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Introduction

Bank of Baroda is a state-owned bank with headquarters in Gujarat, India. It is next only to the State Bank of India in terms of size. It caters to nearly 127 million customers across the globe and offers various banking products and services.

Bank of Baroda offers a wide range of retail loans to help customers meet their various cash requirements. Whether you’re looking for an education loan to fund your child’s higher education or a personal loan to meet your travel needs, Bank of Baroda is sure to help you with the right loan product.

The bank has a variety of home loan products for its customers, which enables them to easily buy a house for their use. These home loans come at attractive interest rates. In metro cities, the maximum loan amount offered ranges from Rs. 5 crore to Rs. 10 crore. In semi-urban and rural areas, the maximum home loan amount offered is Rs. 1 crore.

Bank of Baroda also offers car loans of maximum Rs. 1 crore with a tenure of 84 months. It comes with a quick approval process & very low processing fees. The bank has designed various education loan schemes for students to pursue higher education in India or abroad.

Importance of Loan Repayment

Loan repayment involves paying back a borrowed sum to the bank or lender. The repayment can be made through a series of scheduled payments to include both principal and interest.

Loan repayment is generally made through equated monthly instalments (EMIs). These instalments are made up of two primary components – the principal and the interest on the principal amount. EMIs are paid on a fixed date every month till the end of the loan tenure or till the entire loan value has been paid up.

Impact of Loan Repayment on Credit Health

An individual’s credit health is an indication of his/her creditworthiness. Several factors play a crucial role in determining your overall credit health. An individual borrower’s credit utilization ratio and the repayment history are two key factors.

A positive repayment track record indicates that repayments have always been made on time and instalments have never been missed. Credit bureaus collect all relevant data from different sources and generate a credit report and corresponding credit score of individuals. This is made available to banks upon request. Before approving a loan, most banks look through an individual’s credit report and determine the creditworthiness of the applicant.

In case a loan applicant has an unfavourable repayment history, banks may tag such cases as risky applications. In most cases, banks may deny loans to applicants with a poor credit history. Even, if they offer the loan, the applicant may be charged a higher interest rate. This is because of the possible risk of default by such applicants.

Commonly Used Repayment Methods

Loan borrowers commonly use below-mentioned loan repayment methods. Some of the repayment options may differ across banks and are dependent on the kind of loan borrowed:

1. EMIs – Equated Monthly Instalments or EMIs, are most preferred in terms of loan repayment. Every instalment amount is made up in part of the principal amount and the interest component. EMIs are to be paid every month on a fixed date throughout the loan tenure.

Some banks provide the option to prepay a loan after a certain number of instalments have been paid up by the borrower. Other financial institutions may charge a prepayment fee. Some of the common Pre-payment options available in a loan are:

  • Part Pre-Payment: If a loan borrower repays part of the loan, it reduces the principal amount. This, in turn, reduces the interest applicable to the remaining loan amount.
  • Full Prepayment or Pre-Closure: If a borrower fully pays off the borrowed loan in advance of the loan tenure, it is known as full prepayment or pre-closure of the loan.

2. Bullet Repayment – Repayment of a loan can also be made in bullet loan repayment form. In this option, borrowers have to pay the interest component every month. As the loan tenure approaches its end, the borrower makes a single bullet repayment to pay off the remaining principal value or entire loan amount.

Repayment of Personal Loans in Bank of Baroda

Personal loans can be borrowed for many reasons including emergency hospitalization expenses, purchasing consumer durables, wedding expenses or for a dream trip. Bank of Baroda offers instant personal loans online which can be repaid by making easy EMI payments within the loan tenure. These loans also come with a fixed interest rate. Borrowers are not required to provide any collateral for such loans since these are unsecured loans. They can also calculate the EMIs using a personal loan EMI calculator.

The bank charges interest on the principal loan amount. Loan repayment has to comprise the principal loan amount and the interest component. Borrowers can repay the loan in Equated Monthly Instalments or EMIs. EMIs have to be paid every month and must consist of the principal loan amount and interest.

