6 Things to Remember About an Education Loan Interest Calculator

Pursuing a professional course in India or abroad is a rising trend observed among Indian students. Furthermore, completing a professional course from a prestigious institution upskill and boosts one’s career prospects. While getting into a course is largely based on merit, a significant part is the course fees. These fees are often hefty and many prefer to take education loans. In FY 2023, the education loans registered saw a record 20.6% year-on-year growth. 

This article talks about calculating the interest rate for an education loan to help you compare different lenders and their interest rates. You can plan your finances as per the EMI amount for easy repayment and financial planning.

What Is An Education Loan Interest Calculator?

The education loan interest calculator is an online tool that calculates the monthly EMIs on your education loan. The calculator considers loan amount, interest rate, and tenure to calculate the EMI amount. It is an easy tool to calculate loan EMIs and compare different loan interest amounts. You can check different interest rates with varying tenures to arrive at the payment plan that best suits you. This will assist you in planning your monthly budget when you have a clear picture of the EMI amount. It also reduces any need to do manual calculations thereby reducing the errors.

Top 6 Points to Remember About an Education Loan Interest Calculator 

1. Use a Calculator Only as a Reference: While a loan interest calculator gives accurate results, it does not factor in other charges like processing fees, service charges, etc. The loan interest calculator gives a rough estimate of monthly EMIs. It is best to directly go to the lender of your choice to get the exact EMI instalments you need to pay.
2. Easy to Access Online: Education loan interest calculators are easy to use and always available online.
3. No Personal Details are Required: You don’t need to provide personal details or sign up for any newsletter to use the calculator.
4. Helps to Plan Expenses: When you get the EMI amount, you can plan your finances better. You can make a monthly budget of expenses and factor in the monthly EMI in it.
5. Free of Cost: Most loan EMI calculators are free to use and one can use it as many times as they need
6. Compare Lenders: Interest rates and EMI amount will vary from lender to lender and a loan EMI calculator will quickly calculate the amount. You can narrow down on a lender that best suits you.

Key Features of an Education Loan Interest Calculator 

Using an education loan interest calculator can make the process of planning for your EMI efficient. Zype’s user-friendly loan EMI calculator has the following key features:

Accuracy: Zype’s education loan EMI calculator gives accurate calculations. There is no room for any kind of calculation error. You can get accurate results which ensures you create a solid budget.  

Quick Calculation: While manual calculations can take forever to complete. Zype’s study loan EMI calculator gives an EMI amount within seconds. 

Easy To Use: Zype’s education loan EMI calculator is user-friendly. Just enter the loan amount, interest rate and loan tenure to find out your EMI. 

Compare Options: With the option of experimenting and trying different variations of the study loan EMI, you can compare offers across various lenders. 

EMI Breakdown: Zype’s calculator will give you the breakdown of total interest, monthly EMI and total payable.

How to Use an Education Loan Interest Calculator?

You can use the Zype Education Loan Interest Calculator. Enter the following details, to calculate the loan EMI amount:

Loan Amount: Enter the loan amount you want to avail for your education.

Interest Rate: Enter the annual interest rate that fits your budget.

Tenure: Enter the number of months within which you want to repay the loan EMIs. A longer tenure will lessen the monthly EMI amount and a shorter tenure will lead to higher monthly EMI instalments.

Zype’s education loan calculator will give you accurate results. Adjust the interest rate and tenure as per your budget.

Factors Affecting Education Loan Interest Rates

The key factors that affect education loan interest rates are as stated below: 

Academic background: A candidate who has a good academic record throughout their education journey has a good chance of getting approved for a personal loan. The candidate’s age is another criterion that a lender considers while approving the loan.

Institution and course: If the candidate has selected an in-demand course in a top institute in India or internationally, they may get the education loan approved at a lesser interest rate. 

Loan amount and tenure: The loan amount and tenure directly impact the interest rate. High loan amounts attract higher interest rates. Similarly, longer tenure attracts high interest rates as well. Instant loan apps like Zype usually give you personal loan upto 5 lakhs at a 1.5% interest rate.

Co-applicant or guarantor: Often when a candidate applies for a loan, their parent serves as guarantor. The credit score of the co-applicant is also considered if the applicant has little to no credit history. The lender will look at the credit history of the guarantor, to approve the loan. A good credit score will increase the chances of loan approval.

Credit history: The credit score of the applicant is a crucial factor when approving an education loan. A good credit score ensures the applicant is likely to pay their EMIs on time

Collateral: In some cases, the lender may ask for collateral where the loan amount is high and credit history is not enough to support loan repayment.

Lender’s Criteria: Lenders have different policies and criteria for loan approval. Choose a lender whose criteria you fit. A few common criteria are that the candidate should be an Indian citizen, should have a minimum of 50% in HSC, and have a graduate degree. 

Benefits of Using an Education Loan Interest Calculator 

Using an education loan interest calculator has the following benefits: 

Quick Results: An education loan interest calculator will show the EMI amount instantly.

Simple to Use: Monthly EMI payments can be calculated simply by providing the principal amount of the loan, the applicable rate of interest, and the loan tenure.

Financial Planning: When there is clarity on monthly EMI payments, the candidate can save and plan their finances better. 

Compare Lenders: You can easily calculate different interest rates from various lenders and compare which option best fits you.

Amortization Schedule: The calculator provides one with the loan payment schedule. It helps one to understand how much loan has been paid and how much is left. 

Also Read: Maximum Personal Loan Amount You Can Get on Your Salary

Common Mistakes to Avoid When Using the Calculator 

Before you use a loan interest calculator, it is crucial to provide accurate information to avoid any mistakes as it can impact loan calculations. Adding accurate data and double-checking ensures correct financial data, thereby helping one to plan their finances. Some common mistakes to avoid are: 

Entering The Wrong Loan Amount: Entering an incorrect loan amount into the education loan EMI calculation is crucial. It directly impacts your ability to manage monthly payments and evaluate your financial position. This helps you determine the most suitable tenure as per your needs.

Overlooking The Loan Tenure: Choose the right loan tenure when you decide on the monthly education EMI payments. This tenure which most suits your financial goal is important to ensure timely payments without any financial burden.

Ignoring Interest Rate: A high interest rate affects your budget by raising your monthly EMIs and total repayment amount. To ensure the EMI calculations are accurate and in line with our financial objectives, it is important to choose the right interest rate.

Not Considering Additional Charges: Lenders charge additional fees like processing fees, prepayment penalties, or late payment charges. One needs to thoroughly consider these costs while calculating the monthly EMI amount on their education loan.

Comparing Different Education Loan Interest Rates

Zype offers interest rates starting from 1.5% up to ₹500000. Here’s a comparison table of three examples of education loans and their monthly EMI.

Note: Processing charges range between 2%-6% for Zype. Penalty interest and late fees will be charged to your total outstanding loan daily. These charges are not included in the monthly EMI amount.

Also Read: What is the Processing Fees & Charges for Personal Loan?

Conclusion

When you decide to take a loan for your academic journey, a study loan EMI calculator will be a good tool. It will help you compare various education loan options available and find one that fits your budget. However, most education loan interest rate calculators, factor in loan amount, interest rate, and loan term to calculate the EMI. There are additional charges like processing fees and service charges which most lenders levy. To get the exact EMI amount, it is best to contact the lender directly to know the additional charges and their terms and conditions.