Education and Career Forum

I am interested to study MBBS by taking an education loan from HDFC Bank. I don’t know how they calculate the interest rates. So, I just want to know about the calculation of education loan. Please tell me asap.

HDFC Bank calculates interest rates on education loans using a reducing balance method. This means that interest is calculated on the outstanding principal amount, and as the loan is repaid, the principal reduces, and hence the interest payable also reduces.

The interest rate on the education loan can either be fixed or floating. In the case of a fixed interest rate, the rate remains the same throughout the loan tenure. In the case of a floating interest rate, the rate may vary during the loan tenure based on market conditions and other factors.

The interest rate charged by HDFC Bank on education loans ranges from 8.95% to 10.45% per annum, depending on the loan amount, the repayment tenure, and other factors.

To calculate the interest on the education loan, HDFC Bank uses the following formula:

Interest Payable = (Outstanding Principal Amount x Interest Rate x Number of Days) / (365 or 366)

In this formula, the number of days refers to the number of days for which the interest is being calculated, and 365 or 366 refers to the number of days in the year.

It is advisable to check with HDFC Bank for the exact details and terms of the education loan, including the interest rate, repayment tenure, and other charges that may apply.