By Chaitali Dutta
How is daily reducing balance in a car loan calculated? Should I opt for a fixed or floater loan for a car loan?
By Bhupender Singh
In any daily reducing balance loan, the interest is applied on the day-end balance and aggregated for the whole month. Hence, the earlier you pay the EMI in the month, it will be slightly beneficial, by way of lower interest than as compared to paying the EMI towards the later part of the month. Interest component in a month of 31 days will be higher than, say, February, which has fewer days. Since currently we are in a declining rate period, it would be advisable to go for a floating rate loan.
For prepayment of a home loan, should I pay in bulk after accumulating for a few years or pay any amount whenever I have a surplus?
By Samir Gupta
The decision would be defined by the growth rate possible on your surplus money. Here the net yield (interest rate less tax payable) is to be compared with the interest you are paying on the home loan. If you can grow the surplus at a rate higher than the home loan interest rate, you should accumulate and then pay off the loan. Otherwise, pay surpluses into the loan directly, as and when available.
Can I deposit Rs 1.5 lakh in my son’s (minor) account in addition to Rs 1.5 lakh in my PPF account in the same financial year. Can I deposit in two different accounts?
By Romil Shah
The maximum amount of deposit by an individual is Rs 1.5 lakh including the deposits made into minor accounts where the individual is a guardian. In your case, the aggregate in both accounts should be Rs 1.5 lakh only.
After working for two and half years, I left the services to pursue higher studies. Can I withdraw the accumulated EPF and VPF balance to fund my education? What are the tax implications?
By Sreenivas
Yes, you can withdraw from your EPF account. The TDS on the withdrawal will depend on the number of continuous years of service. If it is five years or more, then TDS is not applicable. The interest on your contributions to EPF, employers’ contribution, interest paid on employers’ contribution are taxed as per your slab.
The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance. com). Send your queries to