Wednesday 17 June 2009

A loan saga

I needed money to pay for my MBA. “Borrow the money from me,” offered my father. “Let’s pay from our savings,” said the wife. Both wanted to save on interest. Fair enough. But I argued, “Let’s take a student loan, so that our savings stay liquid. We’ll repay once I get a job after my course. That way our cash flows stay better.”

They agreed. I applied.

First problem: I’m over-age. Umm… what has age got to do with this loan? I mean, at 39, what are the chances of my popping off tomorrow from age-related diseases? And how does it effect my chances of getting a job, provided I’m realistic about the salary a 40-year-old fresher can expect, and considering I am employed right now?

Second problem: My father, the guarantor, is over-age. But the security offered is his property, which has nothing to do with his age.

Third problem: The property is inacceptable as security because it is in Salt Lake, where all land is leased and none sold. So my parent’s home is built on land leased from the government for 999 years. If my parents want to get rid of it, they must give it back to the government and take whatever the government deems fit.

But doesn’t that disqualify all landowners in Salt Lake from getting home loans?

Anyway, there is a solution to all these problems: Ask for a loan of Rs 7,00,000 instead of Rs 20,00,000 and open a fixed deposit of Rs 3,50,000 (as a mark CBM [Confidence Building Measure]?).

Very well, my father opens the fixed deposit. But shit happens. So they don’t take a decision on the loan by the time I must pay my fees. I borrow the money from my father.  

Then yesterday, 15 days after the last date for paying fees, I get a letter from the bank, denying the loan.

Big question: Why did the bank drag its manager all the way to my father’s office and assure him that the loan will come through once the FD is opened? Why did they make so many phone calls? The FD amount was trivial on the scale that big banks deal with. Why were they so eager?  

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