Loan interest rates too high!

[nikunj_cal]

Originally Posted by tsk1979

Does it give the option for people to choose reducing balance/flat rate?

Well it does not give the option for a fixed one ( you will have to feed the reducing balance rate ) but i can do a search on the fixed rate thing if u want) ,but we can find that out from the sheet itself and it is very simple . Here is how :-
1)All banks quote a reducing balance rate . For ex sbi quoted me 12%
2) Feed the loan Amount , Loan Period/Tenure, No. OF Installments per year ( = 12 , one each month from jan to dec) and the reducing balance rate
3) A list of EMI 's will be displayed in the excel sheet
4)In the top right corner a total amount of interest for the entire tenure is quoted .
5) Interest = (Princiapl X Rate X Time )/100
Therefore :- Rate = (Interest X 100)/Principal x Time

Interest = Total Interest Amount Displayed in Excel Sheet
Principal = Loan Amount
Time = Duration of the Loan ( in years )


Voila you have the fixed rate !!!

@ Ramky - got your pm , will mail you the excel sheet when i reach home , replied the same thing via pm too .

I can vouch for the accuracy of this template cause it worked for me for SBI Loans and the amount was correct till two decimal places

[ramki067]

Nikunj,
Your excel is fabulous and very accurate too!. Thanks a lot. One small Question, doesn't the scheduled payment reduce in reducing method over time.? It shows the same for all 5 years! I'm still new to reducing/flat interest rates.

Regards,
Ramki.

Originally Posted by nikunj_cal

Well it does not give the option for a fixed one ( you will have to feed the reducing balance rate ) but i can do a search on the fixed rate thing if u want) ,but we can find that out from the sheet itself and it is very simple . Here is how :-
1)All banks quote a reducing balance rate . For ex sbi quoted me 12%
2) Feed the loan Amount , Loan Period/Tenure, No. OF Installments per year ( = 12 , one each month from jan to dec) and the reducing balance rate
3) A list of EMI 's will be displayed in the excel sheet
4)In the top right corner a total amount of interest for the entire tenure is quoted .
5) Interest = (Princiapl X Rate X Time )/100
Therefore :- Rate = (Interest X 100)/Principal x Time

Interest = Total Interest Amount Displayed in Excel Sheet
Principal = Loan Amount
Time = Duration of the Loan ( in years )


Voila you have the fixed rate !!!

@ Ramky - got your pm , will mail you the excel sheet when i reach home , replied the same thing via pm too .

I can vouch for the accuracy of this template cause it worked for me for SBI Loans and the amount was correct till two decimal places

[nikunj_cal]

No ramki they do not reduce that is why they are called EMI or Equated Monthly Installments .If u will notice then it is the interest every month which is reducing and the principal is increasing. this is because as and when u pay an installment you are repaying a part of principal along with the interest, so in the next installment you pay lower interest. As the total payment for the month is constant the differential amount results to a higher repayment of the principal . I hope I am clear :-) !!

[GTO]

Nikunj, I have added your "Loan Amortization Schedule" excel sheet to the finance article (ARTICLE: How to get the lowest EMI & the best Finance Deal).

Thanks a ton for sharing this with us.

[balaji_n29]

I did some research and found that IOB provides the best interest rates. Check out their rates at IOB - Personal Banking - Loan Schemes - Home Improvement Scheme. They do not have foreclosure charges, advance payment of EMI etc and have a loan that's daily reducing. Thought I can share this here so that it will be useful for peple looking at financing. By the way, I have processed by loan through IOB.

Cheers,
Balaji.

[adityapd]

are auto interest rates on a downward trend ?

These days there are ads for optra being offered at 7.5% and have also seen some ads for the indica xeta being offered for as low as 5.9 %

Probably guys who have booked their set of 4 wheels recently can confirm

~A

[mobike008]

Originally Posted by adityapd

are auto interest rates on a downward trend ?

These days there are ads for optra being offered at 7.5% and have also seen some ads for the indica xeta being offered for as low as 5.9 %

Probably guys who have booked their set of 4 wheels recently can confirm

~A

Interest rates are no way on a downward trend. Its just a gimmick to attract the buyers, these kinda offers are made on autos that dont have too much of demand. So lower interest ( in this case) can be considered as a freebie for buying an optra or a xeta.

I have also seen such ads for Omni, Alto and 800

[nikunj_cal]

Originally Posted by mobike008

Interest rates are no way on a downward trend. Its just a gimmick to attract the buyers, these kinda offers are made on autos that dont have too much of demand. So lower interest ( in this case) can be considered as a freebie for buying an optra or a xeta.

I have also seen such ads for Omni, Alto and 800

I agree , the lower discount rates that are being offered have a condition , you either get the lower discount rates or you get the freebies including a huge cash discount on the ex showroom price of the car , You cannot have the best of both the worlds . In the end a litlle analysis in the Excel Template and you will see that the Interest Hit vis a vis the savings come to more or less the same amount in both the cases !!

[squarecut]

Nikunj's excel sheet is an invaluable tool to keep track of one's loans. It is accurate and a great help to plan the repayments on one's loan. Great job, Nikunj.

[rkg]

Hi!
iam seriously thinking of writing a compliant to Supreme court as well as to MRTPC against these banks . Input from fellow bhpians required to make it strong. my points are
1. prepayment penalty : i feel is monopolistic trade practice by banks to safeguard their profits and not to allow the consumer his right. the same banks are allowing big companies and guys with no prepayment. point here is i have taken a loan and iam paying it back then why should i pay penalty? there should be penalty if iam not paying not when i pay it back. this the banks are doing to prevent one from taking advantage of arbitrage opportunity available in a free market economy. isn't there futures/options on shares/commodities to take advantage of arbitrage? there are even interest rate futures. why not the same advantage to ordinary citizens? here is thinking of complaining to MRTPC. any suggestions in this regard to prepare the presentation in a proper way
2. applying under RTI act to banks ( many should do it) asking for information on the way banks are fixing the PLR and how RBI rate hikes are effecting it and the relationship between RBI hikes of bank rate, CRR rate Hike to PLR hike. further we should ask information pertaining to floating rates since 2000 to find out whether the banks are equally prompt with respect to decreasing the rates during 200-2004. this we can send to supreme court asking for its intervention on the practice followed by banks. because as far as i know RBI hiked CRR/Bank rate by 0.5 % only whereas ICICI and other banks have hiked the rates by 2%. i would like to know how a 0.5% hike will lead to 2% hike in PLR.
Also the practice of banks not informing the customers about hike in rates/EMI and penalizing them for not fulfilling the commitments( when one is not aware that his EMI is increased how will he keep the appropriate balance in the A/c)
furhter the practice of private banks to lure customers with lower rates and once he he takes the loan hike imm stating it is floating rate. this is nothing but cheating.

How can a bank charge less for new customer a less rate than it is charging already existing customer? In this regard i have lodged a complaint with RBI but there is no response.
inputs from members please

[BaCkSeAtDrIVeR]

A friend of mine has taken an 80% loan from the SBI on his Zen Estillo LXI (on road, Kerala). Says he will be be paying 5450 per month.