Your Query: Check for any pre-payment clause in car loan

January 28, 2020 12:52 AM

If you want to help your brother with the loan, remember that you are taking the responsibility of EMIs on his behalf.

Banks will consider loans to people without regular salary if they can substantiate their over-all steady income with the supporting ITR for 3-5 years.

By Chaitali Dutta  

In a car loan, is there any pre-payment clause?
–Mayank Bhardwaj

Yes, usually there are prepayment restrictions car loans, especially in the first couple of years. However, the charges vary by lender, term expired, loan outstanding and your creditworthiness. Please read the details of your car loan sanction letter to find out the charges.

I had taken loan of Rs 23 lakh from HDFC Bank and the monthly EMI is Rs 18,500. I have not taken PMAY subsidy. I want to increase my EMI to Rs 27,000 and do prepayment of Rs 5 lakh. Will I still be eligible for PMAY subsidy?
—Abhay Singh

If you satisfy the conditions of PMAY subsidy, you may get it now. However, part prepayment or full repayment is not possible without refund of PV of future subsidy already availed at the time of sanction.

My brother wants to buy a house but he does not have regular salary. Can I borrow the money from the bank and give it to him to buy the property?

—Deepak Kumar Soni

Banks will consider loans to people without regular salary if they can substantiate their over-all steady income with the supporting ITR for 3-5 years. If you want to help your brother with the loan, remember that you are taking the responsibility of EMIs on his behalf. Bank will move recovery process against you in case of irregular repayments. This will also spoil your creditworthiness. If the loan is in your joint name, you will reduce your eligibility of a home loan for yourself individually. If you would still want to go ahead with this arrangement, buy the property in your name and allow your brother to stay there with rentals paid to you. Once he has a steady income, you may gift him the property after you close the loan account with your brother’s funds.

Which is better: a gold loan or a personal loan for a short-term need?
—Narender Gupta

In terms of interest rate, there is no substantial difference at the lower end of the interest spectrum. However, a personal loan may be as expensive as 20% per annum interest rate. Given the very limited data you have shared, it is better to go for a loan against gold. This should be cheaper than a personal loan as there is the security of thegold with the bank.

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

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