Have big dreams? Great. But, as you would know it yourself, it’s not enough. You have to invest time and energy to first right-skill yourself for your dream job. But, it’s easier said than done, of course. To upskill yourself, in most cases, you’ll require a formal degree or diploma. If lack of funds is the only thing that’s pulling you from behind, an education loan from CIMB may be your ideal solution. While you remain busy taking care of your assignments, test scores, and job opportunities, the loan can cover your expenses, and give you and your family the much needed peace of mind.
Wondering if this loan can serve the purpose? A glimpse at the following benefits and features of this loan may help you determine the suitability of this loan:
Under its interest repayment servicing scheme, you’ll have to pay a monthly interest only during the interest servicing period and a monthly instalment that includes both principal and interest charges, after it. The interest servicing period will depend on your course duration, borrowing amount, and total period of repayment. You may, however, also choose the standard-repayment option in which the monthly rest remains uniform throughout the entire duration of the loan.
Depending on the prevailing processing fee of 2%, and the current monthly rest interest rate of 0.11% p.a., effective interest rate (EIR), and monthly instalment, on a loan amount of S$20,000, for 5 years, will be (standard repayment):
|1 year||9.18% p.a.||S$1,716|
|2 years||7.38% p.a.||S$881|
|3 years||6.75% p.a.||S$603|
|4 years||6.42% p.a.||S$465|
|5 years||6.23% p.a.||S$382|
[Disclaimer: The figures displayed in this table are for illustrative purposes only and may differ from actual results.]
Please note that for the interest repayment servicing scheme, the interest servicing period will be determined by the duration of the programme in cases where the period doesn’t exceed 4 years. The interest servicing period will always be rounded up to the next 6-month whole number. For example, if the period is 2 years and 3 months in your case, it will be considered to be 2 years and 6 months. Using the education loan calculator available on the bank’s website, you can calculate the monthly interest payable during the interest servicing period and the monthly instalment after the end of that period.
For example, if your loan amount is S$90,000, the course duration is 4 years, the loan tenure is 8 years, then the interest servicing period will be 4 years, the monthly interest charges during this period will be S$450, and the instalment payment thereafter, will be S$2,089.
Let’s take another example. If your borrowing amount is S$200,000, the course duration is 2 years, the loan tenure is 10 years, and the interest servicing period is 2.5 years, the monthly interest charges during this period will be S$999. After the end of this period, you’ll have to pay S$2,707 per month (includes principal and interest).
Are you wondering whether the various fees on this loan would reduce its affordability? While such fears may not be completely unwarranted, you may still enjoy significant savings with this loan. Here are the most important fees that you may have to deal with:
|Prepayment Fee||1% of the amount repaid early|
|Cancellation Fee||1% of the undisbursed borrowing amount|
|Processing Fee||2% of the loan amount granted, payable upfront|
|Late Payment Charges||S$80|
|Fee for Cancellation/Amendment of a Cashier’s Order||S$20|
Before you apply for this loan, take some time off to contemplate on the following points:
In order to be eligible for this education loan, you must:
A guarantor may be required in case of one of the following factors or a combination of the following factors:
Here is a list of documents that you’ll have to submit along with your completed application:
In addition, you’ll also provide the following income documents (where applicable) depending on your employment category:
In order to apply, use any of the following channels:
Q. What are the monthly-rest rates under the Standard Repayment scheme and the Interest Servicing scheme?
A. Under the Standard Repayment scheme, a monthly rest of 0.11% p.a., depending on CIMB’s prevailing prime lending rate (currently at 5.5% p.a.), would apply for the entire duration of the loan. The monthly rest currently for this scheme is 5.5% p.a. - 0.11% p.a.
For the Interest Servicing scheme, however, a rate equal to the sum of the prevailing CIMB’s prime lending rate and 0.49% p.a. would apply during the interest servicing period (the first 4 years) and the difference between the prime lending rate of the bank and 0.11% p.a. would apply thereafter.
In other words, the monthly rest interest for the first 4 years of the course duration will be 5.5% p.a. + 0.49% p.a. and post this period, it will be, 5.5% p.a. - 0.11% p.a.
Q. Will the bank reimburse me from the credit facility (education loan) for the tuition fees that I have already paid?
A. No. This loan may not be used to reimburse tuition fees and related charges, once settled.
Q. What is the monthly-rest basis for interest computation?
A. Under this method, the outstanding balance on the loan from the previous month, is used to calculate the loan interest and the monthly instalment.
Q. Do I have to give the bank a formal notice for early redemption of the loan?
A. Yes. You may prepay the loan by giving the bank a formal, written notice at least 1 month before the date of prepayment. Don’t forget to mention the date in your letter.
Q. Is there a time limit within which I must notify the bank of any error I find in the statement?
A. Yes. If you spot any errors in the statement issued by the bank, you must inform them within 14 days from the date of statement generation. Otherwise, you may have to forfeit your claim for a grievance redressal.