Frequently Asked Questions

Home Loan Questions

For what purposes can I seek a first time home loan?

You can generally seek a first time home loan for buying a house or a flat, renovation, extension and repairs to your existing house. Most banks have a separate policy for those who are going for a second house. Please remember to seek specific clarifications on the above-mentioned issues from your commercial bank.

How will your bank decide your home loan eligibility?

Your bank will assess your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable / surplus income, (which in turn is based on factors such as total monthly income / surplus less monthly expenses) and other factors like spouse's income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically a bank assumes that about 55-60% of your monthly disposable / surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individual’s gross income and not on his disposable income.

The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo / outflow which in turn depends on your disposable income. Banks generally fix an upper age limit for home loan applicants.

What is an EMI?

You repay the loan in Equated Monthly Installments (EMIs) comprising both principal and interest. Repayment by way of EMI starts from the month following the month in which you take full disbursement. (For understanding how EMI is calculated, please see annex).

What documents are generally sought for a loan approval?

In addition to all legal documents relating to the house being bought, banks will also ask you to submit Identity and Residence Proof, latest salary slip ( authenticated by the employer and self attested for employees ) and Form 16 ( for business persons/ self-employed ) and last 6 months bank statements / Balance Sheet, as applicable . You also need to submit the completed application form along with your photograph. Loan applications form would give a checklist of documents to be attached with the application.

Do not be in a hurry to seal the deal quickly.

Please do discuss and seek more information on any waivers in terms and conditions provided by the commercial bank in this regard. For example some banks insist on submission of Life Insurance Policies of the borrower / guarantor equal to the loan amount assigned in favour of the commercial bank. There are usually amount ceilings for this condition which can also be waived by appropriate authority. Please read the fine print of the bank’s scheme carefully and seek clarifications.

What are the different interest rate options offered by banks?

Banks generally offer either of the following loan options: Floating Rate Home Loans and Fixed Rate Home Loans. For a Fixed Rate Loan, the rate of interest is fixed either for the entire tenure of the loan or a certain part of the tenure of the loan. In case of a pure fixed loan, the EMI due to the bank remains constant. If a bank offers a Loan which is fixed only for a certain period of the tenure of the loan, please try to elicit information from the bank whether the rates may be raised after the period (reset clause). You may try to negotiate a lock-in that should include the rate that you have agreed upon initially and the period the lock-in lasts.

Hence, the EMI of a fixed rate loan is known in advance. This is the cash outflow that can be planned for at the outset of the loan. If the inflation and the interest rate in the economy move up over the years, a fixed EMI is attractively stagnant and is easier to plan for. However, if you have fixed EMI, any reduction in interest rates in the market, will not benefit you.

Determinants of floating rate:

The EMI of a floating rate loan changes with changes in market interest rates. If market rates increase, your repayment increases. When rates fall, your dues also fall. The floating interest rate is made up of two parts: the index and the spread. The index is a measure of interest rates generally (based on say, government securities prices), and the spread is an extra amount that the banker adds to cover credit risk, profit mark-up etc. The amount of the spread may differ from one lender to another, but it is usually constant over the life of the loan. If the index rate moves up, so does your interest rate in most circumstances and you will have to pay a higher EMI. Conversely, if the interest rate moves down, your EMI amount should be lower.

Also, sometimes banks make some adjustments so that your EMI remains constant. In such cases, when a lender increases the floating interest rate, the tenure of the loan is increased (and EMI kept constant).

Some lenders also base their floating rates on their Benchmark Prime Lending Rates (BPLR). You should ask what index will be used for setting the floating rate, how it has generally fluctuated in the past, and where it is published/disclosed. However, the past fluctuation of any index is not a guarantee for its future behavior.

Flexibility in EMI:

Some banks also offer their customers flexible repayment options. Here the EMIs are unequal. In step-up loans, the EMI is low initially and increases as years roll by (balloon repayment). In step-down loans, EMI is high initially and decreases as years roll by.

