From mint · Ananya Grover · · 1m 40s
Festive loan offers: Compare rates and fees
Banks offer festive loan discounts but borrowers must check credit scores and hidden fees.
In brief
Banks offer festive loan discounts but borrowers must check credit scores and hidden fees. Borrowers should compare total loan costs, not just interest rates, when choosing festive loan offers. Originally reported by mint.
Festive loan offers
Banks roll out interest-rate concessions and processing-fee waivers during Diwali season.
“Diwali is considered one of the most auspicious times for big-ticket purchases”
RBI rate hike impact
The RBI increased the repo rate by 25 basis points on 7 October, affecting loan rates.
“The Reserve Bank of India (RBI) increased the repo rate by 25 basis points on 7 October”
Home loan rates
Banks absorb 5-10bps of the 25-basis-point rate hike through spread compression.
“Most banks have absorbed only 5-10bps as part of their festive campaigns”
Bank of Baroda offer
Bank of Baroda offers home loans starting at 7.40% with processing fee waiver until 31 October.
“Bank of Baroda had increased the rate after the RBI repo rate hike announcement, but has now lowered it by 5bps effective 10 October”
Credit score impact
Banks offer concessional rates only to borrowers with credit scores of 800 and above.
“State Bank of India (SBI) and IDBI Bank are also advertising concessional rates, but, according to experts, these are reserved for borrowers with excellent credit scores of 800 and above”
Vehicle loan rates
HDFC Festive Treats offers car loans starting at 8.25% and personal loans at 9.99%.
“HDFC Festive Treats advertises a lower starting rate of 8.25% for car loans and 9.99% for personal loans”
Processing fee waivers
Some banks waive processing fees, which typically range from 0.25% to 2% of the loan amount.
“And it’s not just a discount on the interest rates, some banks are also advertising waivers or discounts on processing fees”
Car loan savings
Car loans at public sector banks start at 7.3-7.5%, with 50-100% off processing fees as festive savings.
“Sumit Singla, CEO of Rupyy, said car loans at public sector banks still start at about 7.3-7.5%”
Borrower checklist
Borrowers should check credit scores, compare APRs, and avoid unnecessary add-ons.
“Borrowers should check their credit score, obtain quotes from at least two to three lenders”
Hidden costs
Borrowers may pay 0.5-1% more than advertised rates, especially for riskier loans.
“Most borrowers pay 0.5-1% more than the advertised rate, and for riskier personal loans, the total cost, including fees, can be more than double the advertised rate”
No-cost EMI comparison
No-cost EMIs on e-commerce sites may not be cheaper than paying upfront for big purchases.
“Buyers should compare the upfront product price and total amount payable, as no-cost EMI offers may not always be cheaper than paying upfront”
Festive offer timeline
Most festive loan offers run until the end of December, giving time to compare options.
“Many offers run until the end of December, which gives you time to compare”
Real benefit factors
The real benefit depends on credit profile, lender eligibility, and hidden charges.
“The real benefit depends on the borrower's credit profile, the lender's eligibility criteria and the hidden charges”
The headline
Borrowers should compare total loan costs, not just interest rates, when choosing festive loan offers.
