By Chaitali Dutta
For an education loan, should I opt for a shorter tenure initially, and if there is any cash flow issue then increase the tenure after some months? – Abheek Gupta
A: Usually, banks will agree to a shorter tenure after sanction but mid-loan extension of tenure is possible only in extreme economic distress situations.
I have a credit card outstanding of around Rs 1.5 lakh and I am paying only the minimum balance. Is it better to take a personal loan to clear the card outstanding or convert it into EMIs?- Vinod Kumar
A: The interest charged by the credit card issuer will be higher than the interest on a personal loan. So yes, taking a personal loan to pay off the credit card outstanding will reduce your interest outgo.
As interest rates are likely to fall after some time, should I wait to buy a house and go for a fixed rate when rates fall? – Deepak Joshi
A: Fixed interest rates are good but only when taken at the bottom of the interest rate cycle. We anticipate a plateauing out of the interest rate in India and the reduction to start gradually from early 2024. It would however be difficult to anticipate when the interest rates will bottom out. If the house is for self-utilisation, then I would suggest going for a repo rate-linked floating interest rate loan.
How can I negotiate a better interest rate for a personal loan as the range is between 15 to 25%? -Arvind Iyer
A: There is not much scope for negotiation on the interest rate with a particular bank for a personal loan. Rather you may shop around from different providers and see what is the minimum rate you can get.
I want to buy a second-hand imported car. Should I approach a bank or a non-banking finance company for the loan? – Manoj Awasti
A: Both are viable options. Check the interest rate on a car loan with your banker with whom you have an existing relationship. Compare that with what a non-banking finance company (NBFC) is offering. In fact, NBFCs may offer you up to 100% financing and their paperwork is usually lesser. Depending on your cash flow situation, you may opt for the most suitable option for yourself.
In the case of a home, will a bank lend me to buy a property that is on power of attorney?- Praveen Sharma
A: What I understand of the query is that the buyer is executing a POA in favour of a person who does the documentation with the bank for the loan. Yes, it is possible but only in genuine cases like an NRI spouse giving the POA to the partner to execute the loan documents.
The writer is personal finance wellness expert and founder of AZUKE Finance
Send your queries to fepersonalfinance@expressindia.com