FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Loan interest rates move upwards
As an after effect of the recently announced Monetary policy in which the Repo rates were increased by 50 basis points and also the interest rates on Savings accounts hiked from 3.% to 4.% many local banks have increased their interest rates on retail loans which include Home Loan, Personal Loan, Car Loan etc.
According to news reports the banks have taken a cue from IDBI which was the first off the block in raising its rates and have all gone for a 50% hike in interest rates thus transferring the entire burden of having to pay higher rates to the RBI to the retail customer.
Some of the banks which have announced their new hiked rates include new Age bank – YES bank, Oriental bank and Punjab National. News reports suggest that even LIC Housing finance has raised its interest rate on the housing loans that it offers. The new rates that LIC has offered vary between 9.9% to 10.30% depending on the quantum of the loan.
It is a time to wait and watch the reaction of the other banks who are yet to announce their new rates. In fact some banks are indicating that they might raise their rates by ever 100 basis points.