Step-up option is convenient for borrowers who are in the beginning of their careers. Step-down loan option is useful for borrowers who are close to their retirement years and currently make good money.

What is monthly reducing balances method?

Borrowers benefit more from a loan that's calculated on a monthly reducing basis than on an annual basis. In case of monthly resets, interest is calculated on the outstanding principal balance for that month. The principal paid is deducted from the opening principal outstanding balance to arrive at the opening principal for the next month and interest is computed on the new, reduced principal outstanding. In case of annual resets, principal paid is adjusted only at the end of the year. Hence, you continue to pay interest on a portion of the principal that has been paid back to the lender.

How does tenure affect cost of loan?

The longer the tenure of the loan, the lesser will be your monthly EMI outflow. Shorter tenures mean greater EMI burden, but your loan is repaid faster. If you have a short-term cash flow mismatch, your bank may increase the tenure of the loan, and your EMI burden comes down. But longer tenures mean payment of larger interest towards the loan and make it more expensive.

What is an amortization schedule?

This is a table that gives details of the periodic principal and interest payments on a loan and the amount outstanding at any point of time. It also shows the gradual decrease of the loan balance until it reaches zero. (See annex)

What is pre-EMI interest?

Sometimes loan is disbursed in installments, depending on the stages of completion of the housing project. Pending final disbursement, you may be required to pay interest only on the portion of the loan disbursed. This interest called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI.

However, many banks offer a special facility whereby customers can choose the installments they wish to pay for under construction properties till the time the property is ready for possession. Anything paid over and above the interest by the customer goes towards Principal repayment. The customer benefits by starting EMI payment earlier and hence repays the loan faster. Please check with your banker whether this facility is available before availing of the loan.

What security will you have to provide?

The security for a housing loan is typically a first mortgage of the property, normally by way of deposit of title deeds. Banks also sometimes ask for other collateral security as may be necessary. Some banks insist on margin / down payment (borrowers contribution to the creation of an asset) to be maintained / made also.

Collateral security assigned to your bank could be life insurance policies, the surrender value of which is set at a certain percentage to the loan amount, guarantees from solvent guarantors, pledge of shares/ securities and investments like KVP/ NSC etc. that are acceptable to your banker. Banks would also require you to ensure that the title to the property is free from any encumbrance. (i.e., there should not be any existing mortgage, loan or litigation, which is likely to affect the title to the property adversely).

What precautions do you need to take if you are purchasing a property that is not a newly built one?

Ensure that the documents being provided to you are not colour photocopies. Check the internet for other modus operandi to fraud and ensure clear title to the asset. Seek advice only from authentic sources such as your bank.

Get the no encumbrance certificate to find the true title holder and if it is mortgaged to any financier. Obtain all tax papers to ensure that all documents are up to date.

What should be your strategy in dealing with the banks?

Give yourself comfortable time. Do not hurry your purchase or loan in any case. Shopping around for a home loan will help you to get the best financing deal. Shopping, comparing, seeking clarification and negotiating with banks may save you thousands of rupees.

a) Obtain information from several banks

Home loans are available from mainly two types of lenders--commercial banks and housing finance companies. Different lenders may quote you different rates of interest and other terms and conditions, so you should contact several lenders to make sure you’re getting the best value for money.

Find out how much of a down payment you are required to pay, and find out all the costs involved in the loan (including processing fees, administrative charges and prepayment charges levied by banks). Knowing just the amount of the EMI or the interest rate is not good enough. Similarly, ask for information on loan amount, loan term, and type of loan (fixed or floating) so that you can compare the information and take an informed decision.

The following is some important information that you will require.

i) Rates

Ask your lender about its current home loan interest rates and whether the rate is fixed or floating. Remember that when interest rates in the economy go up so does the floating rates and hence the monthly re-payment.

