Personal loan or Home improvement loan??

POSTED BY Aalap Parekh ON August 26, 2012 10:11 pm COMMENTS (6)

Hello All

I need ur expert advice on my dilemma

I would required 1.5 lac INR for my newly home for kitchen,bedroom ,living room furnishing (Incl A/C,Washing machine etc ) and planning for Max two years.

I am salaried person.

My home loan with BOB. For home improvement loan (Rate of interst 13 %)what BOB said that Movable items (A/C,TV,Washing m/c etc ) are not going to cover under this.only renovation work and fixing work will be covered and payment will be done directly to contractors!! is it so?

How about Personal loan (Rate of interst 17 %)?? as all the money come to my account and I can use the way i want for my home.

Is there any better option for loan with lower interst rate?




6 replies on this article “Personal loan or Home improvement loan??”

  1. Samir says:

    Dear Aalap,
    Why not wait for few months and accumulate these items over the period of item and in priority one by one.
    I know it is harder .. but believe me it feels great .. when you set such small personal goal and achieve it. This also gives fun and excitement of periodic shopping.

    To best accomplish it … you can make your wife as owner of this goal. Let her also be the responsible partner of your financial journey.

    Warm Regards
    Samir Gorey

    1. Samir says:

      To be specific.. I meant that “Don’t take any loan and break into PPF etc”
      Just save some money every month… for this sole purpose. When you accumulate enough money to purchase item X.. indulge in it.

      In USA this is known as “Layaway”… All big retailer park items for you with a small fee and when you pay in full they give you the item. Customer escapes the interest of credit/loan payment but NEED to wait till he pays final installment.

      What I suggested here is “Layaway” of self-control…

      FYI ..Refer below…

      Warm Regards

  2. Aalap Parekh says:

    hello Ashal
    I dont have MFs,Shars FDs.Only PF is there.

    1. Dear Aalap, how much money is there in your PF. You may go for refundable loan from your PF. Which ‘ll be far cheaper than any other source.



  3. Dear Aalap, do you have some other investments like MFs, Shares, FDs, PPF account, PF….?



  4. Home improvement is indeed ‘renovating’ your home. It means structural changes/strengthening including woodwork so the bank is right.

    If home furnishing is your intent (A/C,TV,Washing m/c etc ) then opt for the 0% EMI option that comes with almost EVERY consumer durable. For items worth 1.5 lacs the total processing fees could be less than Rs. 3000 in some cases. That is 1.5% interest outgo equivalent. You will need some down payment to the tune of 20% – you must arrange that in cash than going for a loan even for that down payment.

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