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Loan FAQ

How Does accepting OTS effect on Credit History ?

One Time Settlement Scheme , OTS effect on Credit History of an Individual future credit history : Just as all information about credit availed (amount availed, payments, defaults etc) is reported to Credit Information Companies (CICs), the fact that the borrower has closed a loan account after accepting an OTS is also reported to CICs. The bank is required to explain to the borrower the consequences of accepting an OTS on his / her credit history/ credit rating in the...

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Loan FAQ

When will bank return the securities after closure of loan ?

How much time bank would take in returning the title deeds /securities after closure of loan. Banks should return all the securities / documents/title deeds to mortgaged property within 15 days of the repayment of all dues agreed to or contracted. If any right to set off is to be exercised for any other claim, the bank will give due notice with full particulars about the other claims and retain the securities/documents/title to mortgaged property till the relevant claim is...

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Loan FAQ

Do I need to Insure the Loan from Bank ?

Insure the Loan from Bank - Yes. One will have to insure the property etc. as required by the bank during the tenure of the loan. However, banks cannot insist on your obtaining insurance cover from any particular provider.

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Loan FAQ

What is Collateral Security ?

Collateral Security - This is generally defined as additional security borrower offers a lender to secure a loan. Banks may take some additional securities which are called collateral securities. Collateral could be in the form of guarantee from one or two persons, assignment of life insurance policies, lien over shares, and units or other securities or mortgage of immovable property. These additional securities are taken so that in case a loan is not paid back, recourse may be taken to such securities...

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Loan FAQ

Is there any Penal Charge for Prepayment of Loan ?

Penal Charge for Prepayment of Loan  - Yes, most banks allow you to repay the loan ahead of schedule by making lump sum payments. However, banks may charge a pre-payment penalty which may differ from bank to bank. Pre-payment penalty may vary according to the sources of funds used to pre-pay the loan - if you avail of a loan from another bank to pre-pay the loan, charges are usually higher than when you pay from your own sources. The...

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Loan FAQ

What is Interest Rate Reset Clause ?

Interest Rate Reset Clause - An 'interest rate re-set' clause allows a bank to review and reset rates at the end of a specified period of time based on interest rates prevailing at that time. Read - Whether Provident Fund (PF) Taxable ?

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Loan FAQ

What is Fixed Interest Rate ?

Fixed Interest Rate - An interest rate on a loan / credit facility that remains fixed either for the entire term of the loan or for part of this term is referred to as a fixed interest rate.

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Loan FAQ

Why To Choose Floating Rate of Interest ?

If one has opted for a loan at floating rate of interest he / she needs to know about Floating Rate of Interest. Check out the most important point before opting the Floating Rate of Interest. The Base / Reference rate of the bank to which the floating rate of interest is linked; Whether the spread / margin can change during the tenure of the loan; Whether the agreement specifies a 'minimum interest rate' clause. (This would mean that even if the...

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