MBA in India: How to get a Bank Loan

One of the most post popular courses of the 21st Century, the MBA is a favored choice for many. Finance, Consultancy, Marketing, Banking and Information Technology are among the specializations offered. Myriad job options, illustrious futures and heavy pay-packets lie ahead. If you have the capability and cleared admission, don’t let financial issues become a thorn in your path. Money from wealthy parents is not necessary, depending on the few and far-between scholarships is not a must, Bank Loans can give you the self-satisfaction of independence and your desired career.

The first step is to assess the loan requirement. You should consider the Tuition Costs, Residential Costs (if you will be living separate from your parents) and prepare for any unexpected costs.

Bank Loans for under Rs. 4 Lac do not require security deposits/margins, from Rs. 4 Lac to Rs. 7.5 Lac a third party guarantee (signature from parent/uncle/aunt/relative) is required and for education loans above Rs. 7.5 Lac collateral would be required.

Generally, for studies within India, Rs. 10 Lac is the maximum education loan amount, however it may vary from bank to bank. Both Nationalized and Private Banks offer educational loans but Indian Nationality is a must for both.

Points to consider while selecting a bank for an education loan:
Tenure – How much time will you be given to repay the loan? Estimate your ability to pay the required amount at the required times.
Interest Rates – How much interest will be charged on your loan? Will it be calculated as Simple Interest or Compound Interest? Will it be fixed interest or floating interest i.e. will the interest amount change according to the market trends or will it remain constant throughout?
Down payment – How much money needs to be paid at the time of receiving the loan?
Loan Charges – Each Bank charges a certain fees or ‘processing amount’ for giving the loan
Collaterals or guarantees required.
Maximum repayment time – Repayment usually starts 6 months to 1 year after the completion of the course, however maximum time for repayment of the loan is generally 5 to 7 years.
Pre-Payment Charges – If you repay the loan earlier will any charges be applied?
Loan Availability – How soon would you receive the money from the loan?
Education Loans require a fair amount of paperwork, so it’s important to keep your papers in order.

Documents required for education loans are:
1. Proof of admission to the course
2. Mark sheet of last qualifying examination
3. Schedule of expenses for the course
4. Statement of Bank account for the last six months of borrower
5. Income tax assessment order not more than 2 years old (yours or parents)
6. Brief statement of assets and liabilities of borrower.
7. If you are not an existing bank customer you would also need to establish your identity and give proof of residence.

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