Education loan in India is availed in order to pursue further studies from India or abroad. The primary criteria for availing education loan includes a scholarly history of the student, repayment capacity, and future prospects in terms of job and earnings.
Moratorium period is a unique feature of education loans. Under this, you can choose not to pay the EMI for up to 12 months from completion of studies or 6 months from starting a job, whichever is earlier. However, the moratorium period depends on the bank policies.
When to Start Repaying Education Loan?
Although you are allowed a moratorium period in education loans, it is advisable to start repaying the loan as soon as you can. This moratorium period is not interest free. And education loan interest rate in India is quite high. Interest keeps accruing if you do not start repaying the principal amount. And even in moratorium period, interest needs to be paid. This means without decreasing the outstanding loan amount, you end up increasing the burden of interest and hence the cost of the overall loan. Apart from that, you can also earn a good credit score if you start the repayment early.
Procedure of Education Loan Repayment
Repayment of education loan is not a big process as such. You just need to get in touch with your bank manager who will take note of your account details and start the repayment on an auto deduction mode. You can also check out the various education loan repayment schemes available in India.
Repayment period varies from bank to bank and on the basis of the loan amount that you have availed. For students studying in abroad, the repayment period is at times as long as 15 years giving them enough time and scope to repay it slowly in smaller instalments.
Banks do not levy charges on prepayment of education loans. However, prepaying or foreclosure of the education loan is generally not advisable. This is because in education loans, you can avail tax deductions on the interest as per the Section 80E.
Available Loan Options in this Digital Age
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