By Chaitali Dutta
Last year, I took an education loan for my son. Should I start prepaying a part of the loan or pay after the moratorium period ends?—Deepak Gupta
If you start paying part of the loan now, it will eventually be a smaller loan for your son to repay. Also the aggregate interest outgo will be smaller.
I made some purchases using my credit card and now want to convert the amount into EMI for one year. Do I have to pay a higher interest rate?—Akash Kumar
The EMI payment on a credit card is essentially a loan. Any overdue amount and outstanding EMIs are considered for interest calculation. It carries an interest of 2.5-3.5% per month, which converts to an annual rate of 30-42%. It is advisable to pay the outstanding amount in full at each billing cycle. That way, you pay zero interest on the outstanding.
How should I apply for a loan against my mutual funds and will the interest rate be lower than a personal loan?—Gaurav Sharma
You may look for a loan against securities like your mutual funds. However, please note that the loan amount will be about 50% of the value of the equity schemes and 80% of the value of debt schemes. The effective interest rate will be lower than a personal loan.
I had taken a home loan five years ago and pay EMI. Now, I want to sell the property and buy another property with a loan. Should I pre-pay the existing loan? In that case, my down payment for the new property will be much lower. What should I do?—Pankaj Kumar
If a property is to be sold the loan is paid off from the sale proceeds itself. Only the balance amount will be received in your account. You may use those funds for down payment for the new house.
I paid off my home loan a year ago. However, my credit score is still showing an outstanding balance of Rs 3 lakh for the loan. What should I do?—Mukul Agarwal
Please visit the branch of the bank/FII with the proof of closure of the loan account, and a copy of your CIBIL report in addition to your application to have the outstanding removed. Under normal circumstances, this intervention is not needed as the banks upload the outstanding reports every 15 days to the Credit Information Companies.
The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com).
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Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.