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How to get the lowest EMI in a competitive market for your car loan.

Discussion in 'Insurance & Loan Reviews' started by Arryan, Jun 1, 2012.

  1. Arryan

    Arryan Regolare

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    Bhilai
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    More and more people are opting for car loan to purchase / finance their dream cars. In the market there are a large number of players ready to finance your car, but often we find people missing some finer points and pay the price later. In your enthusiasm to purchase a brand new car people are, more often than not, fooled by the dealers and the finance companies. There is fierce competition in the automobile market and I feel the TFIans, as knowledgeable persons, should be in a position to extract the benefits from the market in their favour.
    In the forum I have often seen people asking for “Which Loan?” etc. I have tried to put down some simple tips that may help the members to get the best possible financial deal for their dream cars in the future. I hope all of us are pretty much aware of most of the points (if not all), but in our urge to possess the FIAT badge, we often ignore some of these points.

    Do window shopping : This advice is ignored by most of us, but do go around collecting rates from different dealers and finance companies, as this is the key to get a good deal. When you ask for a quote from a dealer/FI make it very clear that you are serious about buying the car and also that you are going to compare their quote with some others. Casual enquiries are treated differently by the dealers, only when they sense your seriousness, the dealers would be show flexibility towards you, in their own interest to clinch a deal.

    Negotiate hard :
    Many people don’t realise this, but you will have to negotiate hard to get a good financial deal. Compare at least three/four quotes (more is even better) obtained by you on each parameter and start bargaining with each vendor separately. You might be amused to actually see how an hour of hard negotiation can soften the things for you. Some people may even like it and help others like friends / relatives by negotiating for them.

    Time to finance :
    Every FI / dealer has a monthly target to achieve. Start negotiating in the third week of the month. Most FI/dealers save the best rates for the end of the month and some may even offer something special to fulfil their monthly quota.

    Never take the dealers at face value :
    Most of us hear the dealer saying that this interest rate and EMI has been specially designed for you. Never take such statements on face value, because mostly you’ll find such statements as nothing more than pure bluffs. Check the interest rates from an online EMI calculator. Most banks having net banking facility provides EMI calculators in their site.

    Financing options from manufacturer :
    Sometimes the manufactures offer finance plans at very competitive or even below par rates. Be sure never to miss such an opportunity, if available.

    Leverage your existing relations :
    You can easily leverage your existing relations (if you have any investments or Credit Cards from banks etc.) with any FI to gain 1-2% discount on your loan. Most FI’s do this because you are already a known customer for them and the risk factor involved in providing a loan to an unknown customer is eliminated for them.

    Nationalised Banks :
    The nationalised banks like SBI offer one of the most competitive auto loan packages, that generally offers the best rate and terms, especially again if you are an existing customer. The nationalised banks generally known to provide the most transparent policies and are preferred by many.

    Loan against FD :
    If you or your family happen to be invested in Fixed Deposits with any bank, then you can opt for an auto loan against such fixed deposits. Many banks offer lucrative rates and more so with minimum paper work if you decide to opt for this. Most banks charge “Rate of FD + 1%” in such cases, however, please check up with your respective banks.

    Hidden charges / Pre-payment charges :
    In today’s competitive market I don’t think any Bank / FI would be asking for processing fee for an auto loan. Please make sure to ask for an all-inclusive quote from the dealer/ FI and spare some time to go through the documents for any hidden charges. You will notice the difference in stamp duty etc. from vendor to vendor.

    Some banks do charge very high percentage for prepayment of loans. By pre-paying your loan amount you actually eat into the projected income of the bank. Do check for such clauses and never fail to ask for a waiver at the beginning itself.

    If not eliminated at the beginning itself, these sort of clauses may finally add up to a considerable amount of money, so it is always better to take care right from the beginning itself.

    Credit Rating of individuals : Please take a note of the important fact that all banks and FI’s in India maintain a central database to keep track of the credit history of an individual. This central database is used by all banks to assess your credit worthiness before granting any loan to you. Don’t expect to make any default in loan payment at one bank and get another loan sanctioned from some other bank. So be careful to keep a clean slate by paying your credit card and other EMI’s in time.

    Lastly, a word of caution for all concerned : If you are not already conversant with ECS, don’t go for this option for repayment of your loans.It is always better to go for the old fashioned cheque payment.

    Thanks for your patient reading.
    2 people like this.
  2. thanks @arryan for such an informative post..this will really help the new buyers over here.. it seems you are into this or may be related finance sector..
    however can you pls explain this--what are the possible consequences with ECS??

    and what is the time limit for your credit history to get clean after any defaults??

    thanks again
    sanjeev
    Last edited: Jun 1, 2012
  3. Arryan

    Arryan Regolare

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    @sanjeev : I personally feel that the ECS is not yet 100% full proof in India. I do not say that there is any chances of fraud etc. but I have seen people who have got deductions through ECS and the same not being posted in their loan accounts. The bank then charges additional interest, and after some time it is really tedious to track the old transactions in the system and to restore the same.

    Second answer : To the best of my knowledge it is three years, but I need to update. There are banking ombudsmen in each region to deal with such disputes. It is always better to settle the issues amicably with your bank / credit card agencies and make sure that they have not put any adverse comments. However, this database can be accessed only by certain designated executives at the bank, and they will generally not show you the records.
    Last edited: Jun 1, 2012
  4. Ravi

    Ravi Staff Member Janitor

    Messages:
    6,001
    Bangalore
    Grande Punto 1.3
    My experience is opposite, ECS is best and efficient way to repay any loans. I have my ECS for car loans, home loans, insurance ets., using it for past 7-8 years without any issues.
    And exceptional issues happens with cheques also.

    Anybody can visit and buy his/her credit points/ratings from CIBIL website (https://www.cibil.com/online/manageCustomerDetails.do?action=showAddPaymentPage) by paying 470 rupees.
    Last edited: Jun 1, 2012
    2 people like this.
  5. Arryan

    Arryan Regolare

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    Thanks Ravi for the knowledge.
    I was not updated.

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