If the rate quoted is a floating rate, ask how your rate and loan payment will vary, including the extent to which your loan payment will be reduced when rates go down by a certain percentage. Ask your lender to what index your floating home loan is referenced / linked and the periodicity of updation of that index. Also ask your bank whether the index is internal or external and how and where it is published.

Ask about the loan’s annual percentage rates (APR). The APR takes into account not only the interest rate but also fees and certain other charges that you may be required to pay, expressed as a yearly rate. Banks are obliged to reveal the APR if requested for by the customer.

ii) Reset Clause

Check the reset clause, especially in the case of fixed interest rate loan as the rates will not be fixed throughout the tenure of the loan.

iii) Spread/Mark up

Check if the margin in the case of the floating rate is fixed or variable. The rate of interest you have to pay will vary accordingly.

iv) Fees

A home loan often requires payment of various fees, such as loan origination or processing charges, administrative charges, documentation, late payment, changing the loan tenure, switching to different loan package during the loan tenure, restructuring of loan, changing from fixed to floating interest rate loan and vice versa, legal fee, technical inspection fee, recurring annual service fee, document retrieval charges and pre-payment charges, if you want to prepay the loan. Every lender should be able to give you an estimate of its fees. Many of these fees are negotiable / can be waived also.

Ask what each fee includes. Sometimes several components are lumped into one fee. Ask for an explanation of any fee you do not understand. Also, remember that most of these fees are perhaps negotiable! Do negotiate with your bank before agreeing to a particular fee. See how the all inclusive rate compares with the all inclusive rates offered by other banks. While planning your finances, don't forget to include the costs of stamp duty and registration.

v) Down Payments / Margin

Some lenders require 20/30 percent of the home’s purchase price as a down payment from you. However, many lenders also offer loans that require less than 20/30 percent down payment, sometimes as little as 5 percent .Ask about the lender’s requirements for a down payment and also negotiate with him to reduce the down payments.

b) Obtain the best deal

Once you know what each bank has to offer in terms of rates, fees and down payments, negotiate for the best deal. Ask the lender to write down all the costs associated with the loan. Then ask if the bank will waive or reduce one or more of its fees or agree to a lower rate. Do make sure that the bank is not agreeing to lower one fee while raising another or to lower the rate while raising the fees. Ask for clarification in case you do not understand any particular term. All banks are obliged to explain the most important terms and conditions of the home loan in detail.

Once you are satisfied with the terms you have negotiated, please do obtain a written offer letter from the lender and keep a copy with you. Read the offer letter carefully before signing.

Can you repay your loan ahead of schedule? Is pre-payment of loan allowed?

Yes, most banks allow you to repay the loan ahead of schedule by making lump sum payments. However, many banks charge early repayment penalties up to 2-3% of the principal amount outstanding. Prepayment penalty may vary according to the reasons and source of funds - if you obtain a loan from another bank for pre-payment the charges are usually higher than when you pay from your own sources. However, you may credit more than your EMI amount into your loan account on a periodic basis and bring down your interest burden as and when funds are available with you. Most banks do not charge a pre-payment penalty if you deposit more than your EMI payable on a periodic basis. Please check such stipulations while availing the loan.

What are Switch over charges/ balances transfer charges?

When other banks reduce the interest rate, you may prefer to close your account with the bank with whom you are banking, to avail of the loan from the bank offering reduced rates of interest. You have to pay pre-payment charges for doing so. In order to ensure that their customers do not approach other banks for availing reduced interest rates, banks allow customers to switch over from a higher interest loan to a lower interest loan by paying a switch over fees which is lesser than the pre-payment charges. Generally switchover fee is taken as percentage of the outstanding loan amount.

Keep up-dating yourself on various changes in the home loan market. Visit the branch, discuss with the officials to get the best out of any changes in the home loan scenario.

Do you get a tax benefit on the loan?

