan. Also, the bank will sanction the education loan only when the student is applying along with the co-applicant. A co-applicant acts as a guarantor for the loan, promising to repay the debt if the primary borrower defaults. If the co-applicant has a high credit score and a stable financial profile, the bank may offer you a lower interest rate. This is because the presence of a creditworthy co-applicant reduces the lender’s risk.
Market Conditions
Broader economic factors and ongoing market conditions influence interest rates on education loans. Fluctuations in economic indicators, such as inflation rates, central bank policies, and overall market liquidity, can impact borrowing costs for financial institutions. During periods of economic expansion and low-interest rates set by central banks, borrowers may benefit from lower education loan interest rates.
FAQs
The interest rate for education loans offered by the Bank of Maharashtra starts from 9.45% per annum. However, this may differ based on various factors such as loan amount, credit score, repayment period etc.
Bank of Maharashtra offers both fixed and floating interest rate options for education loans. Borrowers can choose either option based on their preference.
Yes, the Bank of Maharashtra often provides concession interest rate schemes or discounts for specific categories of borrowers, such as female students, borrowers from economically weaker sections, or those pursuing education at premier institutions.
The interest rate significantly impacts the total cost of borrowing for an education loan. A lower interest rate leads to lower monthly repayments and reduces the overall burden of repayment over the loan tenure.
While banks generally have set interest rate structures under the IBA model education loan scheme, borrowers may have some room for negotiation.
This was all about the Bank of Maharashtra education loan interest rate. Always check the entire terms and conditions related to the interest rate on education loans and then proceed with the loan application.
To know more about education loans, 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.
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