Higher education is a crucial for having a bright career in the future. But the quality education, either in Nepal or abroad, may turn out to be out of budget and as a result, someone may face the challenge of covering the high prices. Thus, loans for students have become a vital means of support for the needy students so that they can realize their educational dreams. Nevertheless, it is important to understand the loan terms and conditions before getting into this long-term financial obligation. This article will acquaint you with the basic terms of student loans as per the regulatory framework of Nepal Rastra Bank (NRB) and local banks’ products.
Key Student Loan Terms: A Borrower’s Glossary
When approaching for education loan as a student, understanding the following banking terms is essential to take a informed decision.
- Principal: The “Principal” is the money that you take out of the bank basically for your education needs. That means the whole cost of your education which includes the tuition fees, living expenses, and other costs that may arise during your study period, is the principal.
- Interest rate: This is the money paid for the borrowed principal expressed as a percentage. In Nepal, the education loan interest rate can be two – fixed (same rate for the entire loan term) or floating (the rate varies according to the bank base rate).
- Loan Tenure: It is a period of time for which the loan was given. It is composed of the study period and the repayment period. Loan tenures in Nepal are normally between 5 and 15 years.
- Moratorium Period: This is the most important student loan feature. It is usually understood as the time during the course of study and sometimes a certain period (usually 6 months to a year) after completion during which no repayment of the principal is required. The interest for this period is generally calculated and may be required to be serviced (paid) regularly or sometimes can be added to the principal amount and paid later.
- Equated Monthly Installment (EMI): This is the fixed amount you give the bank every month to pay off your debt. The EMI includes two parts – the principal and the interest ones.
- Collateral (Security): Because student loans are large most of the time, banks in Nepal have to ask for collaterals to secure the loan. This can be real estate (land or building), fixed deposits, or other approved securities. A bank-approved valuator will have to appraise the value of the collateral.
- Processing Fee: The bank charges a one-time fee to cover the costs related to handling your loan application. Normally, this money is a percentage of the loan amount.
- Co-applicant/Guarantor: The co-applicant is a co-borrower, a parent or a guardian, most likely, who shares the responsibility for the loan repayment with you. The guarantor is the one who gives the bank the assurance that if the borrower cannot, he/she will repay the loan. Most of the student loans in Nepal require the presence of a creditworthy co-applicant or guarantor, without which, the loan will not be granted.
Fuel Your Ambitions with Global IME Bank’s Education Loan
Global IME Bank is a reliable financial partner that is dedicated to empowering the academic journeys of Nepalese students when you are considering your options for an education loan. The bank has put forth a competitive and flexible Education Loan scheme for students that is aimed at meeting the diverse requirements of students who wish to study either in Nepal or abroad.
Global IME Bank’s Education Loan: Key Features
- Competitive Interest Rates: Global IME Bank provides appealing interest rates, enabling your loan to remain affordable, with the possibility to choose either fixed or floating options. (Banks usually give the interest rate, so it will be better if you contact the bank for the latest one).
- Flexible Repayment Tenure: The bank offers a repayment period that is not too long nor too short so that students can repay the loan in manageable EMIs without putting too much pressure on their financial condition after the completion of their studies.
- Generous Moratorium Period: Global IME Bank gives a moratorium period that is as long as the course duration because it understands the financial difficulties of the students and thus you will be able to concentrate on your studies with peace of mind.
- Comprehensive Loan Coverage: The loan amount may be used for a wide range of expenditures that include tuition fees, accommodation, books, supplies, and travel expenses for those students going abroad for their studies.
- Transparent Processing: By maintaining a transparent and uncomplicated procedure for the submission of applications, Global IME Bank not only assures a smooth experience but also students and their families can avail of the bank’s services without any hassles. Its processing fees are reasonable in comparison to the industry.
- Nationwide Presence: Global IME Bank has a wide network of branches in the different parts of the country so it is accessible to students from all the corners of Nepal who are availing of their education loan services.
By comprehending the essential terms and the rules and also by checking up on what customer friendly banks like Global IME Bank have to offer, you will be able to take your next step towards a better and more successful future with full confidence.
Disclaimer: The terms and conditions of loans are subject to change as per the market condition and NRB regulation. It is always advisable to directly contact the bank for the most current and detailed information before making any financial decisions.
