By Chaitali Dutta
l If credit card outstanding is converted into EMIs, will the interest rate be less than what I am paying every month on the minimum balance?
—Pradeep Dua
The interest on the outstanding amount in your credit card typically kicks in after about 21 days of credit credit-free period. Once the bill payment date is past, the interest is calculated on the daily balance outstanding on the credit card. Also, any fresh purchase will start accruing interest from day one if there is an overdue amount outstanding. The conversion of outstanding to EMI is just a method to repay the amount in a disciplined way. The interest rate and the method of interest calculation on EMI converted or non-EMI outstanding remain the same. As the interest is calculated on an average daily balance, reduce the outstanding by paying any surplus amount available on as many occasions as possible.
Credit card discount offer explained
l I want to buy an LCD. There is a discount offer on my credit card, but I have to convert the amount into six EMIs. The dealer says it is interest-free. Should I opt for it?
—Abhijeet
An interest-free loan does not actually mean that the bank or NBFC is giving out the funds without any interest. Here, the interest tab is picked up by the seller. Hence, you may sometimes see a markup of the price of the product to absorb the bank interest cost by the seller. You may check the price of the product if purchased through another channel. You may even see a discounted price if you pay upfront.
l I want a home loan for only 15% of the price of a property. Can I get it for 5 years only?
—Devesh Sharma
Yes, home loans where the borrower does a larger part of the funding are possible. The EMI paying capacity being constant, the loan tenure of the low quantum loan could be shorter, up to five years only.
Is there a need for collateral in an education loan?
l What is the collateral needed for an education loan of Rs 15 lakh?
—Mukesh Singh
Typically, loans below Rs 7.5 lakh do not require any collateral. Some banks and a number of NBFCs sanction loans to deserving students without any collateral, for amounts higher than Rs 7.5 lakh. The collateral could be in the nature of financial assets or real estate.
The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to fepersonalfinance
@expressindia.com