Faq's

Home Loan

When can I apply for a Home Loan?

Home Loan can be applied at any time when you have made a decision to acquire or construct a property.

Home Loan can be applied even for the renovation of the Home also.

Q: Pre-approved loan. Should I get one before finalizing the property?

Pre-approved loan is an in-principle sanction from your bank after assessing your credentials and eligibility. It is a confirmation from the bank that you are in fact eligible for borrowing a certain sum of money. As it is pre-approved thus it lead to a quicker disbursal.

Q: Does tenure affect the cost of the loan?

Long Tenure means lower EMI but expensive loan because of larger interest towards the loan. Short Tenure means higher EMI and less expensive loan as you repay the loan faster thus interest is lower.

How long does it take to get my application processed and the loan sanctioned?

Two weeks for processing of loan application and one week for verification and disbursement.

What security/collateral do I have to provide?

Banks generally take some securities which are called collateral securities. These are the securities against the failure on the part of the borrower to repay the loan amount. These could be in the form of guarantee from one or two persons, life insurance policies having the surrender value not less than the loan amount, deposit of shares, and units or other securities.

Does the property have to be insured?

Yes, property need to be insured for fire and other respective hazards as required by the banks during the loan tenure. The banks will be the beneficiary of the insurance policy .

Can I take a Home Loan for construction in one city while working in another city?

Yes, the banks usually service this loan after getting details of the plot legally verified.

What are the bases of interest rates calculation?

The interest on Home Loans is usually calculated on Monthly Reducing or Yearly Reducing balance.

In Monthly Reducing Balance = Interest to be paid on (Total Loan Amount – Total EMI’s paid till date)

In Yearly Reducing Balance = Interest to be paid on (Total Loan Amount – Total EMI’s paid till end of the last year)

What is the Fixed Rate of Interest?

Fixed Rate of Interest means that the interest rates remain fixed for the entire duration the loan. This means that interest do not fluctuate as per the market fluctuations.

And Floating Rate of Interest?

This is the rate of interest that fluctuates according to the market lending rate.

Can I repay my loan ahead of schedule?

Yes, loan can be repaid before the schedule. However, banks charges a fee for early redemption of loan. This fee can vary between 1-2% of the loan amount being pre-paid.

Do I get a tax benefit on Home Loan?

Yes, tax benefits are available on the principal and interest components of the loan under the Income Tax Act, 1961. As these benefits varies from time to time, thus it is suggested to go for the current benefits.

Does the agreement for sale have to be registered?

Yes, as the Agreement for Sale between the builder and the purchaser is required by law to be registered.

Auto Loan

How much loan can I get?

The amount of the loan depends upon:

• The cost of the vehicle.
• The type (standard/premium).
• The percentage financing offered.

If you are buying a new car, you can get up to 90% financing. Different banks have different terms for different models (standard/premium, new/old).

What documents do I need to establish proof of income?

Income proof - IT returns for the last two years.

Some banks do not consider speculative income - from the stock market, rental or agricultural income. Some banks discount such income by up to 50% in their workings.

Is it necessary to have an account with the bank from which you take a loan?

No, it is not necessary. But bank may provide some privileges of having an account in the same bank.

Is it better to go to my current bank for loans?

Yes it is suggested to go to your current bank if you have a good repayment record for an earlier transaction. You are also most likely to get a lower lending rate and your process is sure to move faster.

Do I need to give collateral to get a loan?

No, collateral is not required. But you will have to pledge the car in the banks name and an endorsement made in the Registration Certificate (RC) book of the vehicle.

Is credit profile important?

Credit Profile is the most important factor it shows your ability to pay back the loan amount.

What are the detailed components of my credit profile?

The components of credit profile are age, profession/occupation, income/financials, previous credit history etc.

Can I change the tenure and amount of loan taken after the loan amount has been disbursed?

Yes, you can change the tenure and amount of the loan.

Can I sell my car before I repay my loan?

NO. An NOC is required from the banks before you can sell the car.

Can I get a temporary relief from paying my installments?

Yes, in some cases you can. You need to inform your bank in advance. This should only be for a few days or months and you may have to pay delayed payment charges.

What is a default?

Frequent prolonged delays and dishonored cheque are deemed to be defaults in repaying your loan.

Can I get finance for car-accessories?

Most banks do not finance car-accessories other than those which are factory fitted like air-conditioners. Some may however fund music-systems and other such expensive accessories.

What is Zero Interest Scheme?

