The loan issuers targeting masses of borrowers utilize teaser loans as their promotional product. With the liberty to provide teaser loan rates, the structuring and customization increase for all kinds of loans.
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Key Features of Teaser Loan
- A teaser loan is one that is offered to the borrower as an incentive for purchase, wherein a low rate of interest is offered for a fixed tenure.
- The common types of teaser loans include adjustable rate-mortgage and credit cards with some low initial offers.
- The borrowers should keep into consideration the rates that will be applicable once the teaser loan rate has expired.
How do Teaser Rates and Teaser Home Loan Rates Work?
A teaser loan is surprisingly less, and at times it can be 0% too, and it is a type of teaser loan rate offered as an introductory rate for any of the consumer loans. After these teaser rates expire, the customers witness high rates of interest applicable on their balances, and the increased rate will also show in the minimum monthly payments. The most common types of teaser rate loans in the market are adjustable-rate mortgages and credit card offers.
Things That One Should Know Before Opting for a Teaser Loan
- With teaser loan rates, the borrowers can save a lot of money that is otherwise spent on paying interest.
- Prior to agreeing with the teaser loan terms, the repayment terms and conditions mentioned in the loan contract should be judiciously read by the borrower.
- Post the directive issued by RBI, the teaser rate housing loan products have been discarded in India with the motive to link every home loan to a set repo rate.
- Many carmakers have joined hands with financial institutions to provide teaser loans on cars to enhance car sales.
How can a Homebuyer Benefit from a Teaser Loan?
The borrowers looking for a long-tenure mortgage can go for a teaser loan as it has a good start and will be a no-loss situation for the borrowers. Because home loans are commitments that require dedication, getting them at a certain discount would surely be beneficial. But the homebuyers should also consider their capacity for loan repayment. For instance, what will you do in a condition where the inflow of cash abruptly halts? Though the teaser loan schemes are attractive, you should not opt for them unless you have evaluated all the pros and cons.
Important Real estate Terms You Should Know
FAQs
Is a teaser home loan a good option?
The borrowers looking for a long-tenure mortgage can go for a teaser loan as it has discounted rates of interest at the start.
Why should I care about my teaser loan?
You should keep a check on your teaser loan because high-interest rates are applied to the balance once this tenure expires.
What is a teaser interest rate?
These are the rates offered on a consumer loan as introductory rates.
