BANK INTEREST ON LOANS
Everytime there is a change in the repo or reverse repo rates announced by RBI, the banks are not prompt in reducing the interest rates on lending, but are quick to reduce the rates on deposits. Even nationalised banks, including SBI, do this.
In the case of car loans and education loans, I find that although the banks have now announced a marginal reduction in the rate of interest, the EMI still remains the same. They say they will adjust the difference in the final instalment, which may be anytime from 5 to 7 years later. Why should the loanee wait till then and continue to pay higher than justified EMI for so long ? Even at that distant time, the benefit will be given only when asked for. Who will remember all the ups and downs in rates of interest at that time ?
Once a customer has opted for floating rate of interest, the banks should stick to that scheme, i.e increase or decrease EMI as per increase or decrease in interest rates. Otherwise what is the use of opting for floating rate if the scheme operates like a fixed-interest-rate-scheme till the repayment of full loan amount. I suspect the same happens even in home loans, which are over longer periods of 15-25 years. Imagine the loss a customer suffers even after opting for floating rate, due to higher EMI linked to original rate of interest. more
In the case of car loans and education loans, I find that although the banks have now announced a marginal reduction in the rate of interest, the EMI still remains the same. They say they will adjust the difference in the final instalment, which may be anytime from 5 to 7 years later. Why should the loanee wait till then and continue to pay higher than justified EMI for so long ? Even at that distant time, the benefit will be given only when asked for. Who will remember all the ups and downs in rates of interest at that time ?
Once a customer has opted for floating rate of interest, the banks should stick to that scheme, i.e increase or decrease EMI as per increase or decrease in interest rates. Otherwise what is the use of opting for floating rate if the scheme operates like a fixed-interest-rate-scheme till the repayment of full loan amount. I suspect the same happens even in home loans, which are over longer periods of 15-25 years. Imagine the loss a customer suffers even after opting for floating rate, due to higher EMI linked to original rate of interest. more
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