In this scheme, no interest is charged and borrower is required to repay only the principal amount. These schemes usually offer low amount for short tenure. One has to be aware about all other terms in these schemes as there are always possibilities of certain hidden charges.

What happens if the car meets with an accident?

In the event of an accident, the first step is to inform the insurance company. The company then sends a surveyor to assess the extent of damages to the car. Your claim is then processed and paid directly to the banks, unless you have taken an NOC from the banks, in which case the payment will be made by the insurance company in your favor. The bank normally gives you an NOC if you are regular in your payments. In case of a complete loss, the bank would receive the payment directly from the insurance company.

What is De-Dupe?

Most banks have compiled a list of defaulters. Details of all clients are run through this list to check if the same client had applied for a loan. If the client is the same, the file is rejected.

Credit Card

How many types of cards can I choose from in India?

3 types of cards available, Visa, Master Card and Amex (American Express).

What is the process for owning a Credit Card?

Fill the application form and submit it along with the necessary documents.

How much does it cost to own a credit card?

The basic cost involves

• Joining fee – One time payment. Vary from bank to bank from Rs. 100 to Rs. 1000.
• Annual fee – Charged every year to continue your membership on the card. This may vary from Rs.400 to Rs.2000.

Are there advantages in paying through a Credit Card even if I have cash I can spare?

Using a Credit Card, you can delay payment of the bill by up to 50 days.

How are the fees levied when I delay my repayments?

The late payment fees are very high, around 15% of minimum payment due or 2.5% of the total outstanding balance. Thus it is better to pay the minimum amount every month to avoid such a high interest.

What is an Add-on Card/Supplementary Card?

An Add-on card is usually for dependents of the Credit Card holder, be it your spouse, parents or children. Any additional cards under this head come at a fee, which varies between Rs.125 to Rs.1,000.

Credit limit remains same and it gets divided between the main and add-on cards.

What is a Global Card?

Global Card can be used overseas also. Global cards are accepted in over 200 countries. These can be as an ATM card. You can spend in dollars or any other foreign currency and settle the dues in your local currency. Your credit limit is based on the Basic Travel Quota (BTQ) entitlement.

What is PIN?

PIN - Personal Identification Number. It is a unique combination of numbers given to every card. It is a 16 digit number with the first 8 digits reserving information of the card issuer and the country and the next 8 digits stores customer information like the category of the membership etc. The PIN serves as a password to avail certain services like cash withdrawal from ATMs.

What happens if I lose my PIN?

If you lose the PIN get in touch with the bank ASAP. The bank will replace your credit card and issue a new PIN.

What are Reward Points?

This concept basically rewards you with points for so-and-so amount spent on purchase or services through your card. Each reward point have some monetary value and thus, rewards points can then be redeemed for gifts or for select product purchases or even for paying the annual fees in some cases.

What does the purchase protection feature of Credit Cards mean?

Purchase protection feature of Credit Card means all items bought from the card are automatically insured from damages or loss due to theft/fire, up to a certain amount. This generally works out to around Rs.40,000 worth of cover.

Is it wise to use the cash advance facility?

As the interest rate is very high, usually around 36% to 38%, cash advance facility should be used only when it is extremely necessary.

How should I protect my credit card from abuse?

Never treat your card carelessly and always keep it safely in your wallet/purse.

Never leave your cards unsigned or disclose your card number.

What should I do if my credit card is lost or stolen?

Inform the bank immediately. The bank will then immediately freeze/deactivate your card to prevent any fraud. After you report the loss, your liability is restricted to Rs.1,000.

Working Capital

Q: What is an overdraft facility?

An overdraft limit is usually given against stock and book debts. It is given as a limit in your cash credit account and can be drawn and repaid depending on your cash flow needs.

Q: Can the loan be used for any other purposes?

No, the loan amount should be used for meeting the working capital expenditure only.

Q: How long does it take for the loan to be sanctioned?

Generally it takes between 7 to 20 working days after full documents are submitted.

Q: What are the minimum/maximum amounts of Working Capital Loan?

The minimum amount is ` 3,00,000. The maximum amount is ` 25,00,00,000.

Q: What is the interest rate for Working Capital Loan?

Interest rate is between 12-16% depending on the profile of borrower.

Q: Which companies are eligible for a Working Capital Loan?

All entities engaged in manufacturing, service or trade segment as below are eligible for a Working Capital Loan:

• Sole Proprietorship Firms
• Partnership Firms
• Private Limited Companies
• Trusts and Societies
• Public Limited Companies.