Unreasonable Interest charged by bank on prepayment

POSTED BY VIMAL ON February 14, 2014 3:33 pm COMMENTS (3)

I took Encash offer from a bank for Rs. 81000 @ 20.05% for 36 months. After payment of 12 EMI I want to pre pay, I should be charged interest @ 20.05% for one year only. Bank is not agreeing and saying that  the effective interest rate is 33.67% p.a. on reducing rate, indirectly forcing to avail full tenure. Can I object the way of calculation of interest, even though it was mentioned in the repayment schedule attached to the agreement. Is there any scope of waiver of prepayment charges too?

 

3 replies on this article “Unreasonable Interest charged by bank on prepayment”

  1. Credexpert says:

    Dear Vimal,

    Kindly check your loan agreement for the prepayment fees being charged.

    About paying the effective rate of interest even in case you choose to prepay your loan, as to what it seems to us, this is incorrect. As a first step you could file a complaint with the bank. Based on their response, you could then go ahead and approachthe Banking Omudsman Scheme 2006.

    Regards,
    Credexpert
    http://www.credexpert.in

    1. VIMAL says:

      Dear Credexpert,

      Thank You!
      It’s ok for prepayment fee as it is there in the agreement.

      Update:
      I complained with the bank and got replying e-mail that they would probe into and get back in 8 days. differential interest mount involved in not more, issue is the genuineness.

      Regards,
      Vimal

  2. ashalanshu says:

    Dear Vimal, with out reading the loan agreement we can not comment.

    Thanks

    Ashal

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