Yes. Resident Indians are eligible for certain tax benefits on both principal and interest components of a loan under the Income Tax Act, 1961. Under the current laws, you are entitled to an income tax rebate for interest repayment up to Rs. 1,50,000 /- per annum. Moreover, you can get added tax benefits under Section 80 C on repayment of principal amount up to Rs. 1,00,000 /- per annum.

What are the minimum standards that banks are required to follow when they sell you a home loan?

At the time of sourcing the loan, banks are required to provide information about the interest rate applicable, the fees / charges and any other matter which affects your interest and the same are usually furnished in the product brochure of the banks. Complete transparency is mandatory. The banks will supply you authenticated copies of all the loan documents executed by you at their cost along with a copy each of all enclosures quoted in the loan document on request

A bank cannot reject your loan application without furnishing valid reason(s) for the same.

What do you do if you have a grievance?

If you have a complaint against only scheduled bank on any of the above grounds, you can lodge a complaint with the bank concerned in writing in a specific complaint register provided at the branches as per the recommendation of the Goiporia Committee or on a sheet of paper. Ask for a receipt of your complaint. The details of the official receiving your complaint may be specifically sought. If the bank fails to respond within 30 days, you can lodge a complaint with the Banking Ombudsman. (Please note that complaints pending in any other judicial forum will not be entertained by the Banking Ombudsman). No fee is levied by the office of the Banking Ombudsman for resolving the customer’s complaint. A unique complaint identification number will be given to you for tracking purpose. (A list of the Banking Ombudsmen along with their contact details is provided on the RBI website).

Complaints are to be addressed to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. Complaints can be lodged simply by writing on a plain paper or online or by sending an email to the Banking Ombudsman. Complaint forms are available at all bank branches also.

Complaint can also be lodged by your authorised representative (other than a lawyer) or by a consumer association / forum acting on your behalf.

If you are not happy with the decision of the Banking Ombudsman, you can appeal to the Appellate Authority in the Reserve Bank of India.

What is reverse mortgage loan? What is my eligibility and how I will get back the title deeds?

The scheme of reverse mortgage has been introduced recently for the benefit of senior citizens owning a house but having inadequate income to meet their needs. Some important features of reverse mortgage are:

A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker.

The property should be clear from encumbrances and should have clear title of the borrower.

NO REPAYMENT is required as long as the borrower lives, Borrower should pay all taxes relating to the house and maintain the property as his primary residence.

The amount of loan is based on several factors: borrower’s age, value of the property, current interest rates and the specific plan chosen. Generally speaking, the higher the age, higher the value of the home, the more money is available.

The valuation of the residential property is done at periodic intervals and it shall be clearly specified to the borrowers upfront. The banks shall have the option to revise the periodic / lump sum amount at such frequency or intervals based on revaluation of property.

Married couples will be eligible as joint borrowers for financial assistance. In such a case, the age criteria for the couple would be at the discretion of the lending institution, subject to at least one of them being above 60 years of age.

The loan shall become due and payable only when the last surviving borrower dies or would like to sell the home, or permanently moves out.

On death of the home owner, the legal heirs have the choice of keeping or selling the house. If they decide to sell the house, the proceeds of the sale would be used to repay the mortgage, with the remainder going to the heirs.

As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy.

From FY 2008-09, the lump sum amount or periodic payments received on reverse mortgage loan will not attract income tax or capital gains tax.

Note- Reverse mortgage is a fixed interest discounted product in reverse. It does not take into account the changes in interest rates as yet.

Who should opt for an education loan and why?

Usually, middle-income group people apply for education loans. However, because of: • Rapidly rising costs of education • Income tax benefit under 80 E of IT act • Students wanting to take their own financial responsibilities to preserve the parents savings • build positive credit history Even affluent families are going for education loan



Personal Loan Questions

What is a Personal loan?

An unsecured loan is called a Personal loan. This implies that you don’t have to give any security, as with a car loan or a home loan, where the underlying asset is mortgaged with the bank. Normally, the bank does not ask for guarantors either. More advantages: minimum documentation and speedy clearance (within three to seven days of applying). And there is no monitoring of 'end use' -- you can use the loan for any purpose you like.

