Oct 22, 2012, 03.32 PM IST
Gaurav Mashruwala of Certified Financial Planner explained CNBC-TV18, the pros and cons of personal loans.
Below is the edited transcript of the interview
Q: Festival season is almost here and a lot of people will be applying for personal loans. What are the pros and cons that they need to keep in mind before applying for one?
A: Being a conservative financial planner, I would say, do not borrow and splurge. But, if you still have to borrow then one must compare the EMI because there could be some differences in the amount that you are paying between one rate of interest and two. So, look at EMI as that is going to be your outflow. Look at the processing fees and service charges because that is an outflow and that people normally ignore.
Thirdly, try and take the loan for as less tenure as possible. It could be a burden on your cash flow for future but then you want to get rid of this loan as soon as possible. So, look at these three most important things.
Q: What does an investor do in case the loan disbursement conditions are unfair?
A: Once you have taken a loan and if is really unfair, then there are three or fourthings that you can do. First stage is that you need to go to the customer care department and lodge a complaint.
If you are not happy then the second step is that they have a nodal officer and you can raise a complaint there. Some banks have a customer grievances cell - so that's the third stage. If that is not there then visit RBI website and it has a banking ombudsman and you can lodge a complaint there. So, rbi.org.in is the website that you visit and then you lodge a complain with banking ombudsman the entire process could take anywhere between three-six months. Also ensure that your paperwork is thorough.
You should keep photo copies of all the complaints that you have lodged and also the acknowledgment. This is because when you go to RBI it would be asking about the steps you had taken and if have you completed all the previous procedure.
Q: Investor recently applied for a personal loan, but was informed that only a salary account was acceptable for EMI deductions. His earnings are staggered and he does not have a particular salaried account. What are his options?
A: What I am gathering is that he applied for a personal loan and the bank said that he needs to have a salary account and the EMI deduction would happen from salary account. But here, he is saying that he is not an employee, he is not salaried. He is either a freelancer or a professional. It is not that all the banks lend only to salaried individuals.
Most banks would have loans for professionals as well as other individuals. So, if this particular bank is not giving him that option, he needs to check with other banks. Probably he must have gone to the bank where he has his existing relationship.
Most of the banks would offer personal loans to professionals, individuals and that option is available. There are couple of banks where individuals have staggered income also have an option of quarterly EMI deduction, not many have that. So, he will probably have to do some kind of shopping, some kind of research and find out which bank will give him the loan. But it is not that if you are not salaried you do not get personal loans. It is not that the doors are closed. Maybe check with some other financial institution.
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