Lucky me!

I just received a “certificate” from my bank that I’ve been pre-approved for a personal loan of Rs.2,68,000/- that I’ll have to return with a monthly instalment of Rs.7,452/- in 48 months. They’ll also be charging me a 1% upfront processing fee. After 30 June, 2005, they say, the prevailing rates will apply.

Now if I go for this loan, I’ll end up paying them roughly Rs.3,57,696/-, a whopping extra of Rs.89,696/-. This doesn’t make sense, or does it? 48 months means 4 years. Now this loan should give me a return much more than Rs.89,696/- in order to make it viable. For instance, getting some hardware that makes me lots of money during these 4 years.

Currently I have no need for this loan but I wonder how many people go for it after receiving such promotional gimmicks.