What can I use a Personal Loan for?

Personal loan can be used for anything and everything. There are no restrictions on the end use. You could use the loan money to finance anything from the latest flat-screen-plasma-LCD TV to buying your better-half a diamond ring.

How do I take a Personal Loan?

You can always start by checking out with different banks offering you the loan for the best offers - interests - EMI schemes etc. Also find out the eligibility criteria and the documents required to submit before you apply.

How is my loan eligibility determined?

Loan eligibility depends upon various factors which differ from banks to banks. The main factor of course, is your ability to repay the loan. Also your profile, in terms of residence and the place you work in also matters. Do make sure to check all such other eligibilities before applying.

What is the maximum tenure of a personal loan?

Personal loan is a short tenure loan. Most of the banks provide you loan for maximum 3 years (36 months). to max 5 years(60 months).

How much personal loan that i can take?

Loan eligibility depends upon various factors. The main factor is your ability to repay. The bank would like that the instalment you pay should not exceed more than 30 to 40% of your net salary or 2-3 times of your income tax return. Please check the eligibility section (hyper link)of our site to know how much you can borrow.

What are the fees and charges payable and when are they payable?

Apart from the rate of interest bank also do charge some fees which are of Usually two types. Once when you are applying for the loan and once when you are preclosing the loan. The fees when charged at the time of processing called as Processing Fees vary from 2-3% of the loan amount. This could be reduced if you have the ability of bargaining. the second charge is the prepayment penalty paid at the time of preclosure. This too varies from 2 –3 %. Similar to processing charges, you can also try to get this fees reduced.

What is the rate of interest that will be charged on my loan?

The interest rate varies from bank to bank. And usually it varies from 14%-26% depending upon your profile and the policies/scheme you opt for.

How soon can I get my loan money?

Usually banks disburse your loan within seven working days. However, it is recommended that you keep all your documents ready and in order, especially the post dated cheque (PDC), to avoid any delays. The loan is disbursed only after the completion of submitting of all required documents.

Can I apply for loan, jointly with my spouse?

Yes. Personal Loans can be applied jointly with a co-applicant (either be your spouse or your parents). This helps you to increase your income eligibility and you can also avail for a larger amount of loan, if you want to, as your co-applicants income also gets added to your income and that total is taken into consideration for calculating the loan amount you will be eligible for.

What is relationship discounts?

Lenders offer relationship discounts if you already have a relation with that bank. This basically means that if you are already banking with the lender from whom you seek to avail a loan, they give you certain discounts in the form of reduction in personal loan interest rates or other such charges, sometimes even giving you additional services.

How do I repay my loan?

At the time of applying for the loan, banks ask you to submit all the post dated cheques (PDC). for each month with Emi which is equal monthly installments or they ask you to sign an Ecs(Electronic clearing system ) with the account that you hold. Mostly these cheques/Ecs are presented on 1 st of each month , so please do confirm with the bank on that respect.

Car Loan questions

How do I get an Auto Loan?

First, shop around for all the various finance schemes on Auto Loans available in the market • by applying on You can then decide from margin money schemes, advance EMI's schemes and deposit payment schemes. Usually margin money schemes offer the best terms, but at the end of the day, effective interest rate of the loan is what essentially matters. This method provides a common podium for assessment of different schemes by discounting on the basis of cash flows.

How much loan can I get?

The amount of the loan depends upon: 1. The cost of the vehicle. 2. The type (standard/premium). 3. The percentage financing offered. If you are buying a new car, you can get up to 90% financing but some banks have a limit beyond which they do not offer loans. Also different banks have different terms for different models (standard/premium, new/old) The percentage of finance the banks give on cars is also determined on the basis of second-hand market value of that particular car. This is for cases, if default by any chance, the banks can get a higher resale value for the car. This makes the banks comfy enough to give higher percentage finance.

