During the construction of a property, the loan is disbursed in tranches. The borrower pays only simple interest (Pre-EMI) on the amount disbursed until possession, after which regular EMI (Principal + Interest) starts.

Since the possession of the car remains with the borrower but the bank has a right to seize it upon default, the charge is Hypothecation. The RTO endorses this hypothecation on the RC.

Processing fees cover the administrative cost of assessing the loan application (credit checks, verification). It is usually upfront and non-refundable.

Increasing the tenure spreads the repayment over a longer period, reducing the monthly installment amount (though the total interest paid over the life of the loan increases).

To mitigate risk in high-value loans, RBI mandates a lower LTV of 75% for loans above ?75 Lakh. (For loans up to ?30L: 90%; ?30L-?75L: 80%).

A guarantee is a personal security. It acts as collateral because if the borrower defaults, the bank can recover dues from the guarantor.

RBI guidelines specify LTV ratios: Up to ?30L = 90%; ?30L to ?75L = 80%; Above ?75L = 75%. This ensures borrowers have sufficient equity in the property.

Moratorium allows the student time to complete the course and find a job. Repayment starts after Course Period + 1 year (or 6 months after getting a job). Simple interest usually accumulates during this period.

The scheme is specifically for Senior Citizens. The primary borrower must be at least 60 years old. If a spouse is a co-borrower, they must generally be above 55 or 58 years (varies by bank).

EWS (Economically Weaker Section) is up to ?3 Lakh. LIG (Low Income Group) is ?3 Lakh to ?6 Lakh. Hence, the cap for the EWS/LIG category is ?6 Lakh.

RBI caps the LTV for gold loans at 75% to cushion against volatility in gold prices. (It was briefly raised to 90% during Covid but reverted).

MRI is a decreasing term life insurance policy where the sum assured reduces along with the outstanding loan balance. If the borrower dies, the insurance pays off the loan, protecting the family.

In a Flat Rate, interest is calculated on the full principal for the entire tenure, ignoring repayments. This makes the effective cost nearly double that of a Reducing Balance rate (where interest is on outstanding principal).

Under Section 10(43) of the Income Tax Act, any amount received as a loan (lump sum or installment) under a reverse mortgage transaction is exempt from tax.

To manage price volatility risk, gold loans usually have a short tenure (e.g., 12 months) with a bullet repayment option (interest + principal at end).

The subsidy amount is the Net Present Value (NPV) of the interest savings over the loan tenure (max 20 years), discounted at 9%. This upfront subsidy reduces the principal outstanding immediately.

The loan is meant for the welfare of senior citizens. Use of funds for speculative, trading, or business purposes is strictly prohibited.

Students from Economically Weaker Sections (EWS) with parental income up to ?4.5 Lakh per annum are eligible for full interest subsidy during the moratorium period for loans taken for professional courses.

Hypothecation creates a charge on movable property where possession remains with the borrower (owner) but the creditor has the right to take possession in case of default.