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Holiday Loan


Interest Rates & Charges for a Holiday Loan

Some fees and charges are levied on Holiday Loans which include interest rates, one-time processing fees, prepayment charges, etc. The interest rates charged by banks or financial institutions depend on the applicant’s profile. Based on the loan option, the interest rates may be substantially high.

You can choose between fixed and floating rates.  The interest rates for Holiday Loans vary from 11% to 22%.

Here is the list of interest rates offered by some of the top banks:


Holiday Loan



Interest Rates

Kotak Mahindra bank

10.99 - 19.65%

Standard Chartered bank

10.99 - 14.49%

HDFC bank

11.29 - 19.50%

ICICI bank

11.70 – 18.85%

Bajaj Finserv

11.99% onwards

IndusInd bank

12.99 - 20.00%

SBI bank

12.90 - 16.55%




Types of Holiday Loan Interest Rate

There are two kinds of Holiday Loan interest rates: fixed and floating.

Fixed Interest Rate

Here, the rate of interest charged on the Holiday Loan amount will remain constant throughout the loan repayment period. You know your Holiday Loan EMI obligation at the start of the tenor, allowing you to plan your monthly budget accordingly.

Holiday Loan
Holiday Loan

Floating Interest Rate

Here, Holiday Loan interest rates could change depending on changes to the Marginal Cost of Lending Rate (MCLR), which is the base rate set for banks by the RBI. With changes in MCLR, the interest rate on loans also gets revised. With a lower interest rate, the repayment amount also reduces. On the other hand, if the interest rates increase, your EMI obligation will also increase. A floating Holiday Loan interest rate makes it difficult for you to ascertain your monthly financial obligation.

Holiday Loan Interest Calculation Method

There are two methods to calculate interest: flat rate method and the reducing balance method.

In the flat interest rate method, the interest rate is based on the complete loan amount you pay during the repayment period. In case of reducing the balance method, the rate of interest on the Holiday Loan will be considered and calculated on the basis of the outstanding loan amount.

Flat Interest Rate Calculation

EMI = (principal + total interest payable) / loan tenure in months i.e. total interest payable = P x r x n/100

Where, ‘P’ is the principal loan amount, ‘r’ is the rate of interest, and ‘n’ is the loan tenure in months.

Floating Interest Rate Calculation

EMI = [P x r x (1 + r) ^n] / [(1 + r) ^(n-1)]

Where, ‘P’ is the principal loan amount, ‘r’ is the rate of interest, and ‘n’ is the loan tenure in months.

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