What documents do I need to establish proof of income?

For income proof, most banks look at your IT returns for the last two years and also at the nature of income. However 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.

How long does it take to process the loan?

If all the required documents are in order, your process moves fast. You need to submit requisite documents like salary slip, tax returns, proof of residence, bank statements etc. The processing will take between 2 to 7 days.

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

There is no such compulsion for you to have an account with the bank. Normally banks have no problem in giving auto loans to people who do not have an account with them. However there may be certain privileges you may enjoy with having an account of the same bank you take a loan from.

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

Well if you have a good repayment record for an earlier transaction, YES! You are also most likely to get a lower lending rate and your process is sure to move faster. However, do check out some other offers from other banks as well, before taking a final decision.• And this is where can assist in getting you multiple quotes from various banks really fast.

Do I need to give collateral to get a loan?

No, you don't need to give collateral. But you will have to hypothecate the car in the banks name and an endorsement made in the Registration Certificate (RC) book of the vehicle.

Is credit profile important?

To banks, your credit profile is the most important factor they will consider before funding you. Your credit profile tells banks if one is able to and intend to pay back the loan.

What are the detailed components of my credit profile?

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

What can I do if my credit profile does not match the banks requirements?

If your credit profile does not match the banks requirement you can reinforce it by bringing in a co-applicant/guarantor who would be able to match the requirement.

Can I get auto loan without the submission of income documents?

Yes you can, under the No Income Proof scheme offered by some banks.

Can I increase the amount of loan that I can take and how?

Yes, you can.You can increase the amount of loan sanctioned by clubbing your spouse's income. The spouse then becomes the co-applicant.

Do I need a guarantor and who all qualifies as one?

Yes, you need a guarantor. The guarantor could be your father, mother, son, daughter, husband, brother, sister, son's wife etc et cetera. However for consideration of these relatives as guarantors for the loan, they should comply with the age and other such norms of the company.

What is the extent of liability of a co-applicant and the guarantor?

A co-applicant has as much responsibility as the primary applicant and is equally liable to the banks from which the loan is taken. The guarantor however, promises to pay the bank in case the applicant(s) default on the payment. Both the co-applicant and the guarantor are liable for re-payment and the banks have the right to collect from either or them.

Is EMI a proper measure for comparing the deals of various players?

Not really. There are other charges like processing fees, advance EMI's, other up-front payments (stamp charges), registration charges, insurance which need to be factored in before comparing the various deals.

Can I reduce or change my EMI?

Once you have signed the agreement with the loan provider, the EMI cannot be altered. So only after you are satisfied with the EMI agreed upon with the banks, sign the dotted lines. However you can pre-pay the loan amount in which case there will be some penalty.

How do I pay the Equated Monthly Installment (EMI)?

Normally, all banks ask for a Post Dated Cheque (PDC) for the entire repayment period or at least for the first two years. Sometimes, the installment is directly taken from your salary if there is an agreement between the bank and your employer.

How is annual reducing balance different from monthly reducing balance?

In an annual reducing basis, the outstanding principal gets adjusted once a year while in the monthly reducing balance; the principal gets adjusted on a monthly basis. Therefore, more of your principal gets repaid in monthly reducing basis than in annual basis. However, some banks, calculate EMI's on a daily or a quarterly basis too.

How is the interest calculated?

The interest is usually calculated on a flat rate or on a reducing balance which can be either daily, monthly, quarterly or annually.• You can use the online calculator from to do the quick maths on EMI.

Can interest rates be negotiated?

Yes, it is possible for you to negotiate the interest rates in almost all the cases with all the banks. The interest rates can be reduced by as much as 2% if you satisfy the criteria set forth by the banks for claiming such reduction. So do check out all possible banks for such deductions.

21.Floating rate of interest or a fixed rate of interest?

