The following incident occurred with one of my close friends at Anand, Gujarat branch.
My friend intended to apply for a loan to purchase land for building a house. Since a home loan couldn't be obtained for land purchase, HDFC presented him with the following options:
1. 35% of the loan amount as a home loan, with the land serving as collateral, at an interest rate of 8.25%.
2. The remaining 65% as a "Home Equity Loan", utilizing his substantial stock portfolio as collateral, at an interest rate of 8.75%.
This loan arrangement was planned for a 10-year term, and a processing fee of INR 21,000 was paid.
Everything was agreed upon and the loan was sanctioned. However, during the approval process, my friend calculated the EMI and found it to be at a rate of 10.1%, significantly higher than the agreed rate.
Upon contacting the HDFC agent, he discovered that the entire loan had been converted to a "Home Equity Loan" at a ~10% rate without involving the customer. Feeling blindsided, my friend put the process on hold and did not give his approval.
This situation felt like a betrayal. How could an agent make such a significant change without consulting the customer? The agent's actions failed to uphold transparency and fairness, especially when my friend had not been adequately informed. This practice appeared to be unethical and deceptive.
Following discussions with the agent's manager, an apology was extended, and a commitment was made to reduce the interest rate to 9.25%. However, the entire loan would remain a "Home Equity Loan". Additionally, the processing fee of INR 21,000 would be waived.
Despite the adjustments, the interest rate remains high considering the originally committed rate. In light of this experience, my friend is contemplating lodging a formal complaint with the RBI regarding this unethical and deceptive practice. We seek guidance on the available options to address this issue.
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Adding further:
My friend intended to apply for a loan to purchase land for building a house. Since a home loan couldn't be obtained for land purchase, HDFC presented him with the following options:
1. 35% of the loan amount as a home loan, with the land serving as collateral, at an interest rate of 8.25%.
2. The remaining 65% as a "Home Equity Loan", utilizing his substantial stock portfolio as collateral, at an interest rate of 8.75%.
This loan arrangement was planned for a 10-year term, and a processing fee of INR 21,000 was paid.
Everything was agreed upon and the loan was sanctioned. However, during the approval process, my friend calculated the EMI and found it to be at a rate of 10.1%, significantly higher than the agreed rate.
Upon contacting the HDFC agent, he discovered that the entire loan had been converted to a "Home Equity Loan" at a ~10% rate without involving the customer. Feeling blindsided, my friend put the process on hold and did not give his approval.
This situation felt like a betrayal. How could an agent make such a significant change without consulting the customer? The agent's actions failed to uphold transparency and fairness, especially when my friend had not been adequately informed. This practice appeared to be unethical and deceptive.
Following discussions with the agent's manager, an apology was extended, and a commitment was made to reduce the interest rate to 9.25%. However, the entire loan would remain a "Home Equity Loan". Additionally, the processing fee of INR 21,000 would be waived.
Despite the adjustments, the interest rate remains high considering the originally committed rate. In light of this experience, my friend is contemplating lodging a formal complaint with the RBI regarding this unethical and deceptive practice. We seek guidance on the available options to address this issue.
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Adding further:
- Initially, the HDFC agent did not mention the processing fees of INR 21,000; he brought this up at the very last stage of the application.
- After the loan was sanctioned, the agent visited my friend for final approval. He requested an additional payment of INR 60,000 for compulsory loan insurance. He insisted, but my friend declined to proceed with the loan if the insurance was mandatory, and as a result, the agent backed off.
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