This festive season is a good time to avail your home, car or personal loans. Banks have waived or reduced the steep processing fees to attract customers.
Bank of Baroda (BOB), for example, has reduced its processing fees on home loans to Rs 8,500 from Rs 20,000 it normally charges. Even on home loans, the bank has reduced the processing fees from Rs 5,000 to Rs 500. The bank has also linked its home loans to the repo rate, starting 8.35% while its normal home loans are being offered at 8.40%. The new rates are already in effect.
A senior Bank of Baroda official said, “Besides reducing the interest rates we have brought down the processing fees for the home loans and car loans to encourage customers to fulfill their dreams of owning homes or buying a car during the festival season.”
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Banks are also looking at refinance opportunities to grow their loan book so if you have taken a loan from one bank it is a good time shift. The bank that is taking over your loan will give you lower rates of interest.
Bank of India has also announced waiver of loan processing charges on its home and car loans while reducing rates on these loans. “The bank has waived loan processing charges. The home loans will be at concessional rates,” a senior BoI official said.
Home loan of up to Rs 30 lakh is offered at 8.35% while loan above Rs 30 lakh would be linked to the repo rate, he said. The bank has also launched an SME welcome offer, where loans between Rs 50 lakh and Rs 5 crore would be available at a concessional rate depending on the value of the security.
State Bank of India, Punjab National Bank and Union Bank of India are planning to come out with festive offers where the banks will look at discounts on the processing fees which is around Rs 15,000 to Rs 20,000 for all banks irrespective of the size of the loans. The processing fee includes the legal fees that the bank charges to check the title deed of the property.
“We will shortly unveil our festive offers which will be on auto loans and other personal loans. On home loans where we are offering the lowest rates it will be difficult to bring down rates further. But on car loans we will extend concessions on the process fees,” said a senior SBI official.
Though the interest rates on SBI’s repo linked home loans, which were the first products in the market, are the cheapest, it has steep processing fees, which is 0.35% of the loan amount with service tax where the bank will charge a minimum of Rs 2,000 plus service tax and maximum of Rs 10,000 plus service tax. This is over and above the out of pocket expenses for valuation report and registration charges.
The loan has one of the highest tenures of 35 years, including two years of moratorium. If the property is under construction the tenure will be 33 years and anyone in the age group of 18 years to 70 years will Rs 6 lakh annual salary can avail this loan.