Read the fine print

I dont know why we trust banks so much-- Somehow Banks conjure up an image of integrity and a feeling of faith.

But banks are the best examples of a business built on " Other people's money". They give you an account where they charge you for keeping a minimum amount, Encourage you to take an overdraft, give you a paltry interest rate of 3% and THEN charge you for loans at exorbitant rates!

I mean- I put in money at 3% in a SB account and then they charge me 11% for a car loan or 8.75% for a home loan?

Look at some of the ratios that the banks earn-- 40% margins -- and you think that they would give you more for the buck.

It is always important to read the fine print and understand the rules of their game. As you know i just took a loan for my house from HDFC and was there in their office to take the disbursement. I took the disbursement on a saturday post 4 pm ( I waited in their office for more than 3 hrs) and they charged me interest for Saturday and Sunday! I mean-- by no means can i deposit the cheque on a saturday ( 1230 pm banks close) and Sunday bank is closed-- so the money has not gone from their account into my builders account-- but still they want to charge me interest for those days!

When i argued they came back saying that other companies charge interest from the date of creation of the cheque- and that they only take money when the cheque is disbursed.

Hidden charges? You bet.
One can always be sure that the banks and the businesses that you borrow from have a list of hidden clauses that are in their favour-- 100% of the time. The consumer is left high and dry.

So what the moral of the story?

ASK questions , even though the sales person doesnt tell you upfront. I mean the sales pitch always is-- this is the loan amount, this is the interest for this month and this is the processing fee-- Nothing more.

So here are some questions that i suggest you ask when you take a home loan.

1. Get an agreement copy, so you are better prepared for the clauses that are there
2. Ask for when and how does the interest rate change if the interest is a floating rate- BPLR- x %? How often does the BPLR get set?
3. Pre Payment charges if any-- if the sales guy says nothing-- then you can be sure that the person is trying a make a fool of you.--- Usually there is a charge for the first 3 yrs and they dont tell you that!
4. Processing charges-- what does it cover.
5. Disbursement charges-- is it there?
6. If yours is a construction linked plan-- what is the process for them to check if the demand letter is accurate?
7. Do they have an ECS facility?

I am sure that there would be a lot more such questions that need to be answered- but ASK-- Its your money and you deserve to know! If the sales person cannot answer- go to the bank outlet to understand!

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