Your questions (loans): Would you like to repay a loan against a property early? Check the penalties

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By Manish Chaudhari

I took out a property loan three years ago. Now I have some money left. If I pay back the full amount, will the bank charge a penalty?
– Sanjay Charan Rana

Typically, home loans have prepayment fees that vary from lender to lender. This is clearly formulated in your sanction letter. If you don’t have them handy, contact your lender’s customer service team and they will let you know. Consider the following before making a decision. What are the fees for paying back the full amount compared to the future interest to be paid if you continue with the loan? Is there another better use for the excess money? Would you have an emergency fund if you were to pay off the loan in full? Partial prepayment of the loan can also be an alternative option, if the loan conditions allow it.

I am planning to buy a used Maruti True Value vehicle. While it’s ready to fund it, should I look to other banks? What factors should I consider when applying for the loan?
Atul Baduni
A used car is a smart option, especially from formal channels like Maruti True Value where you can get warranties. Be sure to check out the best options other banks and NBFCs can offer you. Find out about the interest rate as well as the Loan to Value (LTV) ratio; ie the eligible amount, available loan term, processing fee as well as repayment features and loan terms. When applying for a loan, have your KYC documents, vehicle details such as make, model, year and your bank statement and income papers ready.

I urgently need some money. I have a pre approved credit card loan of Rs 4 lakh. Should I choose this?
—RH Sridhar

Ideally, one should look at the least expensive option that also offers the right repayment flexibility to ensure your cash flows aren’t impacted. Check the interest rate your credit card will be charged for this loan, as well as the applicable fees and charges, and consider only taking it if it’s competitive. Check the interest rate offered by other lenders on their websites. Some lenders have a full online personal loan process, and you may be able to get it quickly.

The author is President and Chief of Staff of Poonawalla Fincorp. Send your questions to [email protected]

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