Loans

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In today’s world, loans can be utilised for various things. It can be used for funding a start-up for buying appliances for your newly purchased house. Go through our Resolver’s guide on Loans to know the concepts of loans and their specific characteristics that will make these loans useful to you. If you face any issue, you can raise and resolve it for free via Resolver!

 

PERSONAL LOAN

 

Points to remember before applying for a Personal Loan -

  • This is an unsecured loan. The bank needs certain documents like proof of assets, proof of income, etc. before approving the personal loan amount. You must have enough assets or income to repay the loan.
  • In case of personal loans, the application should be of 1 or 2 pages in length. You will get to know about the denial or approval of the loan within a couple of days.
  • You must remember that the rate of interest associated with these loans can be on the higher side. 
  • The tenure of these loans is not that long. If the loan amount is big, it can be difficult for you to repay without planning your finances properly.

 

How to close my Personal Account completely?

  • Visit the bank with all the valid documents like - govt. Issued identity document, loan approval letter, loan account statement and other relevant documents
  • The bank official will ask you to fill an application form or write a letter for pre-closure of the loan account. 
  • Before applying, check whether you have sufficient funds to repay your loan along with any specific charges applied by the bank in order to close your personal loan account. If yes, then submit the form and pay the pre-closure amount. Prefer not to pay the amount in cash.
  • Sign the documents and get an acknowledgement from the bank that you have paid your personal loan amount. Keep the acknowledgement slip carefully. 

 

How to repay the loan?

You can easily repay the loan in Equal Monthly Installments (EMI). You can also pay through ECS with the EMI amount. 

What are the formalities to be done after closing my personal loan account?

  • Ask the bank to give you a closure letter and unused cheque leaves if any.
  • Update your credit history with the crediting agencies like CIBIL. Keep a good track on your credit score to see if there are any errors. Normally, the update takes 30 days. 

 

CREDIT CARD LOAN

 

Things you should know before applying for a Credit Card Loan:

  • In order to apply for a credit card, all you need to do is fill out a simple application form provided by the card issuer. You need to repay the loan on time but you are also handsomely rewarded for using it.
  • You must understand that there is a high rate of interest on the amount you take on your credit card. If you do not pay your credit card bills on time, the interest will keep piling.

 

How many cards can I hold at once?

It depends on banks to banks, but in most cases, you can apply up to 3 supplementary cards for your spouse, children, parents etc. 

 

How do you repay the loan?

You may repay the loan in Easy Monthly Installments (EMI) over the time period you have picked. You can pick a tenure as long as three years. The EMIs will be added to your financial record and should be paid on the due date alongside instalment for some other buys you may have made. Your credit limit will be decreased to the degree of your EMI sum.

 

How much loan can I get on my credit card?

You can get a loan depending on the credit card limit or even more if you have a good credit score.



Do I need to pay a processing fee for a loan against credit card?

Yes, banks do charge a processing fee for loans against credit card. However, you need to pay a very nominal amount as a processing fee.

 

Would I be able to apply for loan against credit card online?

Truly, you can apply for it online by utilizing net banking. Additionally, you can apply for it by utilizing telephone banking or visiting the branch.

 

What are the formalities to be done after closing my Credit card loan account?

  • Ask the bank to give you a closure letter and unused cheque leaves if any.
  • Update your credit history with the crediting agencies like CIBIL. Keep a good track on your credit score to see if there are any errors. Normally, the update takes 30 days. 

 

HOME LOAN

Points to remember before applying for a Home Loan:

  • This loan generally comes with longer tenures (20 years to 30 years). The rate offered by some of the top banks in India with their home loans starts at 8.30%. 
  • The provider will check your credit score before the loan request is approved by him.
  • Home loans are generally taken for buying new homes. However, you can use these loans for home renovations, home extensions, purchasing land property, under-construction houses, etc. 

 

Who can be joint borrowers for a home loan?

Close relatives, for example, your parents, life partner and youngsters are permitted to be joint borrowers in the event of a home credit. 

 

How do I repay my home loan?

You can pay off your loan by issuing post-dated cheques for the tenure of the home loan or getting the amount deducted automatically from your salary or by issuing standard instructions to the lender for ECS (Electronic Clearing System) wherein the EMI is automatically deducted from your bank every month.

 

Foreclosure of Home loan account: How to do it?

  • You have to write an application to the bank informing that you want your home loan account to be closed. Enclose all the valid necessary documents while submitting the application for a hassle-free process. 
  • The bank will communicate the loan amount to be paid by you and you can pay the amount through online banking services like NEFT or via cheque.
  • There is no penalty for prepayment of floating rate loan, however, a nominal fee can be imposed on a fixed rate loan. This fee should be included while making the foreclosure payment. 
  • Make sure that bank has delivered all your original documents within 7-10 working days. If not, please consult your bank manager within the stipulated time period. 
  • In the end, the bank will issue a No-due certificate stating no amount is payable. Check your name, property details, amount paid, etc. has been mentioned on the certificate. 
  • Update your credit history when the process is done. 

 

What are the formalities to be done after closing my Home loan account?

