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YOUR QUERIES: You can take a personal loan from a bank against your fixed deposits

You can get a personal loan against your FD from the same bank without having to withdraw your money early. Your deposit continues to grow at a pre-determined rate without interruption.

personal loan
I have a total of Rs 20 lakh in bank deposits. Is it possible to put my FDs up as collateral for a bank loan at a lower interest rate?

Yes, you can get a loan against your FD from the same bank without having to withdraw your money early. Your deposit continues to grow at a pre-determined rate without interruption. For the duration of the loan, you pay interest that is a few basis points greater than the FD rate. If you do not return the loan by its due date, the revenues from your FD will clear the loan first, and you will receive the remaining balance.

Approximately half of my fixed-income investments are held in my SBI Overdraft Account for my home loan. It has a 7.7% interest rate (saves that amount from my loan). Should I keep it, transfer it to another instrument, or pay off the loan?

This offers fantastic cash flow management, interest payment management, asset allocation, and rebalancing. Continue with the status quo if your financial flow allows you to pay the EMIs. Only consider paying off the loan if you have a pressing need to do so.

housing loan
I intend to take a home renovation loan to supplement my existing home loan. Will I be able to deduct the loan from my taxes, and will the bank charge me any pre-payment penalties?

The home loan and top-up loan will be treated as a single entity for tax purposes under Sections 80C and 24B. Refer to the sanction letter for pre-payment charges and read the small print for terms and conditions. There are no prepayment charges on a floating rate loan, but they are charges on a fixed-rate personal loan.

I defaulted on a car loan a few years ago. I’d like to get a home loan from the same bank, but it’s turned me down. Should I go to other banks without telling them about the default?

Each Financial Institution reports personal loan default, which is present in the borrower’s credit score. If you have paid off all of your debts, have your credit score corrected at the same bank where you defaulted. If not, pay off your debts before applying for a new loan. Before approving a loan, financial institutions will do a credit check with CIBIL, Equifax, or Experian.

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Is a personal loan for a wedding a wise option to cover expenses?

Is a personal loan for a wedding a wise option to cover expenses? A wedding entails a great deal of preparation and expense, from selecting a location and venue for gifts purchase to making preparations for photography, lighting, decoration, cuisine, and honeymoon planning, etc.

personal loan for wedding to cover expenses

It entails the purchase of various costly items, such as bridal gowns and jewelry, clothing, and household items. Taking up a wedding loan relieves the financial burden for the family and the newlyweds. While also allowing them to cover all of the future costs.

Having said that, experts suggest that with more options for borrowing, such as different forms of loans with varying terms, etc. One should pick what best meets one’s needs.

Gaurav Jalan, CEO, and Founder of mPokket explains, “A wedding is not only a few days of celebration. With two families coming together to start a new life, there are various expenses to consider while organizing a wedding. A personal loan could be the ideal solution. Especially because there are no restrictions on the usage of the loan amount.”

mpokket ceo

Thus, it makes a personal loan ideal for covering all of the unexpected wedding costs. As a result, experts advise that taking out a personal loan for a wedding is a good idea. Moreover, personal loans offer flexible EMI and tenure options. Furthermore, based on one’s credit score, the interest rate on these loans are often comparable. As a result, depending on their credit score, applicants can easily obtain a personal loan of up to Rs 25 lakhs with a tenor of 12-60 months.

According to a study done by IndiaLends, a digital lending platform, demand for wedding loans was the highest among all groups during the second wave of the covid-19 pandemic – 33% compared to 22% during the first wave among persons aged 20-35 years.

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BNPL Vs Credit Cards Vs Personal Loans: Which is right for you?

Personal loans, BNPLs, and credit cards come in the same category of loans which benefits the lender for some time but it costs the interest for sure. All of these comes with high interests and specific durations. In this article, we will talk about these three aspects of loans and we will also see how they can be helpful sometimes.

Great Southern Bank (Formerly CUA) | Personal loans vs. buy now, pay later  – which should you choose?

What is BNPL

BNPL is stated as buy now pay later. They convert your payment into installments on any e-commerce website. They provide all the facilities to pay it online. Some charge the interest for the facility but some do it without any charges. Its business model is very simple, They integrate certain companies with it. BNPLs can currently be enjoyed many number of e-commerce, food-ordering, ride-sharing, travel booking, online groceries and services websites, and even on Edu-tech portals among hundreds of other merchant platforms. The transactions can be made seamlessly during checkouts in a safe and secure one-tap manner without having to enter card details or OTPs.

bnpl vs credit ardsTo assure secure payments and verified accounts, KYC is done before the BNPL service. For merchants- they can take payments through cash on delivery modes, credit/debit card, or pay later like BNPL services.

Microcredit solutions are preferred now to better manage recurring and occasional payments and purchases. In the last few years, BNPL has hugely taken a turn in the Indian market. Many e-commerce giants, leading banks, and startups are using BNPL as a good source of transaction and management. And no doubt it is making great progress.

How does BNPL compare with personal loans and credit cards?

Credit card is acceptable all around the globe and has vast facilities to provide. Credit cards come with much-assured amounts and provide certain facilities like Lower interest options, encash Contactless payment, Insurance, Utility Bills, Easy access channels. There are other additional benefits also. But if we talk about BNPL, it is limited to partnering merchants only. Though the service providers are regularly adding hundreds of partners.

Credit cards can come with major benefits but the interest rate of late payment can be difficult to manage. BNPL services are smaller but they are simpler. Credit facilities for consumer purchases from partnering merchants often result in EMIs involving no interest charges but only a one-time fee in most cases.

 

 

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Your Queries: Loans – You need to submit proof of renovation for a top-up home loan

Are you planning to apply for a loan, or you have an ongoing home loan and need some better cost-saving suggestions? In this article, we will address some of the FAQs we have received.

01. Shubham Kumar

After ten months, my house loan EMI will come to an end. I'd want to apply for a second loan to help me renovate my home. What are the terms of a top-up loan, and should I obtain a loan against my home once my present loan is paid off?

When it comes to interest rates, a top-up loan is a better option because a loan against a property normally has a higher interest rate. Take a home renovation quote and submit it to your current loan provider right away. The loan will be sanctified according to the same procedures that apply to residential loans. Once you obtain such a loan, you must provide proof of completed renovations.
home loan policy

02. Manoj Patel

I took out a home loan for a building that is still under construction. Construction took eight years to complete. Is it possible to claim a tax deduction on a home loan after I have taken possession? Can I shift the loan to another bank and then claim the exemption if that is not possible?

Even if the loan is transferred to a different service provider, the construction period will continue at eight years. Because the construction period is longer than five years, the prior-period interest will not be deductible under Section 24. Only when you have taken possession of the property will you be entitled to receive the benefits on both the interest and principal paid under Sections 24 and 80C.

03. Aditya Khurana

What are the other choices for borrowing ten lakh for a short duration at a lower rate, given the high-interest rates on personal loans?

Personal loans are, indeed, unsecured loans with no collateral, making them costly. If you have any financial assets, such as stocks, mutual funds, classic LIC policies, or bank FDs, you may be able to borrow against them. They'll be less expensive than a personal loan.
Personal Loan

04. Alok Chauhan

My son receives offers from fintech companies for loans with no collateral requirements. Should he apply for a loan using the app?

A loan should only be taken when absolutely necessary. Your kid could take out a loan if he has a specific buy-in mind for which he does not have immediate finances. I would also avoid leveraged investments, which involve taking out a loan to invest in riskier assets.

For more such updates, keep watching this space!