Foreclose charges - EMI | Any idea on why does bank charges 3-5% extra if we wish to foreclose EMI ????????

When u have availed the EMI
u done the contract for x amount for y month ,
So any additional amount ia not accepted, this is absurd but I have to face this as a consumer.

Perhaps, the free cards and offwrse are compensated from consumers bearing the intt. Or defaulted.

Cross subsidization happens every where.

Window programme, anti virus, shopping mall, McD , it depends on the. Business model and regulations.

when you enter into EMI, you comit to the bank to give certain amount of profit (EMI Rate – actual cost of capital). When you forclose, there is a loss of profit to the bank. The charge is compensation for loss of revenue. Most PSU banks do not have forclosure charges.

@panchabhut wrote:

when you enter into EMI, you comit to the bank to give certain amount of profit (EMI Rate – actual cost of capital). When you forclose, there is a loss of profit to the bank. The charge is compensation for loss of revenue. Most PSU banks do not have forclosure charges.

Prepayment penalty stopped for home loans
But CC EMI s are still gimmick ,
Flat rate, processing fee etc., so not standardized,
Different rates depending upon the marketing, credit profile and even for which item EMI is being used !

@B@R_0_0_D wrote:

@panchabhut wrote:

when you enter into EMI, you comit to the bank to give certain amount of profit (EMI Rate – actual cost of capital). When you forclose, there is a loss of profit to the bank. The charge is compensation for loss of revenue. Most PSU banks do not have forclosure charges.

Prepayment penalty stopped for home loans
But CC EMI s are still gimmick ,
Flat rate, processing fee etc., so not standardized,
Different rates depending upon the marketing, credit profile and even for which item EMI is being used !

Standrd Chartd stopped charging foreclosure charges..

AFAIK, SBI does not have any foreclosure charges.

@gambitrite wrote:

AFAIK, SBI does not have any foreclosure charges.

= bola