Ask Us: Harsh Roongta on loans

No tax deductions are available on loan on a plot. However,if you construct the house within a reasonable period from purchasing the plot you will be able to claim income tax benefits on the loan taken for plot as well as for construction of house. The sanction of loan,however,will be subject to your income.

I need a loan urgently. Is it possible to take a loan against my credit card?

— Kushal Vema,Nagpur

Loans against credit card works just like a personal loan but without the cumbersome documentation. However,loan on credit card may not be available for everyone. Banks provide this loan to customers with high credit standing. This means that if you have been using a particular bank’s credit card for some time and you have a good payment track record,you are most likely to be eligible for a loan on credit card. Some banks limit or block the cash withdrawal limit on credit cards to the extent of loan you have taken. For the rest,loan on credit card works like a personal loan — with a processing fee,repayment in monthly installments and prepayment facility,but often with a hefty pre-payment charge. This is useful only when there is an urgent need for liquid funds since any other loan will take at least 2 weeks or so because of the documentation involved which is not the case in case of loan against credit cards.

I had taken a car loan two years back. Now I want to repay the loan through the bonus I received from my employer. What is the procedure to do it?

— Marusha Aggarwala,Mumbai

You can certainly prepay the car loan,but before doing that you need to check with your bank if there are any prepayment charges for the same.

In case your bank has a prepayment clause,then you need to pay a penalty for prepaying the loan. The prepayment penalty is generally in the range of 3-5 per cent of the outstanding loan amount. Once you have paid off the entire principal amount,you need to collect the final settlement letter from the bank,which will state that you have foreclosed your loan. You will also need to get the NOC signed by the bank to get the endorsement removed for the registration document of the vehicles. Similarly,you will need a no dues & clearance certificate from them to get their name removed for the insurance policy of the car.

— Expert is CEO,Apna Paisa. For your personal finance queries mail us at expressmoney@expressindia.com