A loan taken on floating rate of interest is a better option when the interest rates are falling, but when the interest rates are rising, opt for a fixed rate loan. Also if you go for a fixed rate loan, you will know in advance what your EMI's will be like and this will help you in your financial budgeting. If you choose a floating rate, you may not be able to budget properly. So do the math and choose wisely.

22.What is Flat interest rate and Reducing Balance interest rate?

Suppose you have taken a loan of Rs.10 lac at 5% interest. You repay Rs.50,000 in the first installment. If the 5% interest continues to be applicable on Rs.10 lac after your first repayment, you are paying a Flat Interest Rate. But, if 5% interest is applicable now on Rs.9.50 lac, you are paying a Reduced Balance Interest Rate.

23.How long can I get loan tenure for?

Usually auto loan tenure is available from 1 to 5 years. However some banks with schemes, offer loans tenure for 7 years. The tenure also depends on the type of car you wish to purchase. If it is a super-premium car the tenure is restricted to 3 years only. Also know that, higher the tenure, lower is the EMI. But the total interest outflow is higher.

24.Can I pay off my car loan before the tenure is up?

Yes you can pay-off your car loan before the tenure is up by pre-paying your loan amount. But there may be certain rules regarding the pre-payment that your bank may have. Also you may have to pay a small penalty, normally, a percentage of the loan amount that remains outstanding. Some banks however do not penalize you if you decide to pre-pay. Take this aspect into consideration when you choose a bank to take loans from because if later on, you can get a loan at a lower rate of interest, this penalty could compensate whatever you could save through the interest rate differential. • Apply for a Car loan now

25.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. But this would imply that the interest rate and the amount of installment will change accordingly.

26.Can I sell my car before I repay my loan?

NO. You cannot sell the car unless you repay the loan. An NOC is required from the banks before you can sell the car.

27.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 and you will have to pay delayed payment charges.

28.What happens if I delay some installments?

Delaying your installments frequently may affect your credit profile and might make further borrowing not only difficult but costly too. However, in some rare circumstances, if you delay an installment, most banks would charge you a delayed payment charge, as high as 3%, compounded monthly.

29.What happens if my cheque bounces?

Dishonoring a cheque is a criminal offence. Legal actions may be initiated against you and your credit profile could be seriously damaged.

What is a default?

Frequent prolonged delays and dishonored cheque are deemed to be defaults in repaying your loan. Most banks would expect you to turn in the asset on request, failing which they may seize your car, after serving you proper notice.

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.

Can I get 100% car financing?

You can, but it involves a trade off. You will either have to pay advance EMIs or a deposit, so you never really get what they promise you. So find out from different banks where you can get the best options from.

What is an Exchange Scheme?

Some dealers may offer you an exchange scheme whereby your existing car can be upgraded to a new one. The dealer will purchase your car at a price depending on the model, year and the condition of the car. The value of your old car is then adjusted against the purchase price of the new car. You could also get the balance amount financed.

What is Zero Interest Scheme?

Zero Interest Scheme is just that, Zero Interest Scheme. In this scheme you are not charged any interest and you only pay back the principal amount. But under such scheme, the amount financed is low and the tenure is short. However there are hidden costs involved under this scheme as well.

What happens after I have paid the last EMI?

After the last payment is made, get the lien of the bank on your car cancelled. The bank will issue Form 35 with a covering letter (NOC) to the RTO for canceling their name from the R/C book. A similar NOC will also be issued to the insurance company requesting for the deletion of their name from the policy.

Can I get finance for insurance and registration?

Most financiers do not cover Insurance and registration. The ex-showroom price is considered which does not cover insurance and registration 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. It has compiled defaulters from its own bank and also from other available sources from other banks. 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. Read more about car loan!

Business Loan Questions

What are the types of loans I can apply for?

Business Loans cater a variety of needs that includes: Working Capital financing (including Funded and Non-funded facilities) Unsecured Business Loan Loan for Equipments, etc. This varies Bank to Bank. For more details visit

Who all can avail a Business loan?

