Your queries: Pay off expensive personal loans

March 11, 2020 4:45 AM

Usually, while pre-closure of loan, you need to inform the bank in writing that you desire to close to the loan prematurely.

Ideally, create an emergency fund to take care of unplanned expenses so that high-interest personal loans or loan on credit card may be avoided.Ideally, create an emergency fund to take care of unplanned expenses so that high-interest personal loans or loan on credit card may be avoided.

By Chaitali Dutta

I have a personal loan for which I am paying interest of around 18%. I have got some money as my fixed deposits have matured. Should I repay the loan?
—Suraj Gurumurthy
Absolutely. Please pay off as much as possible. It is an expensive loan to keep. Ideally, create an emergency fund to take care of unplanned expenses so that high-interest personal loans or loan on credit card may be avoided.

I have about Rs 50 lakh for a house which I want to buy. The cost of the house is around Rs 35 lakh. Should I still take some loan so that I have some money with me?
—S R Animesh
There are a few other criterions which we need to keep in mind. Your age is a large deciding factor. If in the age group of 30-45: take a loan; if in the age group of 45-55, you may take selectively; above 55 years I would suggest not to go for the loan. Secondly, the source of income. If it is consultancy or business income, you may want to take a loan to avail the benefit of 80C and 24B.

I have an ongoing car loan. My wife, who is also working, want to buy a car. Can I take another loan or should my wife take the loan?
—Sanjay Rana
Ideally, she should take a loan if the car is in her name. The car loan eligibility will be based on her income levels and the cost of the car.

I had prepaid my home loan before going abroad for a year. I did not collect any paper from the bank and my original sale deed as they said it will take a month. I have returned to India to collect the paper. However, the bank says I have to pay around Rs 50,000 as interest pending. What is this and what should I do?
—Ajay Shah
I hope at the time of prepayment you had paid not only the amount outstanding but also the current month’s interest up to the date on which the funds come into the loan account. In case you had given the cheque for only the outstanding loan, then the interest is payable. Usually, while pre-closure of loan, you need to inform the bank in writing that you desire to close to the loan prematurely. Now, the payable interest has to be cleared and request them in writing to give you all your original papers, interest certificate of last financial year as well as this financial year, No Dues certificate.

The writer is founder, AZUKE
Personal Finance Advisory (www.azukefinance.com).
Send your queries to fepersonalfinance@expressindia.com

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