Nowadays, most
people applying for home loan many never even go to the bank and all the process
is done by middleman/agent/friends or relative working in bank for our
convenience. Loan documents require a lot of signatures and contain lot of annexures,
so we don’t bother to read them and rely on them.
This kind of
practice can get us in trouble while signing the home loan documents and due to
your casualness and trust you may be sold some junk product along with your
loan. Recently one of our clients took a home loan from a leading public sector
bank after a lot of research and study.
Real Case Story
He was
sanctioned a loan of Rs 22 lakh. In the duration, hundreds of papers were
signed by him telling him that these are all formalities and that are needed.
However,
when the first disbursement was made, he came to know that the total sanctioned
amount is Rs 22.90 lakh. When he enquired, he was told that the balance Rs. 0.90
lakh is the amount of single premium towards an insurance policy that the bank
has paid to a Life Insurance company for insuring the home loan of Rs. 22 lakh
for him for full tenure of 20 years in case of his death.
This was
never told to him clearly and he has to now pay the EMI for the additional
amount. But the loan was sanctioned by his own relative, so he was so
persuasive and explained him that it is mandatory (even if it is actually not).
Cost of Loan
What could
have happened in the above case? He was supposed to take a loan of Rs 22.90 for
20 years, and his EMI would be Rs 22,480 per month whereas the loan disbursed to him
was Rs 22 lakh. According to loan disbursed amount of Rs 22 lakh, the EMI
should be Rs 21,596 per month for 20 years. In this way, his EMI has increased by
Rs 884 per month for tenure of 20 years. It implies that he would have to pay
extra of Rs 2,12,160 for whole tenure of loan in which the bank has not only
disbursed 0.90 lakh wrongly but is also charging interest on the same. It is
really painful to him due to this unscrupulous activity by bank official.
Unlawful Activity by bank
The fact
that the customer came to know about the home loan insurance after the loan was
sanctioned clearly shows that Bank operations was not transparent at all and
the customer was taken for granted. How can you sell him home loan insurance
without even telling him? This has to be communicated well? Was there a personal
one to one communication done with the customer on whether he can afford the
insurance premium or not.
The purpose
of bank was to earn unlawful commission from insurance agency at your cost.
Also the cost of insurance is much higher than the prevailing market rates. A
normal term plan with 22 lacs cover with 20 years tenure will cost less than
Rs.0.50 lac, but a policy worth 0.90 lacs was issued and no one even cared to
understand it from customer point of view. This clearly shows the
in-sensitiveness of the bank officials involved in the whole process.
This kind of
unfair practice exists all over the world and are going to remain here. You
should read the documents very thoroughly before signing and make sure why and
what is that signature for. You can straight away reject saying that if there
is an extra charge you will not go ahead and in most of the cases if you do not
sign also they will sanction you that loan without that insurance. Mistakes are
from client side too but you have to understand…some skills of this sales
people are so good to prove you that whatever they say is right…. If nobody in
the bank replies properly and only assures that the insurance will be returned
if the loan is prepaid. This is only a way of fooling customers.
Hence, while
processing of home loan from any bank, you should keep a note of this insurance
amount and never let to consider in your home loan because they will charge
interest on your insurance. Instead, if you really want properly loan term insurance
then tell them that you will arrange the same from your own fund. By this, you
will take term insurance at lower premium also get income tax deduction under
section 80C.
2 comments:
This sort of unjust exercise is available worldwide as well as are likely to stay right here. You need to browse the paperwork really thoroughly prior to putting your signature on as well as make certain the reason why as well as what's which personal with regard to. You are able to immediately refuse stating which when there is an additional cost you won't go on and within the majority of the instances if you don't indication additionally they'll sanction a person which mortgage without having which insurance coverage.Yacht Insurance Southern California
Thanks for your suggestion and completely agreed with you.
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