How To Calculate EMI On Education Loans In India?

Also Check here: Various Education loan schemes

Loan Amount And Tenure

After using any education loan calculator in India, you will notice that the total interest you pay hinges on few key parameters. Two of them are depend more on your demands: the loan amount and the repayment tenure. Larger loans translate to larger interest and EMI payments. On the other hand, longer tenure implies smaller EMIs but larger overall interest.

Lender’s Interest Rate

Another thing an education loan interest rate calculator will reveal to you is that interest and EMI payments are directly proportional to the interest rate your lender gives you. Though the lender has greater discretion over this variable, you can secure a better interest rate by having as a guarantor someone with a handsome credit score. Similarly, admission to a reputed college with promising job prospects to follow will help you get a lower rate.

Phase #1: During the moratorium period

As was already stated, during your moratorium period banks calculate interest using simple interest formulae only. So, if your bank disburses an amount of Rs.10 lakh in the beginning at a 10% interest rate for a 3-year moratorium term, then you will incur interest of Rs.1 lakh per year. Which means that after 3 years your total outstanding amount is Rs.13 lakh (Rs.10 lakh + Rs.3 lakh)

Phase #2: Once you start paying EMIs

At the end of the moratorium period, you begin making EMI payments. To compute your monthly dues banks factor in your total outstanding amount (principal + total simple interest). Next, future interest and EMIs are calculated based upon this total amount by using compound interest formulae. Since these are complex, it's easier to use an education loan EMI calculator or a student loan calculator to determine the monthly cost of your loan and the total interest you incur.

Now that you know how to calculate education loan interest and EMIs, if educational loan rates and the resulting EMIs appear too steep, consider opting for Bajaj Finserv Loan Against Property for Education. You can secure this loan without worrying about meeting multiple educational loan requirements like course- and institution-specific criteria. Here you get finances up to Rs.3.5 crore for tenures of up to 20 years to cover all your expenses comfortably, be it for tuition, accommodation, travel, and other living expenses.

Additional Read: What is the education loan procedure

Utilising and repaying this loan becomes easy when you opt for the Flexi Loan facility. It allows you to borrow from your approved sanction in parts, and pay interest only on the amount used. Additionally, it gives you the freedom to pay interest-only EMIs for the first few years. This helps you tackle much of the repayment when you begin to earn.

To avail of this loan, you need to identify a residential or commercial property that you can pledge as collateral. Once done, check offers from Bajaj Finserv. By doing so you get instant approval, access to customised finance solutions and quick loan disbursal.