How does the repayment of a student loan work?
Curious about student loan
In India, the repayment of a student loan generally starts after a moratorium period of 6 to 12 months from the completion of the course or getting a job, whichever is earlier. During the moratorium period, the borrower is not required to make any payments towards the loan. However, interest continues to accrue during this period.
After the moratorium period, the borrower is required to start repaying the loan in equated monthly installments (EMIs). The EMI consists of both principal and interest components, and the loan is usually repaid over a period of 5 to 15 years.
There are several ways to repay a student loan, including through postdated cheques, Electronic Clearance System (ECS), or online payments. Some lenders may also offer the option of prepaying the loan without any additional charges. It is important to make timely repayments to avoid defaulting on the loan, which can have severe consequences on the borrower's credit score and financial future.