I Have 4 Education Loan Offers (8.65% to 11%) for My Son's Manipal B.Tech. What Should I Actually Compare?
Propelld AdvisorMarch 24, 20262 min readIn Brief
The total cost difference between SBI at 8.65% and the NBFC at 10.5% is about ₹2.2L over 7 years — less than most people assume. What actually matters more: prepayment terms (SBI has no penalty; some NBFCs charge 4%), disbursement speed (SBI takes 4-6 weeks; NBFC takes 1-2 weeks), and whether collateral is required.
The Total Cost Difference Is Smaller Than You Think
Over 7 years (4 years course + 3 years repayment), the gap between SBI at 8.65% and the NBFC at 10.5% works out to about ₹2.2L in total interest. That's ₹5,000/month difference in EMI. Significant — but not the whole story.
| SBI 8.65% | Credila 9.5% | NBFC 10.5% | College NBFC 11% | |
|---|---|---|---|---|
| Interest during 4 years (simple) | ₹5.54L | ₹6.08L | ₹6.72L | ₹7.04L |
| EMI post-course (3 years) | ~₹68,500/month | ~₹71,000/month | ~₹73,500/month | ~₹74,800/month |
| Total interest (approx) | ₹8.66L | ₹9.50L | ₹10.50L | ₹11.04L |
| Processing fee (approx) | ₹0-16,000 | ₹16,000-24,000 | ₹32,000-40,000 | ₹24,000-32,000 |
| Prepayment penalty | Nil | 0-2% | 2-4% | 2-4% |
The 5 Things That Actually Change Your Decision
- Prepayment terms — With ₹10L in mutual funds, you might want to partially prepay after 2-3 years. SBI has zero prepayment penalty. An NBFC at 4% penalty on ₹5L prepayment costs ₹20,000 extra. This alone can close the rate gap.