HDFC Credila vs. IDFC First Bank: Which is the Best Education Loan Provider?

When it comes to financing your education abroad, choosing the right lender can make all the difference. When considering which lender to choose it is crucial to compare the loan products of different lenders. In this blog, we will compare two loan giants - HDFC Credila and IDFC First Bank. Both lenders offer attractive loan offers, but which one will fuel your dreams best? Let’s find out.

Bank vs. NBFC: A Key Distinction

The primary difference between these two lenders is their nature: IDFC First Bank is a private bank, whereas HDFC Credila is an NBFC specializing in education loans.

Banks and Non-Banking Financial Companies (NBFCs) differ in their operations and regulations. Banks are licensed to accept deposits, offer savings accounts, and provide loans, and they are regulated by the Reserve Bank of India (RBI) with strict guidelines. NBFCs, while also regulated by the RBI, cannot accept deposits but can offer loans and other financial services. NBFCs often provide more flexible loan options, like customized education loans, but may have higher interest rates as they rely on market borrowings instead of public deposits.

As a private bank, IDFC First Bank has unique terms and conditions. It maintains pre-approved lists of universities and colleges in countries such as the USA, Canada, UK, Australia, Netherlands, and France. These institutions are categorized into Platinum, Titanium, and Gold based on factors like the applicant's GRE score and course. Whereas, HDFC Credila, a subsidiary of HDFC Bank, covers over 1,000 universities across 35 countries. It offers customized loan options tailored to the applicant's course and country preferences. Notably, HDFC Credila is the only NBFC in India that provides tax benefits under Section 80E for non-collateral education loans, allowing borrowers to claim a deduction on the interest paid for up to eight years, starting from the year the loan repayment begins.

Loan Quantum: How Much Can You Borrow?

Loan quantum refers to the maximum loan amount that lenders are willing to offer as education loans. When evaluating an education loan, it's crucial to understand the maximum amount each lender is willing to provide. The loan amount offered by banks depends on factors such as the type of loan, your selected course and destination country, your academic performance, and the creditworthiness of your co-applicant.

Interest Rates: What Will It Cost You?

Interest rates are crucial as they determine the total repayment amount. The interest rate on an education loan is a key factor that influences the overall cost of borrowing for educational purposes. It represents the percentage charged by the lender on the loan amount and can greatly affect the total repayment amount over the loan's duration.

Processing Fees: What’s the Cost of Application?

Processing fees are the charges levied by lenders for processing your loan application. The processing fee for an education loan is an upfront charge imposed by lenders to cover the administrative expenses involved in processing and approving the loan. Essentially, it acts as a service fee.

Repayment Tenure: How Long Do You Have to Repay?

After your loan is sanctioned and disbursed, the repayment period begins. This period includes a moratorium period during which you can skip EMIs and only pay simple interest. 

Choosing the Right Lender: What’s Best for You?

Both IDFC First Bank and HDFC Credila have their strengths and weaknesses, and the best choice depends on your unique needs. Here are some scenarios to consider:

• Need a higher unsecured loan amount - HDFC Credila is the way to go. They not only offer higher loan amounts but also have the flexibility to increase the loan based on your profile.
• Looking for lower interest rates and processing fees - IDFC First Bank might be your best bet. They offer competitive rates, and with the help of GyanDhan, you could negotiate even better terms.
• Scored a GRE of 310 or more - IDFC First Bank should be your top choice. They offer favorable loan terms, lower interest rates, and processing fees, as well as advantageous repayment terms during your moratorium period.

Both HDFC Credila and IDFC First Bank offer compelling education loan options, each with its own set of advantages. HDFC Credila stands out for those seeking higher loan amounts and customized solutions, especially for non-collateral loans. On the other hand, IDFC First Bank provides competitive interest rates and lower processing fees, making it an excellent choice for students with strong academic profiles, particularly those with high GRE scores.

In the end, there’s no definitive winner between HDFC Credila and IDFC First Bank. The right choice depends on your specific circumstances. If you’re still unsure, don’t worry—there are plenty of other options available. To ensure you make the right decision, GyanDhan is here to assist you. With our expertise, you can compare over 15 different lenders and find the perfect loan to fund your educational dreams. Start today by checking your loan eligibility today!

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