Repayment of Home Loans in Bank of Baroda

Every individual’s dream is to own a home by a certain age. But, at times, the earnings may not match the exorbitant property rates. Thus, many people can afford a home only when they borrow a loan. Bank of Baroda offers home loans at attractive interest rates and typically gives out an amortization or repayment schedule to loan borrowers. This helps borrowers in keeping track of their EMIs. They can view this schedule for understanding the EMIs till the loan is completely paid off. Here is some of the information contained in the repayment schedule:

  • Total number of paid and due EMIs
  • EMI due dates
  • The original principal amount on which interest is charged
  • Principal and interest component of the EMI
  • Balance principal amount, after each month’s EMI payment
  • The annual rate of interest (fixed or floating)

Repayment of Car/Two-Wheeler Loans in Bank of Baroda

Buying a car is a huge investment which can sometimes require one’s life’s savings. But to afford a car without using one’s savings is possible by taking a car loan. This way one does not have to compromise on the car quality and can pay for it in easy Equated Monthly Instalments or EMIs. Borrowers can even calculate the loan EMI before actually purchasing the car. They can do so by using a car loan EMI calculator.

Bank of Baroda allows borrowers to use the auto loan EMI calculator. Apart from this, they can also use other online tools such as amortization calculators to understand car loan payments through loan tenure. A car loan amortization schedule gives a detailed, structured plan of a car loan. It includes the loan amount, rate of interest, loan tenure and other factors which affect the repayment of the loan. It helps to understand the loan progress through its tenure. Borrowers can look up monthly EMIs, total interest amount, amounts overdue after each EMI is paid, etc.

Repayment of Gold Loans in Bank of Baroda

Gold loan borrowers of Bank of Baroda can use the bank’s Gold Loan EMI Calculator to keep track of the EMI amount to be paid every month on the gold loan. Here are the steps to be followed for using the EMI calculator:

  • Click on the EMI Calculator available on the bank’s website
  • Provide the loan amount, rate of interest and tenure (in months or years)
  • You will see the EMI amount once all the details have been entered

Gold Loan EMI Calculator is useful while comparing different gold loan interest rates. It helps select the best available plan.

Repayment of Business Loans in Bank of Baroda

Bank of Baroda offers business loans with different tenures as per the applicant’s needs. A business loan with a maximum loan tenure of 36 months can be availed from Bank of Baroda. Such longer loan tenure allows for lower loan EMIs. One has to pay approximately Rs. 3,423 per lakh, which is why business loans from Bank of Baroda are very affordable for borrowers. The lowest interest rate offered by Bank of Baroda on a business loan is 14.10%.

A repayment schedule is a table of periodic loan payments that consists of the principal amount and the amount of interest. Each payment has to be made month on month until the loan is paid off at the end of the loan term. This schedule can be obtained from the bank.

In the business loan repayment schedule, the monthly EMI amount will be equal across months. However, the proportion of interest payment and principal payment will not remain the same every month.

How to fix the right EMI amount?

If you are a first-time loan borrower, here is how you can go about fixing the right EMI amount to be paid every month to Bank of Baroda.

  • As a first step, determine the loan amount you must borrow. Before you approach Bank of Baroda for any loan, you should ensure to estimate the loan amount you will need to borrow. Remember, personal and business loans are unsecured short-term loans. Thus, it is advisable to borrow the least possible loan amount. Also, depending on the EMI amount you can afford to pay, try to choose the lowest loan tenure as longer loan tenure may result in larger interest outflow.
  • Gauge current obligations: Before borrowing any loan from Bank of Baroda, you must evaluate all current monthly expenses, such as any EMI obligations on your current loans. This will help you to determine the EMI amount you can afford to pay comfortably after considering all other obligations. Once you calculate the total EMI you can afford to pay, you can then choose the right loan tenure.

FAQs

1. Why do I need to know about loan repayment while borrowing a loan?

Loan repayment has to be made by a borrower after sourcing a loan from any bank. A borrower must agree to make timely repayment to a lending institution after borrowing a loan. The repayment is to be made through a set of scheduled payments, also known as EMIs. The repayment amount includes principal and interest components.

2. Will my credit health improve if I make timely loan repayment?

Timely loan repayment can have a positive impact on any borrower’s credit health. This way, you can ensure to build a good credit history for yourself. In case the credit health is not maintained, timely repayments will help in rebuilding the credit health over time.

3. How do I make a personal loan repayment to Bank of Baroda?

If you have taken a personal loan from Bank of Baroda, you can choose to repay the loan in equal monthly instalments (EMIs). The loan repayment can also be done through post-dated cheques. The bank also has the option of making repayment through Electronic Clearing System (ECS) or a standing instruction to debit Bank of Baroda account for the payable amount.

4. Can I delay loan repayment in the present Covid-19 situation?

Bank of Baroda has allowed moratorium to all its loan borrowers in a current pandemic situation. However, you must start making timely repayments after the moratorium period.

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