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Is education loan eligible for moratorium?
The concept of a moratorium period is applicable only to education loans from government banks in India. This provision is not applicable to any of the other forms of loan.
What does proposed moratorium in months mean?
A moratorium period is when your lender allows you to stop making payments for a specific period of time. A moratorium is similar to a deferment or forbearance.
What is the moratorium period for education loan?
Public-sector Banks: Usually, the moratorium period in government banks is course period + 6 months. Students do not have to do any type of payments during this moratorium period. Private-sector Banks: The moratorium period in private banks is usually course period + 12 months.
What is moratorium period in SBI Education Loan?
The repayment tenure offered is up to 15 years after the course has been completed. Collateral security has to be provided by the borrower, equal to the loan amount availed. State Bank of India offers a moratorium period of up to 6 months to begin the repayment of the education loan.
Why there is a provision for moratorium period in education loans?
There might be a time lag between their completing studies and before getting a job. That is why a provision for moratorium period is made. The most important feature of education loans is the structure of repayments. You do not have to make any loan repayments until you complete your course.
Do I have to make any loan repayments during the moratorium?
You do not have to make any loan repayments until you complete your course. During the moratorium period, on an education loan the bank will calculate interest on your loan on simple interest basis. Interest calculations will start as and when amounts are disbursed to you and not on the entire loan amount at once.
What is moratorium and how does it work?
Moratorium is common in education loans. Lenders allow students to start repaying once they finish their courses and start earning. So a borrower doesn’t need to repay the loan up to six months after the course is over or until she gets a job, whichever is earlier.
When does the repayment of an education loan begin?
Normally, the repayment begins after the loan is disbursed and the payments have to be made each month. However due to this moratorium period, the payment starts after some time. Education loans provide this feature. This is because education loans are repaid by the students after they start earning and build their finances.