Frequently Asked Questions (FAQs)

A loan is a sum of money borrowed from a lender (such as a bank or financial institution) that is expected to be paid back with interest over a specified period of time.

Common types include personal loans, home loans (mortgages), auto loans, education loans, and business loans.

The interest rate is the percentage charged by the lender on the principal amount, representing the cost of borrowing.

Tenure refers to the duration or period over which the loan must be repaid.

Eligibility varies by lender but typically includes age, income, credit score, employment status, and repayment capacity.

Generally, you need proof of identity, proof of address, income documents, bank statements, and sometimes collateral documents.

EMI combines both the interest and a portion of the principal in each monthly payment, making loan repayment predictable and structured.

Principal amount, interest rate, and loan tenure are the main factors determining EMI.

Most lenders allow prepayment, but terms and conditions (such as prepayment charges) may apply.

Missing an EMI payment may result in penalties, impact your credit score, and could lead to legal action if prolonged.

Yes, most banks and financial websites provide free online EMI calculators.

A longer tenure reduces the EMI amount but increases the total interest paid over the loan period.

For floating rate loans, the EMI may change if the interest rate changes. For fixed rate loans, the EMI remains the same.

Knowing your EMI helps in better financial planning and ensures you borrow within your repayment capacity.

A home loan is a sum of money borrowed from a financial institution or bank to purchase, construct, or renovate a residential property. The borrower repays the loan amount with interest over a specified period.

The EMI for a home loan is calculated based on the loan amount, interest rate, and tenure using the formula: EMI = [P × r × (1 + r)^n] / [(1 + r)^n – 1], where P is the loan amount, r is the monthly interest rate, and n is the number of months.

The EMI of a home loan is affected by the loan amount, interest rate, tenure, and the type of interest rate (fixed or floating).

Some lenders allow you to change the tenure after disbursement, subject to terms and conditions. This may involve a re-evaluation of your EMI.

Part-prepayment reduces the principal amount, which in turn reduces the EMI or the tenure, depending on your preference and the lender's policies.

Yes, under Section 80C of the Income Tax Act, you can claim deductions for the principal repayment, and under Section 24(b), for the interest payment on your home loan EMI.

Missing a home loan EMI payment can result in penalties, increased interest rates, and a negative impact on your credit score. It's important to contact your lender if you face difficulties in payment.

It is possible to avail a home loan with a low credit score, but it may attract a higher interest rate and stricter terms. Consider improving your credit score before applying for a loan.

A car loan is a type of secured loan provided by banks and financial institutions to help individuals purchase a new or used vehicle. The car itself acts as collateral until the loan is repaid.

The EMI for a car loan is calculated based on the loan amount, interest rate, and tenure using the formula: EMI = [P × r × (1 + r)^n] / [(1 + r)^n – 1], where P is the loan amount, r is the monthly interest rate, and n is the number of months.

The EMI of a car loan is affected by the loan amount, interest rate, tenure, and the type of interest rate (fixed or floating).

Some lenders allow you to change the tenure after disbursement, subject to terms and conditions. This may involve a re-evaluation of your EMI.

Part-prepayment reduces the principal amount, which in turn reduces the EMI or the tenure, depending on your preference and the lender's policies.

Unlike home loans, car loans do not typically offer tax benefits on EMI payments. However, if the car is used for business purposes, you may claim depreciation and interest as business expenses.

Missing a car loan EMI payment can result in penalties, increased interest rates, and a negative impact on your credit score. It's important to contact your lender if you face difficulties in payment.

It is possible to avail a car loan with a low credit score, but it may attract a higher interest rate and stricter terms. Consider improving your credit score before applying for a loan.

A personal loan is an unsecured loan offered by banks and financial institutions to individuals for personal use, such as medical emergencies, travel, home renovation, or debt consolidation. Because it is unsecured, you do not need to provide collateral.

The EMI for a personal loan is calculated based on the loan amount, interest rate, and tenure using the formula: EMI = [P × r × (1 + r)^n] / [(1 + r)^n – 1], where P is the loan amount, r is the monthly interest rate, and n is the number of months.

The EMI of a personal loan is affected by the loan amount, interest rate, tenure, and the type of interest rate (fixed or floating).

Some lenders allow you to change the tenure after disbursement, subject to terms and conditions. This may involve a re-evaluation of your EMI.

Part-prepayment reduces the principal amount, which in turn reduces the EMI or the tenure, depending on your preference and the lender's policies.

Personal loans do not typically offer tax benefits on EMI payments, as they are unsecured. However, if the loan is used for business purposes, you may claim deductions on the interest paid under Section 37(1) of the Income Tax Act.

Missing a personal loan EMI payment can result in penalties, increased interest rates, and a negative impact on your credit score. It's important to contact your lender if you face difficulties in payment.

It is possible to avail a personal loan with a low credit score, but it may attract a higher interest rate and stricter terms. Consider improving your credit score before applying for a loan.