Recently, I came across a viral content on social media where the author referred to home loans as a scam. Why? The author took a loan of Rs 48 lacs. EMI of Rs 42K. After paying 15 EMIs, the author had repaid only Rs 75,000 in principal and Rs 4.8 lacs in interest. And it… Continue Reading
You’re looking to buy a car using a bank loan. You already have an existing home loan with your bank that you have been aggressively prepaying over the years. Your bank app tempts you with a customized top-up loan offer with instant approval and 24-hour disbursal. Should you use it to finance your car purchase?… Continue Reading
Have you taken a loan from your employer at a concessional rate of interest? As I understand, such arrangements are quite common for bank employees. The banks offer loans at a concessional rate to their employees. This could result in significant interest savings for the employees, especially for long tenure loans. However, as per the… Continue Reading
I will give you Rs 1 lacs. You have to pay me 5% interest. Sounds like a good deal? I will add a few caveats. You must pay 5% interest upfront. Pay off the loan in 3 equal monthly installments of Rs 33,333 each. Is this a joke? No, it is not. This is the… Continue Reading
You take a personal loan of Rs 2 lacs from a bank. Interest rate is 10% p.a. What is the cost of the loan? 10% p.a., right? Isn’t interest rate the cost of loan? Yes, but only if the bank levies no other charges. If the bank does levy additional charges, then the cost of… Continue Reading
What is an EMI? Equated Monthly Installment. We usually associate this term with loan repayment. Every month, the same amount (and hence the word “Equated”) gets debited from your bank account and is used for loan repayment. A portion of the EMI goes towards interest payment and the rest towards the principal repayment. We have… Continue Reading
I have not found too many people who are not in a rush to close their home loans. For some, the obsession is so high that they put everything else, even long-term investments, on the back burner while they focus on closing their home loans. Do you belong to the same group? Nothing wrong in… Continue Reading
You have 2 home loans. You got an annual bonus. You want to prepay your home loan. Which home loan would you prepay first? Clearly, the one with a higher rate of interest, right? You save more by paying off the loan with a higher rate of interest. Ready-to-Move-in or under-Construction Property? The choice will… Continue Reading
Home loans are long tenure loans. 15-30 years. And even a difference of a few basis points can make a huge difference to your overall nominal outgo. Assuming the interest rates stay constant, here is the difference between the cash outgo to repay a Rs 50 lacs home loan in 20 years. Interest Rate 7.50%… Continue Reading
The Reserve Bank has come out with two separate circulars in the middle of August 2023. First about levy of penal interest and the second about the reset of interest rate in retail floating rate loans. We discussed both these topics when the RBI broached these topics for the first time. Coming Soon: EMI Defaults… Continue Reading