Consumer services

Home loan is availed for any of the following purposes –

A. Purchase of –

1. Residential apartment/flat (under construction/ complete)

2. Residential villa/independent house (under construction/ complete)

3. Residential plot with the intention of house construction

B. Extension of a residential property e.g. additional floors/rooms

C. Renovation of a residential property e.g. fixed furniture and fixtures

D. Transfer of an existing home loan to another lender with or without additional loan amount

Providers: Almost all banks (public & private), some Non Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs). Some of the banks provide home loan through their NBFC/HFC arm as well.

The loan amount is decided based on the EMI repayment capacity of the individual borrowers and value of the property being mortgaged. Each lender has its own policy with respect to the assessment of repayment capacity and the property valuation, though largely common – most have certain salient features, which suit some special requirements of various borrowers.

Regulatory guidelines mandate 10%-25% of margin on property value (primarily depending upon quantum of loan, higher the amount – higher the margin) which means only 75% to 90% of the property value can be funded subject to this amount being supported by the assessed repayment capacity of the borrower.

Reserve Bank of India regulates banks & NBFCs while National Housing Bank does it for HFCs. These able regulators have primarily been responsible for ensuring fair practices by all lenders. With long-term interest in mind, they have often taken unfavourable stand on many innovations in home loan industry e.g. teaser rates (dual rates/ partly fixed rates) and 80:20 scheme (builder funding the pre-emi expenses on customer’s behalf).

Factors influencing home loan assessment include (but not limited to) customer profile, credit history, quality & valuation of property, corporate/builder tie up (if any) & end use of property purchase (self occupation or investment).

The loan tenure can be up to 30 years (normally restricted up to 20 years). This largely depends on the current age of borrowers e.g. Salaried segment would normally be restricted to age of retirement (can be negotiated for little more depending upon other parameters) and 65-75 years of age for business segment.

LAP is availed through mortgage of a fully owned property under below mentioned category –

1. Self Occupied Residential

2. Self Occupied Commercial

3. Vacant Residential

4. Vacant Commercial

5. Rented Residential

6. Rented Commercial

7. Residential Plot

8. Commercial Plot

9. Industrial Plot

10. Industrial with non heavy machinery/ light labor work

For LAP, multiple properties under multiple categories can also be clubbed together. Normally, under construction properties are avoided for LAP.

LAP is usually availed by businessmen to support working capital requirements or as enabler for further investments. Salaried individuals do also avail LAP as a superior alternative to personal loan.

Providers: Almost all banks (public & private), some Non Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs).

The loan amount is decided based on the EMI repayment capacity of the individual borrowers and value of the property being mortgaged.

Assessment of EMI repayment capacity is done by a host of innovative methods. Many of these methods (or products) do not require commensurate formal documents like ITRs. Though most lenders have similar products, everyone has special considerations for specific customer/ property categories depending upon the concerned lenders own experience/ expertise.

Reserve Bank of India regulates banks & NBFCs while National Housing Bank does it for HFCs. Unlike home loans, under LAP regulators don’t put too much emphasis on the extent of margin lenders must keep on property value. Though normally the funding is up to 60% of property value - one may get anything from 25% to 80% of property value depending upon internal policy assessment of various lenders.

Loan tenure is normally restricted to 10 years, however stretches up to 15 years is possible under specific circumstances. 

This is a variant of Loan Against Property wherein rental income from a long-term lease of commercial properties is considered to ascertain the EMI repayment capacity. 

Primarily, the rent receivables from the lessee are directly escrowed to the lender. Tenure is restricted to balance lease term (can be stretched to 10-12 years).

Car loan is availed to fund purchase of a new/ used car.

Almost all brands/ models of cars can be funded – however, certain lenders may have restrictions for specific brands/ models.

Almost all banks & select NBFCs provide car loans.

The loan amount is decided based on the EMI repayment capacity of the individual borrower and the value of the car being hypothecated.

The extent of Car’s total cost that can be funded depends on a variety of factors. While it is normally restricted to around 75% of the ex showroom value, it can be higher or lower depending upon the car brand/model, car dealer’s arrangements with various financers and the borrower’s own profile/income strength.

The loan offering is quite often bundled with car’s sale price itself making it difficult to exactly figure out the advantage in loan terms v/s the discount on car price. Though sometimes car dealers arrange for best loan terms, it is extremely advisable to check independent (without car dealer’s involvement) loan options to be very clear about the value offering from the dealer.

Normally the loan tenure is restricted to 5 years, however it can be stretched to 7 years with certain providers.

For used cars, the lender will do its own valuation and the funding is normally restricted to 50% of this value (though it can be higher under favorable circumstances). In comparison to new cars, interest rates are higher and loan tenure is smaller for used cars.

Business loan is pretty much the same as personal loan except for the end use. The purpose of business loan is to put funds in business use.

Though business loan is also unsecured, terms are slightly more comfortable as the end use is productive (i.e. it is not an outright expense but an investment towards better income).

Personal loan is availed for various incidental requirements like purchase of consumer durables/furniture, margin money funding; to support expenses on holidays, marriage, education, medical exigencies OR just to meet any other sudden requirement.

Almost all banks and select NBFCs provide personal loan.

Loan amount is decided based on the EMI repayment capacity of individual borrowers. There is no collateral/security involved in personal loan and hence the interest rate is comparatively higher than secured loans like home loan & car loan.

The loan tenor is normally restricted to 5 years, however it can be stretched up to 10 years under favorable circumstances with select providers.

When comparing insurance products in India, there are several key factors to consider:

1. Coverage: Make sure the insurance product provides the coverage you need for the risks you are exposed to. Read the policy document carefully to understand the extent of coverage offered and any exclusions.

2. Premiums: Compare the premiums of different insurance products to find one that is affordable for you. Keep in mind that lower premiums may mean lower coverage, so be sure to strike a balance between cost and coverage.

3. Claims Process: Consider the ease and speed of the claims process when choosing an insurance product. Look for insurance companies with a good reputation for handling claims efficiently and fairly.

4. Network Hospitals: If you are choosing a health insurance policy, consider the network of hospitals that the insurance company has tie-ups with. Make sure the policy covers the hospitals you prefer or are likely to use.

5. Riders: Riders are add-ons that can be purchased along with insurance policies to provide additional coverage. Consider the riders that are available with each insurance product and whether they are appropriate for your needs.

6. Reputation and Financial Strength: Choose an insurance company that has a good reputation and strong financial stability. A financially stable insurance company is better equipped to pay claims when they are due.

7. Customer Service: Consider the level of customer service provided by the insurance company. Choose a company that is responsive and provides clear and concise information.

These are some of the key factors to consider when comparing insurance products in India. It is important to consider your specific needs and goals before making a decision.