Your Queries: Loans| You can prepay personal loan without any penalty charges

Usually a bank will not ask for additional papers after sanction of a loan.

By Chaitali Dutta

Will the bank levy penalty if I prepay a personal loan of Rs 2 lakh?
—Rajesh Katara
No. Usually personal loans are on a floating rate basis. In such loans, you may repay the loan any time, subject to the conditions put in the sanction letter. Please read the sanction letter carefully to see if they have mentioned any upper limit for repayment or a restricted period from the loan disbursed for repayment.

My home loan was sanctioned before the lockdown. Now, the bank wants a fresh employment letter. I got a new job in August and it is not accepting that. Should I go to another bank as I have paid booking amount?
—Ajay Kaushik
This may be due to the stress on the job front for many borrowers. Usually a bank will not ask for additional papers after sanction of a loan. However, if it is not a loan-sanction and only an in-principle sanction of loan, the bank has the right to ask for additional papers. Apply for a loan with another financial institution, with the new set of documents, from your current employer.

I had availed three gold loans from Rupeek in March 2020 and then the lockdown was declared. The interest was payable monthly at 0.89% pa, and if not paid an increased interest rate of 1,59% would be levied from the third month. I requested it to extend the scheme but it is still charging higher rates. What should I do?
—Dhananjaya Gowda
While availing a loan facility from a bank or NBFC, however desperate your situation may be, it is a good idea to read the loan document carefully. I presume that all the penalty clauses as well as increased step-up interest rates were mentioned in the document. Read them now and see if such details were there. If not, you may approach consumer court and contest the increased interest charged by the company.

My home loan will be disbursed soon. Should I take a life insurance or a general insurance policy with it?
—Rohit Palviya
Ideally both. The life cover is required so that the family is not burdened with loan repayment in your absence. General insurance is for the property to ensure against natural calamities, fire, etc.

The writer is founder, AZUKE
Personal Finance Advisory (www.azukefinance.com).
Send your queries to fepersonalfinance@expressindia.com