EMI

Equated Monthly Instalments are the installments made towards the payment of your loan. Termed equated because equal amount is paid every month, not varying in any month. This is done through providing Post Dated Cheques (PDCs).

Post-dated cheques

The cheques collected towards the payment of the loan, which carries a future date is termed as Post dated Cheques.The number of cheque leaves provided depends upon the tenure you opt. These cheques are collected at the time of processing after the sanction of loan and before the disbursement of the loan amount.

Hypothecation

A hypothecation is an equitable charge on the goods without possession, but not amounting to a mortgage. The contract is done to secure a debt.

Prepayment

It is the amount paid towards principal ahead of the prescribed repayment schedule. The benefit of interest is given to the party in such cases as per the norms of the company.

Prepayment charges

The fee paid at time of pre-closing is called as the prepayment charges or prepayment penalty. This fee is a percentage of the outstanding principal amount. The percentage levied varies between 2-3% depending upon the banks.

Processing charges

The fee charged by the bank for processing of your loan documents is called as processing charge. This charge is either deducted from the loan amount at the time of disbursement or taken separately as a cheque. When it is paid in form of cheque, the loan is disbursed only after realization of the cheque. This charge varies from 1.5%-3% of the loan amount.

Co-applicant

A person, who applies for a loan as a secondary applicant is called as a Co-applicant. The primary applicant with whom he applies, get the loan in his name. The co-applicant can be either the spouse or the parent of the applicant. Co-applying for the loan helps to avail a higher loan amount.

Processing time

The time that the bank takes to sanction and disburse your loan is called as the processing time. Usually the bank promises to process your loan within seven working days.