These options would be helpful for those facing uncertainty in their monthly income, such as self-employed people, and those wanting to set aside some money for investments, said Govind Sankaranarayanan, chief operating officer (retail business and housing finance), Tata Capital Financial Services.
Tata Capital has a retail loan book of over Rs 16,000 crore. Of this, home loans account for 48%, loans against property 22%, vehicle loans 20%, personal loans 2% and business loans 8%. The non-banking finance company was looking at loan growth of over 20% this year, Sankaranarayanan said.
The Step Up plan allows you to increase your fixed EMIs as your income increases. Under the Step Down plan, you can start repaying with a higher EMI and lower it in subsequent years. The Bullet plan allows you to prepay the loan at periodic intervals and the Balloon plan allows you to pay small instalments during the tenure of your loan in return for a lump-sum repayment at the end of the tenure.
The Step Up and Bullet plans are available for all products like home, car, personal and business loans. The Step Down plan is available for car, business and personal loans, while Balloon plan is available only for car loans.
"The Step Up plan is beneficial for youngsters wanting to buy houses at the beginning of their careers. Even if your current income does not allow higher EMIs, you can take a higher loan, given that you can increase the EMI later during the tenure. Similarly, the Step Down plan is suitable for those approaching retirement, or businessmen,'' Sankaranarayanan said.
In case borrowers were not able to stick to the Flexi EMI plan they opted for, the loan would get classified as non-performing asset. Else, they would have to restructure the loans, he added.