Your queries: Loans – Credit card history is enough to give you a credit score

By Chaitali Dutta

I want to benefit from a student loan for my daughter’s higher education. I’ve never taken out a loan and I have five years of service left. Whose credit score will the bank verify the loan?
—Ashok Joshi

Usually the credit score is checked for the parent in the case of a student loan. Even if you haven’t received a loan, a credit card history is enough to give you a credit score.

I am planning to take a home loan for Rs 40 lakh. Should I opt for a fixed or variable rate loan?
— Rajiv Kamath

As a general rule, it may be wise to opt for a variable rate because mortgages have a longer duration. However, please check if there is an option to take out a loan where for the first three years the interest rate is fixed and then floating. Opting for a fixed rate loan in today’s times would only be desirable if the term of the loan is 5 years or less.

Also Read: Luxury Housing in the Fast Lane – Here’s Why

I couldn’t pay EMI on my car loan for two months. When I went to pay EMI for two months, the bank insisted that I pay 20% interest. What should I do now?
—SK Raghav

Check the sanction letter and see if such a clause was mentioned. You are only obliged to pay the penalty interest if this is mentioned in the general conditions.

To buy a used car, can I get a bank loan? If so, how to approach the bank and with what documents?
—Aditya Pratap

A used car is also financed. Documents are like details of your income and creditworthiness. As for the car, it must be loan free (with no lien registered) and the bank/FI will require the owner to sign a number of RTO forms required for the transfer of ownership as well as registering the lien on the car. . The bank/FI will also do an independent appraisal of the car to assess the feasibility of the loan amount.

My parents had a vacation home in the hills with attached land. After their death, I now want to turn the property into a guest house. Will I get a bank loan for the construction since the papers are still in my parents’ name?
—Nitin pants

Ownership must first be transferred to your name. Only then will you have the right to build anything on the land with borrowed capital.

Is it possible to repay the full amount of an additional home loan within two years of taking it out? Will the housing finance company charge a penalty?
—Arvind Kumar

Usually, for a variable rate loan, the top-up loan can be paid off as funds become available. There should be no penalty on this prepayment. However, have a detailed view of the supplementary loan sanction letter.

The author is a personal finance wellness expert and founder of AZUKE Finance.Send your
questions to [email protected]

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