5 minute guide to International MS loan options

Several financial institutions provide education loans backed by collateral for overseas master's programs. Notable characteristics of such financing packages consist of:

• Coverage of up to 90% of the Cost of Attendance. In certain regions, the remaining 10% must be deposited directly into the bank by the applicant beforehand, a requirement commonly referred to as margin money.
• An adjustable interest rate of roughly 10.5%. In some instances, a reduction may be granted for purchasing loan protection insurance; for example, borrowers might secure a 0.5% decrease, though this represents an extra expense that contributes to the overall loan burden.
• In specific regions, government banks mandate both collateral and a co-signer for financing. Applicants should prepare for heavy documentation and an extended processing duration.
• Although not a universal rule, the collateral demanded in some areas requires pledging parental real estate, a possibility that is not accessible to everyone.

Non-Banking Financial Companies: Co-signer Loans

NBFCs in certain jurisdictions are authorized to finance international studies. Typical features associated with these loan products comprise:

• Funding up to 100% of the Cost of Attendance, though a co-signer is invariably mandatory, and collateral is frequently required for large loan amounts.
• A proprietary interest rate that is not regulated by a central financial authority. It is essential to comprehend the complete expense of any loan, factoring in concealed charges like sanction letter fees and foreign exchange expenses, to effectively evaluate different offers.
• Financing evaluations may rely heavily on the co-signer's credit rating, income level, and other credentials. This creates a significant obstacle for master's applicants whose co-signers are retired or lack established credit histories.

Certain financing organizations, such as Prodigy Finance, offer loans to foreign students, frequently denominated in the currency of the study destination. Principal characteristics of these loan programs include:

• Financing covering up to 100% of the Cost of Attendance without the need for collateral or co-signers, representing merit-based loans granted on the strength of acceptance into a premier global institution.
• Tailored interest rates featuring a fixed component alongside a variable component, which is frequently the LIBOR rate corresponding to the loan currency.
• Digital application procedures that tend to be faster than those of traditional lenders, as well as generally offering greater transparency.
• Prodigy Finance utilizes a future earnings model to evaluate your financial potential based on your expected post-graduation salary and career trajectory.

Alongside the absence of a co-signer and the availability of master's education loans without collateral, borrowers through Prodigy Finance also qualify for supplementary perks such as scholarships and career assistance.

Comparing loan options

Evaluating loans is not simply a matter of examining the quoted interest rates. Nevertheless, grasping how interest rates work serves as a solid foundation; while every loan includes them, they are not universally calculated in the identical manner.

The majority of education loans utilize floating interest rates, and all floating rates consist of two elements: a variable base rate and a fixed margin. To perform an accurate loan comparison, it is vital to comprehend both components.

1. Fixed margin - This represents the static portion of the interest rate and remains unchanged throughout the duration of the loan, covering study, grace, and repayment phases. In some regions, the fixed margin is referred to as the spread. Regardless of the terminology, this rate is personalized and tied to your financial standing.

2. Variable base rate - This is the segment of the interest rate that fluctuates periodically. The benchmark rate applied is frequently determined by geography:

• For Indian financial institutions, the floating rate is the MCLR, standing at 8.45% as of July 01, 2018, which varies by bank although the Reserve Bank of India dictates the calculation methodology.
• Loans disbursed in Brazilian Real are pegged to the Selic rate, which was 6.50% as of June 20, 2018.
• Within the US, the 3-month LIBOR, recorded at 2.33% as of July 09, 2018, functions as a primary benchmark rate for borrowing.
• The 3-month GBP LIBOR, valued at 0.71% as of July 09, 2018, serves as the benchmark for loans in the UK.
• The 3-month EURIBOR, recorded at -0.32% as of July 09, 2018, is utilized for loans denominated in Euros. Note: If the active variable rate drops below zero, a zero rate is enforced, effectively rendering the interest rate fixed until the benchmark climbs back into positive territory.

3. Annual Percentage Rate (APR) - This represents the yearly cost to the borrower, incorporating all charges linked to the loan. For global lenders, the extra cost is generally limited to an administration fee. Domestic lenders, however, can introduce various hidden charges into the borrowing process. (Such costs might feature: processing fees, sanction letter fees, loan protection insurance charges, and currency exchange fees applied to every payout.)

Keep in mind: The APR is not the interest rate charged on the borrowing amount, but rather a comparative instrument designed to assist in evaluating various loan proposals from multiple financial institutions.

Interest rates are just the starting point

Although the APR enables a cost comparison between two separate loans, it is not the sole metric that can (or ought to be) utilized. Master of Science students often find other elements far more significant, including the duration required for approval and subsequent disbursement, the simplicity of obtaining the loan sanction letter essential for overseas student visa processing, and the flexibility to make prepayments, which lowers the total interest paid over time.

The true secret to evaluating study loans for overseas programs. The chart below outlines the main characteristics of the aforementioned lender categories, offering a handy reference and loan evaluation guide for Master of Science candidates, utilizing Prodigy Finance to represent international lenders:

*3-month USD LIBOR stands at 2.33% (as of July 09, 2018)

^ Annual Percentage Rate (APR) includes the yearly effect of all charges tied to the borrowing - it serves as an instrument for contrasting loan proposals

Bear in mind that every loan proposal possesses distinct advantages, and you ought to evaluate all available choices thoroughly. This brief overview serves merely as a starting point to set you in motion. Education is a financial commitment and study loans represent a serious obligation; you will want to look at the future alongside the present because that admission offer is just the beginning.

Interested in viewing the conditions Prodigy Finance can extend to you?

Submitting an application for Prodigy Finance’s collateral-free loans that require no cosigner takes a mere 30 minutes. Furthermore, with no requirement to accept a preliminary loan proposal, there is no cause to delay. Submit your loan application today