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Loan riders

'Processing fees are nonrefundable. It means if your loan is rejected or a lower amount sanctioned you cannot claim the fee back.'

Go window-shopping, then bargain and then, bargain some more: Short list four or five banks and, get the short-listed banks to compete for your loan. The cost of your loan depends a lot on your ability to negotiate. Remember that all terms and conditions are negotiable.

Interest rates offered by banks take your income and repayment profile into consideration, apart from, off course, your negotiation skills. Beside interest rates, also check various charges like processing fee, pre-payment charges, processing, legal and valuation fees, and other hidden costs. Take all these things into account before choosing your bank.

Get clarity about the loan amount you are eligible: Banks have different ways to calculate loan eligibility. If loan eligibility based on your income is likely to be an issue, then talk to a number of banks to find out which bank can give you the maximum amount. It may so happen that based on your own income, as well as your spouse’s, you are still not eligible to get the amount of loan that you require.

Harsh RoongtaThen you must seek a bank that allows you to club the incomes of your other close relatives to increase your loan eligibility. Some banks may agree to club the incomes of two siblings for the purpose of calculating the loan eligibility.

Be prepared to lose your processing fee: Your lender may charge you a fee to get the proposal on roll. This fee is termed as the processing fee. This fee varies from bank to bank, but is usually around 0.25-2% of the total loan amount. Paying the fee doesn’t mean that you will get the loan, but this is the fee to get the lender to even take a look at your application. No matter what the bank representative informs you, the processing fee is non-refundable. This means that if your loan application is rejected or is sanctioned for a lower amount or at a higher rate than promised, you cannot claim the processing fee back.

Plan for delays in cheque disbursement: This is a common problem faced in dealing with personal loans or car loans. The banks often delay handing over cheque-disbursements to the dealers or to the consumers. This effectively means that if you have taken a car loan to buy a car or a personal loan, there will be a delay in its delivery to you by the dealer. This delay could pinch even more if the bank charges the interest from the date of cheque rather than the date on which the cheque is handed over to the dealer or to you. The best bet, in this case, is to check with the dealer if he has an account with the concerned bank. This can help minimise the delay in cheque disbursement and delivery of goods.

Negotiate car loan rate and car price separately: Taking a car loan can be tricky as the actual interest rate that you pay for your car loan can get confusing. Many a times, the car dealer also doubles up as the direct sales agent selling the car loan--drawing commission from both car manufacturer and the bank that finances your car purchase. You may feel that you have won a good deal on the car loan rates, but the dealer would have made up for that by denying you the maximum discount that you could have got on the car price. So it is advisable that you negotiate discounts and rates for both separately. Also the interest rates on car loans can vary widely depending on the car model.

By Harsh Roongta, CEO, Apnaloan.com