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Aspiring to pursue higher education with the intent to strengthen your career position, but worried about finances. Don’t worry. Applying for an Education Loan makes it all possible.
An Education Loan offers a significant Loan amount at a competitive interest rate based on your eligibility and requirement. You can repay the Loan amount in Equated Monthly Instalments (EMI) over a preferred tenure.
Moreover, the pre-EMI and full-EMI options make the repayment more manageable for you and maybe your co-applicant (such as a parent). This blog sheds light on these two payment options and their impact on the overall Loan. Read on.
Pre-EMI:
The Pre-EMI amount only includes the interest component.
For instance, you have taken an Education Loan of Rs 1 Crore at a rate of 7%. The interest calculated based on this will be included in the EMI amount. Use an Education Loan EMI calculator to determine the payable interest.
The Education Loan EMI calculator is an online tool that offers an estimate of the payable EMI. It also provides a breakdown of the total Loan amount (principal + interest). Log on to any banking or financial website or mobile app to access it.
Ideally, you or the co-applicant needs to start paying the pre-EMI from the month of Loan disbursement. This continues throughout the moratorium period, which is the time period for which you pursue your educational course.
The advantage of this pre-EMI repayment option is that the burden of paying the full EMI does not fall on your or the co-applicant’s shoulders while you are still studying and may not have a source of income.
However, the disadvantage is that the principal amount remains stagnant throughout this period. Hence, you pay the interest on the entire principal amount every time. This often increases the total interest you pay at the end of the Loan tenure.
Full-EMI:
The Full-EMI amount includes both the principal amount and the interest component.
Let’s consider the above example again. You have taken an Education Loan of Rs 1 Crore at a rate of 7%. The EMI is calculated considering both these aspects for your chosen tenure, just like a regular Loan EMI. Use the Education Loan EMI calculator to estimate the payable EMI.
You need to enter the Loan amount, interest rate, and tenure in the Educational Loan EMI calculator. It will offer accurate results in a matter of seconds.
Typically, you need to start paying the full EMI after the moratorium period. However, in some cases, the co-applicant begins paying the full EMI right from the first month of the Loan.
The plus point with the full-EMI payment option of the Study Loan India is that banks wait for you to secure a job and have a stable income to start with the full-legged payment. This means you do not have to depend on your parents, which is often the case, to pursue higher education.
However, things become challenging when you fail to secure a job during the moratorium period imposed by the bank. Some banks, being considerate of this, tend to extend the moratorium period, but this is entirely subjective and rare.
Summing It Up
If you have the will and rigour to pursue higher education, but the thought of finances is holding you back. Don’t worry. Applying for an Education Loan can make it all possible.
Significant Loan amounts, competitive interest rates, and a feasible repayment system are among the top benefits of taking an Education Loan.
Pre-EMI and full-EMI are one of the most widely appreciated aspects of this feasible repayment system.
This option allows you to repay only the interest component during the moratorium period, enabling you to focus on your education.
Once your education is complete and you have secured a job, you can begin with the full-fledged repayment.
Overall, an Education Loan ensures you have the power to take care of your future independently.