Banks primarily provide Business Loan to Self Employed Individuals/Professionals Sole Proprietorship Firms Partnership Firms Private Limited Companies

What are the types of security / collateral lending Banks are looking for?

The Collaterals would depend on the nature and type of the loan. For example- For Working Capital Loan, it is stock and book debts, For Loan Against Property, it is property and, For Equipment Loans it is the equipment itself in usual cases but it can vary with different Banks.

Can a start-up get a loan?

Banks look for 3 years track record for lending money. However, they may make an exception for those with good track record in other businesses or in certain cases, if the value of the property and supporting cash flows are very good.

What if my loan is rejected?

Review the shortcomings that the bank may have pointed out and apply again. You may also consider applying under a different asset category where you have a better chance of getting your loan approved.

Loan Transfer Questions

1.How does the lending bank decide on the amount I can get as loan against property?

Basically, the bank looks at your repayment capacity. For calculating the loan amount, your income, age, qualifications, number of dependants, spouse’s income, assets, liabilities, stability and continuity of occupation and savings history are taken into consideration. However the eligibility of loan does not, generally, exceed 60 percent of the market value of the property.

2.Can there be a co-applicant for loan against property? If yes, who can be co-applicant?

You can include your spuse as a co-applicant and that results in a higher amount being lent. However, if the property is co-owned, all co-owners mandatorily need to be co-applicants.

3.What are the processing fees for such a loan?

Processing fee for loan against any property varies from bank to bank and is generally around 1 percent.

4.How is the rate of interest on loan against property calculated?

Interest is calculated on daily reducing balance. Your monthly out-go (equated monthly installment – EMI) is much lower as compared to the interest on annual reducing balance.

5.What is the tenure of the loan?

Loans against property has a maximum tenure of 15 years, subject to the condition it does not exceed your retirement age. This condition however can be flexible in certain cases

6.How to repay my loan?

You repay the loan in Equated Monthly Installments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement.

7.What security will I have to provide?

As the name implies you need to mortgage your property for availing this loan. This mortgage is Equitable mortgage by Memorandum of Entry by way of deposit of title deeds and/or such other collateral security, as may be necessary. Collateral security for by way of assignment of insurance policy or any such other assignable financial instruments are also required, as security to loan if deem necessary by the Bank. Please do ensure that the title to the property is clear, marketable and free from encumbrance. To elaborate, there should not be any existing mortgage, loan or litigation which is likely to affect the title to the property adversely.

8.Can I repay the loan ahead of schedule?

Yes. Prepayment is possible and there is no prepayment fee if you repay the loan after six months of availing the loan if you pay from your own source of funds without transferring the loan.

9.How is my loan reassessed if there is a change in status from Non-Resident Indian to Resident Indian?

The repayment capacity of the applicant(s) based on Resident status is reassessed and a revised repayment schedule worked out. The new rate of interest will be as per the currently applicable rate of Resident Indian loans (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted. A letter is given to the customer confirming the change of status.

Loan Against Car Questions

Does Loan Against Car require Car verification / Valuation?

Yes, Cars will undergo car valuation and verification. If your car is financed by a bank, it may undergo verification depending on your credit requirements.

Who can avail the Loan against Car?

Any applicant owning a car, including a fleet operator or taxi, can avail of the Loan against Car. The maximum age of car varies Loan Disbursing Institution.

Do I need a guarantor for Loan against Car?

No. The car itself acts as a security.

Which cars can be financed for Loan against Car?

All the cars including Hatchbacks and Sedans can be financed. Some banks/institutions exclude models that are out of production

How much finance can I avail of on Loan against Car?

You can avail finance of up to 100% of original loan amount for a vehicle depending upon its valuation and age parameters primarily.

Can I sell my vehicle before I repay the entire loan?

You cannot enter a transaction with any seller without a 'No Objection Certificate' (NOC) from Bank. The NOC can only be obtained after foreclosure or after you have paid off your loan.