Here’s how much it’ll cost to take a loan
MUMBAI: Ifyouplantobuyahouse, most likely, you will look for a home loan. Besides the interest rate, you will also have to shell out fees and charges. Here is a look at each of the loans products and how much it will cost you:
HOME LOAN
Home loan is usually the most expensive loan that an individual tends to take considering the real estate cost. It is a secured loan and the interest rate is usually the lowest. Secured loan means the house acts as a security for the lender in case you default on your loan. The interest rate on a home loan is usually in the range of 8.45-12%, depending on the loan amount, your profile, bank and tenure. In case of a floating rate home loan from a bank, it will be linked to marginal cost of funds based lending rate (MCLR). This means depending on the interest rate cycle, your home loan rate will also fluctuate. Beside interest rate, you also need to factor in processing fee, which is usually in the range of 0.25-0.5% of the loan amount. There are other charges such as administrative charges, frisking charge and legal fee.
CAR LOAN
The interest rate on car loan depends on the type of the car. Generally, the interest rate on loan for a new car is likely to be lower than those on used cars. For instance, interest rate on loans for new car ranges from 9% to 17%, while for used car it could range from 11% to 20%. The processing fee for car loan can go up to 2% of the loan amount and the tenure usually between 1 year and 7 years. If you want to prepay the loan, you may have to pay pre-closure charges, ranging up to 4% of the outstanding amount.
PERSONAL LOAN HOME LOAN
Home loan is a secured loan
Interest rate: In the range of 8.45-12%, depending on the loan amount, your profile, bank and tenure
CAR LOAN
Interest depends on the type of the car
Interest rate: For new car the range is As personal loans are unsecured loans, the interest rate is usually higher and can range from 10% to 22% an annum. You have to pay a processing fee of up to 2.50% and generally there is a caveat that you can’t prepay the loan for say until repayment of 12 equated monthly instalments. Similar to car loans, in case of prepayment, you will have to pay a prepayment charge, which will range from 2-4% of the loan amount. In case of default, you will have to pay penalty in the form of additional interest.
WHAT YOU SHOULD DO?
The interest rate, fees and charges
9% to 17%, while for used car, 11% to 20%
PERSONAL LOAN
They are unsecured loans
Interest rate: Range from 10% to 22% an annum
You have to pay a processing fee of up to 2.50% and generally there is a caveat that you can’t prepay the loan for say until repayment of 12 equated monthly installments.
vary from bank to bank. Considering there are multiple fees and charges along with a range of interest rate, it would be prudent to compare the rates and charges. There are two ways of doing it. You can either visit the individual bank websites or loan comparison websites. In case you decide to check rates at comparison websites, know that these portals may end up showing only their partner banks.
Once you shortlist the banks, negotiate with the banks to waive charges such as administrative costs and other charges. If you have a good credit score, you can also negotiate for a better interest rate.