Your queries: Loans – Loan prepayment does not impact credit score

I prepaid my entire home loan because the interest rates have risen in the last one year. Will it impact my credit ratings now and will I be eligible to take a fresh loan after a few years?
—Jayanta Sen
No, prepayment does not have a negative impact on your score. You can avail loans in the future.

In case of a car loan, is it better to opt for a longer tenure and then prepay the amount within two years?
—A R Kishore
This is true for any loan. If the tenure agreed at the time of sanction is longer, then there is lower pressure on cash flow, and you have the flexibility to repay a lump sum as and when you accumulate some funds.

I get a lot of offers from fintech firms for loans promising quick disbursal. Is it safe to opt for such a loan and what are the precautions I should take?
—Suraj Sharma
Yes, loans from fintech are a recent trend. While availing of the loan, read the offer document carefully as there may be detrimental hidden clauses. Also availing such loans via apps on mobile makes it difficult to read through wordy documents. It is better to download such documents and read them carefully. The penalty clauses and interest rate clauses are important.

How do banks calculate the spread over the loan? How can I negotiate it with the bank?
—Vikram Awasti
The bank’s board which has the credit department heads and ALM heads decides on the spread applicable to the various loans. A borrower with a high credit score, wanting to avail of a high-ticket loan will be best placed to negotiate a better rate from the bank.

My brother has a plot of land and we want to build a two-storey house on it. Can I get a bank loan to construct my floor which will be registered on my name?
—Ashokan R Shiva
Since the plot of land is only in your brother’s name, your right to build a house/ one floor has to be established first. You may look at a sale deed or gift deed from your brother to you, for 50% of the land. Only after establishing your rights to the land, you can avail a loan to build a floor.

I am looking for a gold loan for one year. Can I pledge my gold coins instead of pledging my wife’s gold jewellery?
—Jeetender Kumar
Yes, gold in any form is accept-able as security by the FI or bank from whom you are taking the loan.

The writer is personal finance wellness expert and founder of AZUKE Finance. Send your queries to fepersonalfinance@expressindia.com