Home Loans are not given to kids. They are given to mature adults. RBI should stop treating the population as immature.
If it thinks that there is going to be a potential issue of NPAs because of improper understanding of Teaser Loans by borrowers, it should tighten rules around making things more transparent rather than asking banks to do away with such schemes. It is the failure of the regulator to make Financial Institutions more transparent in their dealings that can lead to issues. Not the scheme by itself.
These schemes may not well work for everyone, but it does for a section of the people. Some examples could be: 1. Money locked up in FDs/PFs/ELSS or other closed Funds which is going to be available in a few years. 2. Current major obligations such as children's college education which is going to end in few yrs 3. Impending expenses such as wedding of close relative etc 4. Repayments on some other loans expected to be over in the near future. For e.g. House Loan, Car Loan, Business Loan, Education Loan.
Re: What Trick?
by Biren Shah on Nov 30, 2010 09:54 AM
Bewakoof - Adults doesnt mean they can understand all JARGONS of the industry. I can start some jargons for my industry where I belong and then see if you can grasp 100% and take proper decision.
Re: Re: What Trick?
by bewakoof on Nov 30, 2010 10:01 AM
Biren:
And thats the reason I have mentioned, regulator needs to tighten rules towards tranparency.
Transparency does not mean "code language" but a language that is easy to understand by "common people" and that apprises potential customers of what they can expect with some sample projections based on Historical Data.
An Adult can read that, get clarifications if required and proceed when things are crystal clear.
Re: Re: What Trick?
by asad hgjkf on Nov 30, 2010 11:24 AM
Banks themselves specify the interest they will charge for teaser loans, for example- 8% for 1st year, 9% for 2nd year, and marker rates 3rd year onwards. What is so difficult to understand here? Yes, I do agree people should get more proactive and ask questions whereever there is a doubt.
Re: Re: Re: What Trick?
by Second Thought on Dec 03, 2010 09:59 PM
Its difficult to understand the EMI for 9% and EMI if interest rated increased more. they need to understand the relation between EMI and tenure.. Bank should mention future EMI Chart to the Borrower.
Re: Re: Re: Re: What Trick?
by Ajay Pai on Dec 06, 2010 12:32 PM
The banks are supposed to give an amortization schedule (or in simple langugage the EMI chart) at the time of taking the loan and everytime the interest rate chnages. This will allow thew customer to see the EMI. Many banks do give this, but many customers arent bothered to look into this. Some PSUs give this only on request and that too after too much nagging.
Re: Re: Re: Re: Re: What Trick?
by tin tin on Dec 31, 2010 04:01 PM
First stop the comission being charged, Second make clear the EMI's ,(Like MRP for a product) mark a EMI limit that should not be exceeded by any bank on slabs of Loan amounts for 10 years tenure. Make stringent standards most banks tend to attach an insurance along to loan.