  • Update your Encumbrance Certificate (EC). This certificate is a necessary document used in home loan transactions as a proof for free title/ownership over the property subject. It shows that your property is free from any legal liabilities or mortgages. After receiving the closure letter and No due certificate, visit the Registrar’s office (RO) to update your EC. 
  • If the bank has put lien (alien is the legal right of a bank to sell the property in case of default), make sure you remove the bank’s lien from your property. 

 

EDUCATION LOAN 

 

Things you should know before applying for an Education Loan:

  • Banks generally fund up to 90% of education expenses which includes expenses like college/university fees, library charges, travel costs related to their course, etc. The average tenure is 5-7 years.
  • The max. The limit is 10-15 lakhs within India and 20-30 Lakhs outside India. Your parents or guardian or spouse can be the co-borrowers. They should have a steady source of income and a good credit score.

 

What are the necessary documents to avail education loan?

  • Admission confirmation letter and scholarship letter if any
  • Consolidated data regarding tuition fees and other expenses
  • If you have given any qualifying test, the score sheet should be submitted
  • Copy of student visa if you are going abroad for studies
  • Bank account statements for the last 6-8 months
  • Age proof
  • Residence proof
  • Passport size photographs
  • Statement of assets and liabilities
  • Details of collateral if necessary (depends on the loan amount)

 

What are the courses for which an education loan can be availed?

An education loan can be availed for all courses recognized by the UGC in case of India and all regular courses abroad. Each bank has its own list of educational institutions and courses that they would provide a loan for whether overseas or within India.

 

What are the expenses covered by education loans?

  • Education loans can be used for paying:
  • Tuition fees and hostel expenses
  • Exam, library, and lab fees, if any
  • Caution deposits paid to the educational institute, if refundable
  • Books expenses, uniforms, and other essentials for completion of course
  • Travel expenses (return fare for international flights).

What if there is a break in the study? Can I extend my loan tenure?

If there is a break in study or you are on a sabbatical, it is totally up to the bank’s discretion to extend the holiday period. Holiday period refers to the no. of months banks provide to the borrower before repayment begins.

 

Do I have to pay any prepayment penalty on closing the education loan account?

Generally, there is no such penalty to be paid, however, you should confirm this from your bank before signing the loan. 

 

How to submit my issue with my loan provider (Bank)?

  • Inform your bank - Before taking any action, you should contact your bank and register your issue with them. Nearly all banks have a grievance redressal cell where customers can file their issues.  Raise your issue via Resolver, making sure that you include any relevant details and supporting documents with your complaint.
  • If you don’t receive a satisfactory reply, or if there's no response from the branch within a reasonable time, you can approach the Regional or Zonal manager of the bank who’ll start an internal enquiry into the matter.
  • The manager has to address your complaint within 30 days. If the bank fails to provide satisfactory redressal, you can approach the Banking Ombudsman and escalate the matter further. The Banking Ombudsman is the senior official appointed by the Reserve Bank of India to address banking complaints by the consumers. 
  • If you aren’t satisfied with their response, you can file an appeal with the Appellate Authority against the Banking Ombudsman’s decision within 30 days.

 

How will the  Reserve Bank of India (RBI) help you?

The Banking Ombudsman appointed by RBI will independently assess your case. There is no charge to the consumer for the assessment. The ombudsman will make a decision on your case and provide an outcome that is binding on the bank. If you aren’t satisfied with the outcome, you could consider switching bank or provider. The final option would be to take the bank to consumer court – you should get expert legal advice before taking this route.

 

Banking Ombudsman: How does it work?

  • Every Banking Ombudsman has jurisdiction in one or more states/ UTs. You should submit your application to the Banking Ombudsman whose jurisdiction your state or bank falls under. You can submit an application to the Banking Ombudsman via Resolver or in hard copy.
  • Make sure you have the appropriate documents and records to give as proof.
  • After receiving your complaint, the designated officer will be responsible for resolving your complaint to your satisfaction. Every attempt will be made to offer you suitable and appropriate alternate solutions where necessary. 
  • Suitable timelines have been set for every complaint according to the level of investigation involved in resolving the issue. Complaints are suitably acknowledged on receipt and you’ll be informed of delays if they occur. The designated officer will contact you if anything needs clarification. 



How will Resolver help you?

If you have a complaint, first make sure that is reasonable. If you believe that it is, you can use Resolver to submit your issue. Any complaint from Resolver is an official complaint, and the bank is therefore obliged to act upon it. If it’s not resolved, you can take your case to the Banking Ombudsman. Resolver plays the role of the bridge between you and the company you’re complaining to,  making it easier for you to get your complaint to the right place at the right time. Resolver is free. No adverts, no hidden costs. Start by telling us the name of the company or organisation you have an issue with, raise a case and leave feedback afterwards.

 

How to address my issue with Non-Banking Financial Companies (NBFCs)?

Non-banking financial companies (NBFCs) are a group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. The Redressal System are as follows  - 

 

  • Tier I - In the First Tier, you should submit the details of the company right from the Branch to the Head Quarters.
  • Tier II - The Second Tier involves Registrar of companies (ROC) and Company law board (CLB) and the regulatory authorities, government officials etc. 
  • Tier III - The Third Tier i.e. the courts are brought into the picture only when the first two tiers do not result in resolution of your issue. 




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