The IDBI education loan repayment plan must be understood by students so that they can start repaying the loan efficiently. IDBI Bank is a prominent name in the Indian banking sector. It offers education loans for students aiming to study abroad. The bank also provides a moratorium period before the loan repayment starts. Continue reading to understand the IDBI loan repayment process.
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IDBI Education Loan Repayment Plan: Major Highlights
IDBI education loan repayment must be planned in advance so that you can repay the loan properly and increase your credit score. Some major factors that must be considered for IDBI education loan repayment are the loan tenure, interest rate, moratorium period etc. Check the details about all the essential factors below:
Loan Tenure and Interest Rates
IDBI Bank provides loan repayment tenures of up to 15 years. However, if you want to make the loan cheaper, you should choose a shorter repayment period, as it will eventually save you money. IDBI education loan interest rates are determined by the bank, considering a floating rate of interest linked to RLLR (Repo Linked Lending Rate). At present, the interest rate is around 8.55% to 11%, depending on the course.
Moratorium Period
The moratorium period is one of the most important factors affecting IDBI Bank education loan repayment plan. IDBI Bank offers a moratorium period on education loans to allow students to focus on their studies without immediate financial pressure. The moratorium period generally covers the study period plus an additional 12 months. This period provides students time to secure a job before starting repayments. If you get a job immediately after the course, you will still get a 6-month repayment holiday.
Also Read: Check here all the details about IDBI Education Loan Disbursement Process
Loan Margin and Security Requirements
For education loans above INR lakhs, IDBI bank requires a margin money in education loan of 15%. For loan amounts above INR 7.5 lakh, you need to provide a margin money of 20%. IDBI Bank provides education loans without collateral of up to INR 7.5 lakh. For an amount above INR 7.5 lakh, collateral is required to be pledged with the bank.
IDBI Education Loan Repayment Process
IDBI education loan repayment process refers to the various modes of payment of EMIs or part payments. The simplest way to repay the loan is through monthly EMIs. The bank determines the EMI amount based on the education loan interest rate and the repayment period. Check the details of the IDBI loan repayment process below:
Standard EMI-Based Repayment
The loan repayment is divided into equated monthly instalments (EMIs) that start after the moratorium period. Students who find employment immediately after graduation will find this option convenient as it is simple, with fixed monthly payments. Loan repayment in fixed EMIs makes budgeting easier for students but it may not offer the flexibility some students need if job placements are delayed.
Step-Up EMI Plan
IDBI’s step-up plan is designed to align with the increasing income levels of graduates. Initial EMIs are lower and they increase later based upon the salary of the borrower. This option is beneficial for students expecting a rise in income or pursuing careers with growth in the field of technology or management. However, rising EMIs can be difficult if the expected income growth doesn’t occur as expected.
Interest-Only Repayment During Moratorium
The bank charges simple interest during the moratorium period. Borrowers pay only the interest portion of the loan during the moratorium period which will help to reduce the overall repayment. This plan suits students with some income or support during their studies. While this reduces the total interest, paying interest during the moratorium can still be financially demanding without external support.
Also Read: Want an education loan from a government bank at low interest? Check here all about the PNB Education Loan Interest Rate
IDBI Bank’s Education Loan Repayment Example
Let’s assume a student takes an education loan of INR 20 lakhs at an interest rate of 10% with a moratorium period of course duration plus 6 months. Under the standard EMI plan, if the repayment tenure is set to 10 years post-moratorium, the EMI will be determined as follows:
Moratorium Duration: 2.5 years
Total Repayment Period: 10 years
EMI After Moratorium: INR 24000 to 25,000 (approximate, based on standard calculations)
By selecting the step-up plan, initial EMIs might start at a lower value (around INR 15,000) and gradually increase over time, easing early financial strain.
IDBI Bank education loan repayment plans offer international students studying abroad a range of options. Selecting the right plan is very important while repaying an education loan. Check some common FAQs below:
FAQs
IDBI Bank offers a repayment tenure of up to 15 years. However, you should choose a shorter tenure as it can reduce the overall interest cost.
Yes, IDBI Bank offers a moratorium covering the study period plus an additional 12 months that allow students time to secure employment before starting repayment.
Collateral is not required for loans up to INR 7.5 lakh, but for higher amounts, collateral is mandatory. A margin of 15-20% may be needed based on the loan amount.
IDBI offers a standard EMI-based plan, a step-up EMI plan, and an interest-only repayment option during the moratorium.
Yes, IDBI allows flexible part-payments and it won’t charge interest rates for that much amount.
To know more about education loans, the best bank accounts for, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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