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Banks are not agreeing to uniform rate for old and new home loan borrowers. RBI has been after the banks to give the old borrowers the benefits of the new rates but banks refuse to budge from their set rates claiming cost mismatch. They are extending lower home loan rates only to rope in the new potential home loan seekers.

RBI deputy governor K.C.Chakrabarty reminded bank CEOs about their concern on teaser rates and inaction on the banks’ part, to distribute the benefits of the new home loan interest rates uniformly among all their borrowers (old and new). It is common practice that bank is slow to pass on a discounted rate but quick to increase the loan term or EMI with increase in rates.

Presently, old home loan borrowers are paying more than new ones as their interest rates are linked to the BPLR (benchmark prime lending rates) which is prevailing from April 2009 by most banks. After 2009 banks came up with new schemes for home loans which promises lower fixed interest rates (in first 1-3 years depending on bank to bank) rendering the old loan borrowers feel letdown.

Bankers have explained that since they had obtained funds at a higher cost the interest charges on earlier loans cannot be reduced and the new loans have a lower rate due to the reduction in the incremental cost of funds since then. RBI has pointed out that with the reduction in the incremental cost brought down their average cost and thus they could extend this benefit uniformly among old and new customers alike. Bankers even voiced their concern that same rate to all customers could result in a legal dispute as each customer has separate contracts with the bank. Few even said that their financials could get strained.

Personal loan is always said as an easy way to fulfill your short term money requirement. But from last one year Banks are not focusing on Personal Loan; the way they were doing till 2008. Pre approved personal loans and loan against credit card were quite popular.

But today things has changed, there is no such facilities that banks offer. The rate of interest on personal loan has drastically increased. But still the demand of personal loan is there, this is because it is the only that takes minimum time in disbursal. For an instant requirement of loan, personal loan is the best loan.

But one should not take any decision in hurry. If you have an urgent requirement of a loan, it doesn’t mean that you should pay more interest on them. In fact, it is your responsibility to check out the latest interest rates being offered by various banks and should go for a best or at least a good deal.

Here are few tips on the basis of which you can choose a best deal for your Personal Loan

1) Rate of interest : The Personal Loan Interest Rates varies from 14% to 30%.It  depends upon customer profile and upon the bank from where you are taking this personal loan. The basis factors that determine rate of interest are customers net income, age, residential status, age, martial status, work experience and many more.

2) Fee & Charges: When every a loan is disbursed from a Bank, there are some charges that bank takes from us. At times these charges are known to us and some are hidden that get reveled at the time of disbursal. So to confirm these charges is an important task.

3) Loan Processing Charges: When a DD or funds transferred is done at the time of sanction of a loan, a percentage of amounts are charged by the bank. It is said as the processing fee. Processing fee is an upfront charge that banks takes from us at the time of disbursal. Again it varies from bank to bank.

a)Prepayment Charges: If you wish to close your loan after paying 6emi’s or thereafter, then you are liable to pay an extra charge on the outstanding amount . This charge is known as Prepayment charge.

4) Documentation: The most important part of any loan is its documentation. At times customers get pissed off with the documentation formalities. So before going for a loan you need to check that what all documentations they require for your loan application. The basic documents that banks usually ask are income proof, address proof, banks statement, passport size photograph and etc.

5) Disbursal time: Personal loan is said as a loan that fulfill your requirement of money instantly. So, the disbursal time is the most important aspect as it is very important that you get the money in the time of urgency. The time that bank usually takes in disbursing the loan is 5 to 10 working days. So do check the time taken by bank in disbursing your loan.

6) EMI deduction date: The problem that customer usually face once there loan get sanctioned, is the date on which the emi of loan will get deducted from the account. For example your emi deduction date is 1st of every month whereas your salary gets credited on 7th; there is a chance that your emi might get bounced because of insufficient balance in the account. So choose the date in such a way that there should not be any chance of cheque bounce.

So, do keep all these thing in your mind before going for a Personal Loan from any Bank. Always follow a rule of Compare & Choose to get the best deal.