11 Important Education Loan Terms You Need to Know

Collateral

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Cosigner

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Early Repayment Penalties

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Fees

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Moratorium Period

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Sanction Letter

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Loan Tenure

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Margin Money

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Monthly Payments (EMI)

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Variable Interest Rates

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Annual Percentage Rate (APR)

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11 Important Education Loan Terms You Need to Know

Collateral

A collateral is a physical asset demanded by the lender as security, to get gold of a loan amount.

Cosigner

A cosigner is someone who signs your loan with you, making them responsible for loan repayments, if you default.

Early Repayment Penalties

Early repayment penalties are nothing but charges or fees you must pay if you choose to repay your loan early.

Fees

There are quite a number of fees attached to a loan, such as currency conversion fees, insurance, and processing or admin fees.

Moratorium Period

A moratorium period is a time when you aren’t expected to make loan payments. During this time, interest may still be applied to your loan.

Sanction Letter

A sanction letter is a document from your lender which shows how much money you’re borrowing.

Loan Tenure

Loan tenure is the total time you get for loan repayment. It begins at the end of your grace period and concludes with your last payment.

Margin Money

Margin money is the amount you pay to the bank before returning it as part of the loan.

Monthly Payments (EMI)

EMI refers to the amount you will have to pay after the grace period.

Variable Interest Rates

It is important to know that Variable interest rates are not fixed and fluctuate as per the market. Your monthly due will vary according to the interest rates.

Annual Percentage Rate (APR)

APR (%) is your interest rate plus all the fees/costs associated with your loan. It is always higher than your interest rate.

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