Let us understand with the help of an example:
Consider home loans offered by LIC HFL. LIC HFL has linked its schemes directly with the applicant’s CIBIL score, which directly impacts the interest rates offered to the applicant. Due to this, the total loan cost varies considerably with changing CIBIL Score.
| CIBIL Score | Interest Rate# | EMI (in Rs.) | Total Payment (in Rs.)* |
|---|---|---|---|
| 825 and above | 7.15% | 33,770 | 1,21,57,322 |
| 800 to 824 | 7.25% | 34,109 | 1,22,79,173 |
| 775 to 799 | 7.35% | 34,449 | 1,24,01,498 |
| 750 to 774 | 7.45% | 34,790 | 1,25,24,291 |
| 725 to 749 | 7.65% | 35,476 | 1,27,71,258 |
| 700 to 724 | 7.95% | 36,514 | 1,31,45,076 |
| 600 to 699 | 8.75% | 39,335 | 1,41,60,607 |
| Below 600 | 9.55% | 42,225 | 1,52,01,084 |
For loan amount up to Rs. 50 lakh | *Principal of Rs. 50 lakh for 30 years
An applicant with a CIBIL score below 600 will end up paying Rs. 31 lakh (appx) more than a borrower having a CIBIL score of 825 and above.
Borrowers with CIBIL scores of 825 and above can save up to Rs. 8,455 every month in EMIs.
Improving your credit score before applying for the loan can not only ease the approval process but also help save considerably on the overall loan cost. Use Paisabazaar’s Home Loan EMI Calculator to calculate the EMI, interest payable and the total loan cost to compare multiple offers before applying for the home loan.
