What is Margin in Education Loan?: Are you also one of them who faces a lot of financial jargon when it comes to education loans? If you are confused about what exactly is margin money in education loan then this is the right place. In this article of ours, we will list everything about what is margin in educational loan and how to calculate margin money, what you need to know about margin money. In addition to these we will also explain what is the relation between margin money and other expenses, etc. in detail here.
- What is Margin Money in Education Loan?
- How to Calculate Loan Margin Money?
- Banks offering Margin Money
- Relation between Margin Money and Overall Expenses
- What is meant by 0% Loan Margin Money?
- How does Margin Money Work?
- FAQs on Margin Money in Ed Loan
- What is margin money in short?
- What is the formula for Margin Money in Percentage?
- When do you have to pay the margin money?
- What is the advantage of margin money on education loan?
What is Margin Money in Education Loan?
Margin in Education Loan is nothing but some amount of the expenditures that the students will bear on their own. Usually, minimum loan margin is around 10% that most of the public sector banks follow. For instance, if you choose a bank for your expenditures and the bank offers loan amount of around 85% then you need to take care of the remaining 15% expenditures.
How to Calculate Loan Margin Money?
Margin money usually is the loan amount that the bank decides the borrower to pay. In simple words, it is nothing but the difference between the total amount required to the bank granted amount. Now that you are familiar with the term margin money let’s discuss in detail on how to determine the margin money.
To put it in short we can write the Margin money = total amount required – bank granted amount
In terms of percentage the same formula can be rewritten as (1- (Loan Amount Sanctioned) / Overall Expenses) )*100
Let’s us discuss in detail considering an example for better illustration
Consider Mr. Anil is going to Texas university where overall expenses for two years of education are INR 60 lakhs. Mr. Anil approached a bank for his education loan requirement for abroad study and got a loan sanctioned of INR 45 lakhs. This means that Mr. Anil will take care of INR 15 lakhs himself for his higher education and this15 lakhs or 25 % { (1-45/60)*100 } is the margin money in Mr. Anil’s case.
Banks offering Margin Money
Majority of the government banks provide margin money in education loans. However, the percentage of margin money in education loan is fixed by the banks.
| Banks | Minimum Requirements |
| SBI | Global advantage: 10%
Student loan: Maximum 4 Lakhs: NIL More than 4 Lakhs: 15% |
| BoB | Max 4 Lakhs: NIL
For amount more than 4 Lakhs: 5% |
| ICICI Bank | Max 4 Lakhs: NIL
In case of more than 4 Lakhs: 15% |
| Axis Bank | Max 20 Lakhs: NIL
Amounts more than 20 Lakhs: 5%-15% |
Relation between Margin Money and Overall Expenses
Margin Money is inversely proportional to overall expenditures. Lower is the education loan amount higher is the margin money. In caseof students visiting the countries like US for higher studies banks double the loan amount in I-20 letter thus decreasing the margin money. However, this might not seem a fair decision as the living expenses are more than the actual.
What is meant by 0% Loan Margin Money?
Some of the private lenders will provide 0% margin money on unsecured education loans. There are chances of public sector banks offering 0% loan margin money depending on certain eligibility criteria. You might have doubts on whether to choose these banks to leverage the benefits. Yes, you can choose them but need to look into certain factors.
Wanna learn about how to obtain non collateral education loan abroad go through our writeup and know everything you need to know.
How does Margin Money Work?
There are certain policies associated with the margin money in Ed loan. However, these differ from bank to bank and the percentage of margin money is not fixed. Minimum of 10% margin money is levied in most of the cases. Based on the collateral value and loan amount for total expenses overall percentage of margin money might get increased. However, keep in mind that the margin money percentage will not go less than 10%.
FAQs on Margin Money in Ed Loan
- What is margin money in short?
Margin money in short is nothing but the amount of expenditures that the borrower has to bear on their own.
- What is the formula for Margin Money in Percentage?
The formula for Margin Money in Percentage is given by the equation Margin Money = (1- (Loan Amount Sanctioned) / Overall Expenses) )*100
- When do you have to pay the margin money?
You need to pay the margin money once your loan is sanctioned.
- What is the advantage of margin money on education loan?
One main benefit of margin money on education loan is that it builds a sense of trust between the lender and borrower.
Final Words
We wish the knowledge shared on the page regarding what is margin money in education loan has shed some light on you. If you need further assistance on the same feel free to write us through the comment section and we will guide you. Stay tuned to our site learncbse.in for more latest updates on education loans, how to get them easily.
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