POSTED BY July 24, 2012 1:37 pm COMMENTS (4)ON
I have opted for HDFC Home Loans @ 10.5% and this month on July 21st took the first disbursement of Rs 374000.
Now, my ECS cycle begins from the 4th of consecutive month. So HDFC said that since there are 9 days pending for the month to close, I would have to pay simple interest ( which on the receipt is termed as PreEmi) amounting to Rs 1185. Now I think that’s fine.
My EMI calculation will being from Aug 1st to Aug 31st and the first EMI will be debited on 5th Sept.
Now, comes the confusion.
HDFC says that I have to pay the PreEMI calculated through simple interest every time I come to collect the next disbursement cheque, and that too on the cumulative amount.
What I don’t understand is since my EMI has started why should I pay “interest” twice on the same amount, once in cheque and again through ECS?
Also, they have failed to explain how this “Pre-EMI” is calculated and how it adds up against the recovery of my loan amount.
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4 replies on this article “Unable to understand PreEmi and EMI terms on HDFC Home Loans”
If disbursement is done on 1st date of the month, then whether PRE EMI have be paid for rest of 29 or 30 day depending upon days of month ?
This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that
May be below links will help you out.
“HDFC says that I have to pay the PreEMI calculated through simple interest every time I come to collect the next disbursement cheque, and that too on the cumulative amount.”
This is true that you will have to separately pay through cheque for the interest amount for days remaining in the month u get amount disbursed. We have to to do this as HDFC system fixes its principal and interest component for an EMI at the beginning of a month itself. For the next month onwards interest on this additional disbursement will be taken care out of EMI.
The only thing that does not look correct to me is “interest on the cumulative amount”. This interest is only the disbursemnt made on that month and not cumulative. So say, if you get 10lakhs disbursed till end of Sep. and then u get another 2 lakhs disbursed on say mid-oct, you will haev to pay intrest on 2 lakhs for 15 days as pre-emi for remianing 15 days in Oct.
This amount would not get deducted from your actual EMI of that month. Please this get confirmed with HDFC, but I am sure this is how it should be.