Margin money or loan margin is the term; you hear when you are applying for an education loan in a bank.
When you apply for an education loan, you come to know many new terms that you generally don’t know. But it is important to know about the margin money.
When you apply for an abroad education loan, most of the time some banks do not provide 100% finance for your total expenses. The applicants have to contribute a certain percentage of money for their total expenses.
So we can say that the margin money is the contribution by the applicant for his total expenses.
For example, when a public bank like SBI & PNB informs the applicant that their loan margin is 10%. Then that 10% of the loan amount is to be contributed by you. This 10% of the loan amount that you are contributing, is your loan margin.
Now let’s understand.
We assume that your total expenses for going abroad education loan are 50 lakhs. If the bank informs that the loan margin is 10%. Then the bank will finance 90% of 50 lakhs that is 45 lakhs. The rest of 10% of 50 lakhs is 5 lakhs that have to be paid by you. This Rs. 5lakhs is your margin money.
Margin money varies from bank to bank.
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