Q - Can I get tax benefit on two wheeler loans?
A - There are no tax benefits on two wheeler loans unless you are using the two wheeler for the purpose of your business.
Q - Is a loan for the purchase of a commercial car entitled for tax rebate in form of depreciation or interest paid on account of the loan?
A - The interest payable on the car loan can be set off against the income from leasing the car.
Q - Does car loan taken from Public Sector Units like UBI, SBI etc allow part repayment which can be greater than the monthly EMIs, just to wind off the loan earlier?
A - The clause relating to pre-payment on a car loan will have to checked in the car loan agreement. It will normally attract pre-payment charges, but you will have to check the agreement to be sure.
Q - What is the best interest rate that one can get for a car loan? What can one expect even if the tenure is for 5 years, after 2 years or so we could give a bulk amount and reduce the EMI significantly for next 3 years. Is it possible with any bank?
A - Interest rates on new cars loans vary very widely depending on the car and the model since it is usual to club manufacturer discounts into the car loan rates. Though banks look at a minimum returns of around 12-13% for themselves (net of their sourcing charges), the actual cost to the consumer can be lower depending on the manufacturer and dealer discounts available. Shop around to get a deal at the lowest interest rates.
Q - Which loan should one go for for buying a car, personal or an auto loan? Which will be beneficial?
A - To buy a car, one must apply for an auto loan as it will be cheaper than a personal loan.
Q - What type of loans can be claimed for income tax deductions?
A - Home loans, personal loans and educational loans are eligible for tax deduction benefits. However, this is subject to certain conditions.
Wednesday, January 16, 2008
Tuesday, January 8, 2008
Education Loan Queries
Q - Is education loan tax free?
A - If it is for a course which is of a kind or similar to the one mentioned in section 80E, the interest paid is eligible for tax deduction benefits.
Q - What is amortization?
A - It is the process of knowing the break-down of the EMI(Equated Monthly Installments) into principal and interest components of a loan repayment. It also lets you know how much of your loan is outstanding and how much of your EMI is towards repayment.
Q - Something about study or education loan.
A - Any person can avail a loan for his/her studies both in India as well as abroad for up to Rs. 15 lakh. Banks offer loans up to Rs. 4 lakh without security. Providing collateral or security is mandatory for loans above Rs. 4 lakh. The loan covers the cost of travel, lodging, books, tuition fee etc.
Q - What is GPA?
A - GPA or "Grade Point Average" is a long-term indicator of a student's future performance. Generally, most master's courses require a minimum of GPAs of 3.0 or 3.3, and for the Ph.D. courses require minimum GPAs of 3.3 or 3.5.
Q - Can bank officials reject an application for education loan?
A - Banks can reject loan applications if doesn't meet their eligibility criteria. Taking a loan against property or securities like jewellery, life insurance policies with high surrender value, shares, mutual fund units etc can ensure that it doesn't get rejected.
A - If it is for a course which is of a kind or similar to the one mentioned in section 80E, the interest paid is eligible for tax deduction benefits.
Q - What is amortization?
A - It is the process of knowing the break-down of the EMI(Equated Monthly Installments) into principal and interest components of a loan repayment. It also lets you know how much of your loan is outstanding and how much of your EMI is towards repayment.
Q - Something about study or education loan.
A - Any person can avail a loan for his/her studies both in India as well as abroad for up to Rs. 15 lakh. Banks offer loans up to Rs. 4 lakh without security. Providing collateral or security is mandatory for loans above Rs. 4 lakh. The loan covers the cost of travel, lodging, books, tuition fee etc.
Q - What is GPA?
A - GPA or "Grade Point Average" is a long-term indicator of a student's future performance. Generally, most master's courses require a minimum of GPAs of 3.0 or 3.3, and for the Ph.D. courses require minimum GPAs of 3.3 or 3.5.
Q - Can bank officials reject an application for education loan?
A - Banks can reject loan applications if doesn't meet their eligibility criteria. Taking a loan against property or securities like jewellery, life insurance policies with high surrender value, shares, mutual fund units etc can ensure that it doesn't get rejected.
Friday, January 4, 2008
Q/A - Credit Cards
Q - Is using a credit card a good practice for repaying after 50 days or should we use the debit card instead at wherever possible?
