Should I Take Education Loan from Indian Bank? #Shorts

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Interest Rate Parity concept states that the interest rates in different countries cannot be compared on an apple to apple basis.

Let’s take an example to understand this better. Let’s say you take a $100k loan at a 10% interest rate from both a US 🇺🇸 & an Indian 🇮🇳 bank. This is roughly around 80 lakhs (assuming $1 = ₹80). Let’s assume that the repayment period is 3 years. In those 3 years the rupee would have depreciated against the dollar to an average of ₹86 (₹80 to ₹92). Also the loan amount accumulated including interest would be $132k or ₹1.05 Cr. Now when you repay the US bank you have to repay the entire $132k. But when you repay the Indian bank you have to repay ₹1.05 Crs / ₹86 = $122k. See the magic? You save $8,000 which is about 6.4 lakhs. If you consider a longer repayment period, the savings are even more.

So that’s why a 10% interest rate US loan is not equal to a 10% interest Indian loan. It’s actually equivalent to a 15% interest rate Indian loan. Opt for a US loan only if the difference in interest is greater than 5%.

So effectively you would be able to save a lot of money if you opt for the Indian bank loan at 10% interest rate as opposed to US bank with 8% interest rate even though it looks smaller on paper.

#financewithsharan #finance #sharan #educationloan

[rushabhchheda]

“I work in the goddamn bank, it’s my job to know all this”
😂😂

[thegamerwithin]

"In 5 years, 1 dollar will be 85 Rupees"
More like 5 month s

[emotionaljackfruit]

"I work in the goddamn bank" had me🤣🤣🤣

[DrShubhammalhotra]

1$ is already 82, u don’t need 5 years to reach 85 😢

[KaustavNemoSen]

Meanwhile SBI: please come back later, it's lunch time now

[Mr.Nobody_]

What kind of people is this videos help Full.I haven't had a single info from this guys it is helpful to me.

[hemanthrajakuncham]

It is because,
To repay the dollar emi, you need to buy dollars with rupees, which is very costly and therefore the rupee depreciation against the dollar (or dollar appreciation @5% p.a) increases the effective dollar interest rate to 11% (6+5).. Sometimes even higher..

Conclusion:
If you take $ Loan,
Make sure you earn $ income..

[AKshay_]

Wow... I wasn't expecting that climax 😂

[Randomiser]

Opening a new channel.. “finance with bank teller”

[cheating_lemon]

"sir i work in the goddamn Bank, it's my job to know all of this"🤣

[g]

Bro. Assuming that you are taking edu loan for studies abroad, you can opt for 6% loan. It makes sense because once you were trained abroad, you will settle there. So, you'll start earning foreign currency and pay your debt in foreign currency 💪

[hemantchambhare]

Buy the USD-INR futures contract and keep rolling over, till you repay your loan... The currency fluctuations will be taken care.. In fact using Call option will be beneficial if the Rupee appreciates..

[resolver]

Rupee is not falling dude the dollar is strengthening 😂❤

[VirtualChoupal]

I liked this video and the most liked part is that you have not shown banker as dud but an informed person.

[yuvrajdalai]

its just effect of changes in foreign exchange rates.

Nothing to surprise at all cause i guess every indian who is graduated knows being a millionaire in usd is a big thing compared to being a millionaire in Inr.

[vijayalageshan]

Yeah but most people are gonna pay off the debt by getting a job in the US itself. So it makes no sense to take a loan from India.

[thoisin]

This bip boop bip boop is the most powerful sound in finance

[raunaqsharma]

Won't matter if you get placed in the US itself,
And most people take foreign currency loans only when pursuing education in that country

[GuneetJain]

But that also means that the loan will be insufficient as the ruppee is weakening and all the payments will be made in dollars

[msvnr]

Glad I took Financial Management in my final semester engineering as elective 😄💯🙏