Your requests (loans): Do you want to prepay a loan on real estate? Check the penalty conditions

By Manish Chaudhari

I took out a mortgage three years ago. Now I have some spare money. If I refund the full amount, will the bank charge a penalty?
—Sanjay Charan Rana

Usually there are prepayment charges applicable on the loan against the property, the same differs from lender to lender. It’s clearly stated in your sanction letter. If you don’t have them handy, talk to your lender’s customer service team and they’ll let you know. Consider the following before making a decision. What fees apply to repay the full amount versus future interest payable if you were to continue with the loan? Is there another best use option available for the excess money? Would you have an emergency kitty available if you had to repay the loan in full? Another option may also be to partially repay the loan if the terms of the loan allow it.

I plan to buy a used car from Maruti True Value. While he is ready to finance it, should I look at other banks? What are the factors to consider when applying for a loan?
Atul Baduni
A used car is a smart option, especially from formal channels like Maruti True Value where you get warranties. Definitely check out the best options that other banks and NBFC can offer you. Find out the interest rate as well as the loan to value (LTV) ratio; i.e. the amount that can be financed, the term of the loan available, the processing fees and repayment features as well as the terms of the loan. When applying for the loan, keep your KYC documents, vehicle details such as make, model, year of manufacture and your bank statement and income papers handy.

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

Ideally, one should explore the least expensive option that also offers the right repayment flexibility to ensure that your cash flow is not negatively affected. Check the interest rate charged on your credit card for this loan as well as any applicable fees and charges and consider taking it only if it is competitive. Check the interest rate offered by other lenders on their websites. Some lenders have an entirely online process for personal loans and you may be able to get it quickly.

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

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