Education loan terminology used by banks or NBFCs

Principal Amount: The initial amount of money borrowed for education.

Interest Rate: The percentage charged by the lender for borrowing the principal amount.

EMI (Equated Monthly Installment): A fixed payment amount made by the borrower to the lender at a specified date each calendar month.

Moratorium Period: A specified period during the loan term when the borrower is not required to make any principal or interest payments.

Collateral: Assets pledged by the borrower to secure the loan. It could be property, investments, or other valuable items.

CIBIL Score: A credit score provided by Credit Information Bureau (India) Limited. Lenders use this score to assess the creditworthiness of the borrower.

Co-signer or Co-borrower: A person who signs the loan agreement alongside the primary borrower, sharing the responsibility of loan repayment.

Repayment Tenure: The period over which the borrower agrees to repay the loan. It is usually stated in years.

Subsidy: Some education loans might have subsidies, reducing the effective interest rate for the borrower.

Processing Fee: A one-time fee charged by the lender for processing the loan application.

Creditworthiness: The borrower's ability to repay the loan, often assessed based on credit history, income, and other financial factors.

Prepayment: Repaying the loan before the scheduled due date.

Default: Failing to make loan payments as agreed in the loan agreement.

Margin Money: The percentage of the total educational expenses that the borrower has to bear, and the rest is covered by the loan.

Disbursement: The release of the loan amount by the lender for educational expenses.

ROI (Rate of Interest): Another term for interest rate, representing the cost of borrowing.

Credit Counseling: Professional guidance provided to borrowers for managing their finances and loans responsibly.

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