A - Using a credit card is useful provided you follow 2 rules:
1) Plan your spending in a balanced manner- Resist the urge to make an impulse purchase through a credit card. If you cannot resist such urges then debit card would work the best for you.
2) Pay off the full amount before the due date - Make the payment before the due date so that you do not pay any late payment interest charges which is quite a messy business.
Q - What do credit card companies or banks gain from the customers who pay their bills on time? If they don't , then why do they have reward points for paying bill on time?
A - It is incorrect to state that banks do not gain anything from consumers who pay the entire sum on / before the due date although the income from such clients is only marginal. Banks make a fee on every transaction that you make using your credit card. The reward points come from this fees. Through reward points the banks promote expenditure on the card with a view that at some point of time you may actually use the revolve payment facility and also they would make more money with more of your transaction.
Q - Could the credit cards be used for shopping online on the website outside Indian IP address or for making payment in dollars? Does the rule permit it?
A - It can be used except for gambling and lottery purposes. The spend has to be within the limit specified by RBI which is quite liberal.
Q - Some banks are charging a service tax @12.36% whereas others are not? Why is it so?
A - All banks charge the service tax @ 12.36% on interest and other fees.
Q - How is minimum amount calculated and what is it significance. Whats the advantage if I pay only minimum amount due to cash crunch?
A - Normally most card issuers allow you to pay off a minimum of 5% of the total outstanding every month. However interest is chargeable on the entire amount from the date of debit. It is not advisable to use the minimum payment facility as the credit charges are quite high (around 36% per annum). If you have a temporary cash crunch you can either get another credit card to pay for it or for longer period you can go for personal loan for paying it.
Q -Is the credit day's limit same for both cash transaction as well as the merchant transactions?
A - Some banks have different limits for cash transaction but the cash limit could be sued for purchases from merchant establishment although vice versa is not possible.
Q - Incase someone uses your credit card by stealing the card details for transactions online, how can one be secured of it and what should be done?
A - First thing to do is to immediately get your card frozen by calling the concerned bank and get the reference number for such request. You can then get a replacement credit card from the same bank which you should keep safely.
A - Using a credit card is useful provided you follow 2 rules:
1) Plan your spending in a balanced manner- Resist the urge to make an impulse purchase through a credit card. If you cannot resist such urges then debit card would work the best for you.
2) Pay off the full amount before the due date - Make the payment before the due date so that you do not pay any late payment interest charges which is quite a messy business.
Q - What do credit card companies or banks gain from the customers who pay their bills on time? If they don't , then why do they have reward points for paying bill on time?
A - It is incorrect to state that banks do not gain anything from consumers who pay the entire sum on / before the due date although the income from such clients is only marginal. Banks make a fee on every transaction that you make using your credit card. The reward points come from this fees. Through reward points the banks promote expenditure on the card with a view that at some point of time you may actually use the revolve payment facility and also they would make more money with more of your transaction.
Q - Could the credit cards be used for shopping online on the website outside Indian IP address or for making payment in dollars? Does the rule permit it?
A - It can be used except for gambling and lottery purposes. The spend has to be within the limit specified by RBI which is quite liberal.
Q - Some banks are charging a service tax @12.36% whereas others are not? Why is it so?
A - All banks charge the service tax @ 12.36% on interest and other fees.
Q - How is minimum amount calculated and what is it significance. Whats the advantage if I pay only minimum amount due to cash crunch?
A - Normally most card issuers allow you to pay off a minimum of 5% of the total outstanding every month. However interest is chargeable on the entire amount from the date of debit. It is not advisable to use the minimum payment facility as the credit charges are quite high (around 36% per annum). If you have a temporary cash crunch you can either get another credit card to pay for it or for longer period you can go for personal loan for paying it.
Q -Is the credit day's limit same for both cash transaction as well as the merchant transactions?
A - Some banks have different limits for cash transaction but the cash limit could be sued for purchases from merchant establishment although vice versa is not possible.
Q - Incase someone uses your credit card by stealing the card details for transactions online, how can one be secured of it and what should be done?
A - First thing to do is to immediately get your card frozen by calling the concerned bank and get the reference number for such request. You can then get a replacement credit card from the same bank which you should keep safely.
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