By Chaitali Dutta
I am planning to take out a loan to invest in some initial public offerings (IPOs). How can I get a loan and what will be the interest rate?
—Prashant Rajput
Leverage is avoidable for salaried families who have financial goals yet to be fulfilled. The interest payable on the loan may sometimes wipe out the gains in speculative investments. Then there will be tax payable on the capital gains on the equity investment that you will do. I advise you to accumulate the intended EMI you would have paid on the loan and then get into equity markets in a planned way.
I want to apply for a joint housing loan with my brother to construct a house on a plot. Will a bank finance it and what documents that I need?
—Amit Tandon
Siblings may jointly apply to a bank for such a loan. The documents—proof of ownership of land, an estimate of the cost of construction by an authorised architect, both your income proofs and ability to repay—have to be established.
I plan to take a Rs 5 lakh personal loan. I expect to get some money after a few months. Can I repay the loan with it without paying any penalty?
—Vinod Nair
There are no uniform rules in personal loans. Ask for the details before signing on the papers. Usually, the bank will allow the prepayment after a specific period only. Loans with a fixed rate of interest cannot be prepaid.
I have taken a home loan to buy a flat. What kind of insurance should I take—life or general insurance?
—Gurdeep Singh
Ideally you should take both. The life cover is required as you do not want the family to be burdened with repayment of the loan, if something happens to you. The general insurance is for the property to ensure against natural calamities, fire and terrorism.
Do I have to pay any penalty for prepaying my car loan?
—D K Mishra
There is usually a clause in the car loan agreement which does not allow for additional part payment/ full closure in the first few years. This varies from bank to bank. Take a detailed look at your agreement. It would be beneficial to pay off the car loan with your surplus funds.
The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance. com).
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