A Guide To Floating Interest Rates On Education Loans

Have you ever wondered why your education loan interest rates change?

It is due to the concept of floating interest rates. Let’s explore.

Floating interest rate – the concept

A floating interest rate is that which changes during the loan tenure depending on the change in market interest rates.

Floating interest rates are linked to the bank’s Marginal Cost of Lending Rate (MCLR). The MCLR, in turn, is linked to RBI’s repo rate.

A spread or margin is added to the MCLR to calculate the floating rate. If the MCLR changes, the floating rate also changes.

Thus, floating interest rates keep changing during the loan tenure. In some years, the rates might be high and in other years the rates might fall.

Choose from fixed or floating interest rate education loans. While fixed rates would stay the same throughout the tenure, floating rates would change.

Get cost-effective interest rates with IDFC FIRST Bank Education Loans and fund your dream of higher education without hassles.