CIMB Education Loan

CIMB Education Loan Review: Not the Cheapest, But Can Be a Good Backup

With a 4.78% interest rate, CIMB Education Loan’s offer is higher compared to other banks in Singapore. But with a low 2% processing fee, a maximum loan of S$200,000, and its “Interest Servicing Scheme”, this offer might still be a good alternative if one fails to obtain cheaper loans. 

 

Key Features

Loan Repayment Scheme Interest servicing scheme
Interest Rate 4.78% per annum
Processing Fee 2%
Maximum Loan Amount S$200,000 or 8 times of monthly income (whichever is lower)
Loan Term Flexible loan tenures between 1 to 10 years

 

How CIMB Education Loan Works

There are essentially two types of education loans distinguished by their repayment schedules. One is the monthly rest education loan. The other one is the interest servicing repayment scheme. 

The interest rate, for obvious reasons, is of utmost importance. Read also Interest Free Study Loan in Singapore.

Other factors that you should consider are processing fees and loan tenures. These variables affect the interest and monthly amount that you have to pay throughout the loan term. But the one factor that has far-reaching implications is the type of repayment schedule. 

 

CIMB’s Education Loan as compared to other banks

In this table, CIMB’s Education Loan stands out with a 4.78% interest rate – an intimidating option for students looking for financial support. But looking closely, CIMB allows its borrowers to get a S$200,000 maximum loan amount in which they can repay for up to 10 years. 

Bank Interest Rate Processing Fee Maximum Loan Amount Loan Term
CIMB Education Loan 4.78% 2% S$200,000 or 8x of monthly income  1-10 years
Maybank Education Loan 4.5% 2% S$200,000 or 8x monthly income  1-8 years
OCBC FRANk Education Loan 4.50% 2.5% S$150,000 or 10x monthly income 1-8 years
POSB Further Study Assist 4.38% 2% S$80,000 or 10x combined monthly income  1-10 years

 

Monthly Rest Education Loan

Monthly rest education loans use the standard repayment scheme. The monthly payment includes both the loan principal and interest accrued.

 

1. Sample Computation of Standard Repayment Scheme

  • Loan Amount: S$20,000
  • Interest Rate: 4.78% per annum
  • Processing Fee: 2%

 

2. Interest Servicing Repayment Loan

CIMB offers interest servicing repayment (also called interest-only) education loans. In this repayment schedule, you pay only the interest during your study. After the interest servicing period, that is when you begin to pay for both the principal and the interest accrued.

“What is the interest servicing period?” You may ask. In essence, it is the course duration rounded up to the next 6-month mark and will never exceed four years. Suppose your course is two years and eight months. In this case, the interest servicing period would be three years.

 

3. Sample Computation of Interest Servicing Repayment Scheme

  • Loan Amount: S$20,000
  • Interest Rate: 4.78% per annum
  • Course Duration: 48 months
  • Interest Servicing Period: 4 years
  • Processing Fee: 2%

In this example, the monthly payment during the interest servicing period would be S$100. Compared to the standard repayment scheme, this amount is much lower because you are not paying the principal.

 

CIMB Education Loan Effective Interest Rates

How accurate is the advertised interest rate of a CIMB education loan? As of the publication of this article, the bank is offering 4.78% per annum. However, it does not consider the compounding period, especially for long tenures.

Consider this:

Suppose there are two loans, both having the same 4.78% interest rate. Loan A compounds once a year, while Loan B compounds twice a year. Although they have the same stated interest rates, Loan B will be higher.

A better representation is to use an effective interest rate (EIR). It is essentially a more accurate depiction of the real interest rate because it factors the compounding period.

 

Monthly Rest Repayment Scheme EIRs:

  • Loan Amount: S$20,000
  • Interest Rate: 4.78% per annum
  • CIMB Prime Rate: 5.5% (as of publication time)
  • Monthly Rest Interest Rate: CIMB Prime Rate – 0.72% per annum
  • Processing Fee: 2%

Interest Servicing Scheme EIRs:

  • Loan Amount: $20,000
  • Interest Rate: 4.78% per annum
  • CIMB Prime Rate: 5.5% (as of publication time)
  • Interest Servicing Interest Rate: CIMB Prime Rate + 0.49% per annum (first 4 years); CIMB Prime Rate – 0.11% per annum (5 to 10 years)
  • Course Duration: 48 months
  • Interest Servicing Period: 4 years
  • Processing Fee: 2%

The lowest EIR for the standard repayment scheme is 5.22%. CIMB charges more for the interest servicing scheme, the lowest EIR being 6.11%.

 

How to apply for CIMB Education Loan 

1. Eligibility

Only Singapore citizens and Singapore permanent residents ages 16 to 50 can apply for a CIMB education loan.

CIMB will require a guarantor if the applicant:

  • Is below 21 years old
  • Does not meet the minimum income criteria of S$24,000 annually or S$2,000 per month
  • Taking out a loan that is more than eight times the monthly income
  • Taking out an interest servicing education loan scheme
  • Pursuing full-time study

Applicants who qualify may take out a minimum loan amount of S$1,000 and up to S$200,000 or 8 times the monthly income (whichever is lower).

2. Requirements

  • Photocopy of principal applicant and guarantor’s NRIC (front and back)
  • Completed and signed application form
  • Letter of acceptance from education institution stating course, duration, and total course fee
  • Proof of relationship between principal applicant and guarantor
  • Marriage certificate
  • Birth certificate

Click here for more information. 

 

CIMB Education Loan Fees and Charges

Item Charges
Processing Fee 1% of the approved education loan amount
Cancellation Fee 1% of the education loan amount canceled
Early Repayment Fee 1% of education loan amount prepaid
Late Payment Fee S$80
Issuance of Cashier’s Order S$10 (waived for the first three)
Cashier’s Order Cancellation/Amendment Fees S$20

 

CIMB Education Loan Review Highlights

One of the best investments you can make is on yourself – a university course. If money is a problem, try getting an education loan. CIMB, in this regard, does not offer the most attractive interest rates. Nevertheless, it is an excellent backup if you cannot find a better rate.

  • It has attractive interest rates but is not the lowest on the market.
  • It has among the lowest processing fees for study loans and no hidden fees.
  • The loan requested is relatively easy to get approved.

If you need help finding the best rates and getting an approved loan, look no further than InstantLoan – a loan comparison site where you can request up to three free quotes from licensed moneylenders!

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