What is "simple interest" education loan?
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I took an education loan from BOB back in 2022. The Loan sanction letter says that Simple interest should be charged for the term of moratorium which is until August 2025.
Now, I thought simple interest means that even if I don't make any interest payments (allowed by bank), the bank will only charge me monthly interest on the main amount disbursed and not on the total outstanding amount which includes the accumulated Interest.
Yesterday I went to bank to pay up and close the loan but the bank has charged me interest on total outstanding every month. I tried to explain them the difference between simple and compound interest but they didn't agree, also there is no definition of simple interest on either BOB or RBI's website which i can show them.
Any Idea, what i should do here? I would've let it go but the difference between simple and compound interest is coming to around 40k.
Any help or guidance is highly appreciated.
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for how long might 'bankruptcy' impact creditworthiness?
like today if I say: i do not have money. tomorrow they declare it NPA and keep pestering me.
Day after tomorrow i declare bankruptcy and they close the loan book on the account.
Then after 24 months or so, can I come back and say that now I have rebuilt my life.. give me credit cards, loans.
Would two-three years suffice?
P.S.: I am not inspired by Anil Ambani. I am asking for theoretical purposes only.
Simple interest wrongly mentioned probably
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If the sanction letter clearly mentions that only simple interest is to be charged during the moratorium period (until August 2025), you should only be paying interest on the principal amount, not on the accumulated interest.
Review Your Loan Documents: Recheck your sanction letter and loan agreement carefully. Look for any specific terms about interest calculation during the moratorium. Pay close attention to whether the letter specifies accrual of interest during the moratorium and how it is to be treated after the moratorium ends.
Approach the Banking Ombudsman: If you're unable to resolve the issue at the bank level, you can file a complaint with the Banking Ombudsman under the Reserve Bank of India (RBI) guidelines. This process is designed to resolve disputes between customers and banks. You can find more information on the official RBI website.