I am planning to take up a study program abroad for 2 years.I need an educational loan of 20 lakhs INR.Lets assume that i apply for the loan today and my loan gets approved on 1st June 2013.I understand that the interest to be paid as EMI will be around
Rs 35,0 per month.Bank gives a tenure of up to 7 years for repayment of loan.My question is whether I have to start paying interest from the day I get my loan i.e from 1st June 2013 or after completion of my program which is after 2 years..Please clarify my doubt.Thanks.
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Interest is calculated from the date of first disbursal but it is not payable till the repayment starts. Repayment starts six months after getting the job or one year from completing the course.At the time of starting the repayment the interest that is accrued till then is added to the principle and emi is calculated for the term of repayment. From then on wards interest is added to the principle.
An option is given to the borrower to pay interest debited from the 1st disbursement or to to pay the interest along with the principal during the repayment period as EMI. Accordingly the EMI will be arrived..
Source(s): Banking knowledge.