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Which car loan to go for?

Discussion in 'Insurance & Loan Reviews' started by dj.nish, Sep 12, 2011.

  1. dj.nish

    dj.nish Superiore

    Messages:
    543
    Mumbai
    Ok so I pitted three major banks against each other and they have matched each other to the T. Here's how it goes:

    Loan amount - Rs 700,000
    Tenure - 60 months
    ROI - 11.5% fixed
    Monthly reducing method
    EMI (advance) - Rs 15,249
    EMI (Arrear) - Rs 15,394

    HDFC
    - 50% discount on (Processing fee + Stamp duty) i.e. total Rs 2,250
    - NO PART PRE PAYMENT ALLOWED
    - Foreclosure charges - 1.5% of outstanding loan

    Axis
    - 50% discount on (Processing fee + Stamp duty) i.e. total Rs 2,250
    - 2 part pre-payments allowed in one year
    - 10% (plus service tax) of prepaid amount within first six months. 5% (plus service tax) afterwards. Two pre-payments allowed per financial year.

    Kotak
    - Processing fee + Stamp duty is Rs 3,600
    - Foreclosure charges - 3%

    I'm going in for processing with HDFC and Axis as of now. Although I'm tilting towards Axis as it allows part pre-payment. Although I have my salary account with HDFC but their attitude/customer service is appalling. I was expecting a pre-approved loan with them but they inform me it is not so!

    Any grossly negative reviews about either bank?

    Also, still not decided between Advance vs Arrear option. Anybody here who can give me a solid convincing argument?
    Last edited: Sep 14, 2011
  2. dj.nish

    dj.nish Superiore

    Messages:
    543
    Mumbai
    Guys - SBI was super quick in approving my loan. I submitted my documents on Thursday and by Monday the loan was approved! Over the weekend, I got SMS from Axis too about loan approval. Now I'm slightly confused. For want of transparency and lower costs, I would prefer to go with SBI. But looking at the rate hikes, I'm in two minds. SBI is based on daily reducing FLOATING rate, while Axis is Monthly reducing FIXED rate. Please advise!

    1. Loan amount - Rs 700,000

    2. Tenure - 60 months

    3. Rate of interest
    - SBI 11.25% (Floating)
    - Axis 11.5% (Fixed)

    4. EMI
    - SBI Rs 15,305 (arrear)
    - Axis Rs 15,408 (arrear)

    5. Charges
    - SBI: No processing fees, 0.3%+Rs 250 as Stamp duty - Total Rs 2350
    - Axis: Rs 2250 as processing fees, 0.3%+Rs 250 as Stamp Duty - Total Rs 4600

    6. Foreclosure and part prepayment
    - SBI: No charge
    - Axis: 3% of the outstanding / paid amount

    So numbers are in favour of SBI.
    Last edited: Sep 20, 2011
  3. anoop

    anoop Superiore

    Go with SBI. I think the rate you are getting is fixed for 2 years. OR are they floating from Day 1?

    I do not think reserve bank will hike the repo rates again - this time, it was a last ditch effort to contain the inflation, but as per market analysis, this measure is past its prime and RBI will no more resort to it as a quick fix.
  4. dj.nish

    dj.nish Superiore

    Messages:
    543
    Mumbai
    So I decided on going ahead with SBI and communicated my NO to Axis. That's when they started getting real desperate! The guy called me late evening and promised to match each and every thing in the SBI offer! I was amazed at the lengths these guys stretch to capture business. Ofcourse, his harping point was that SBI offers floating interest rate while Axis' is fixed. But he could not answer one question of mine - can I make multiple repayments every year without a charge?

    Apart from that, Axis has agreed to waive off pre/part re-payment charge, foreclosure charge and processing fees. They are also wiling to write it down in the agreement. I wonder why they are chasing me so much?
  5. anoop

    anoop Superiore

    Simple - they are desperate to get business.

    If i were you, I will go with SBI. Though AXIS now says they will match every thing and give it in writing, who knows what loop holes and headaches will be there when you actually go to close \ repay your loan.
  6. dj.nish

    dj.nish Superiore

    Messages:
    543
    Mumbai
    Yes, I'm going with SBI only. You just spoke my mind. Even if they give in writing, I do not trust them. What stops them from bringing in some 'policy change' after a year and introduce riders? Moreover, when they are bending over backwards and the "Manager is getting special approval for a high profile (?) customer like me?"
  7. dj.nish

    dj.nish Superiore

    Messages:
    543
    Mumbai
    Guys - I need a quick help here.

    I signed my loan agreement with SBI, gave 6 security cheques and basically completed all loan formalities. The only pending item was to give them ECS mandate - which is OK as EMI begins around Oct 15th).

    However, to my utter shock I was informed by my dealer that my loan amount (Rs 700,000) was disbursed by SBI to them 2 days back. How is this possible? I have not paid the balance amount to dealer. So technically no car has been allotted to me. But the SBI guy claims that he was shown an invoice (I suspect the booking amount invoice) and was told that since customer has made the balance payment, hence the bank should release the loan amount. However, the booking amount is not tied down to any specific car.

    Can SBI disburse loan in a generic way i.e. not against a specific car? (I doubt though!).

    I completed my car's PDI yesterday and then gave the green signal to the dealer (but not yet to the bank), to bring the car to showroom and complete the pending formalities.

    WHAT IF I had cancelled the booking? What would have been the course of action between me, Bank and Dealer, because Rs 700,000 was already in dealer's account!
    Last edited: Sep 29, 2011
  8. anoop

    anoop Superiore

    @nish: I have heard this happening with private banks, but now it seems like it is happening at SBI also. I think dealer might have good connection with SBI and they may have made SBI disburse the loan. Ideally, this should NOT happen. Only with your consent bank can disburse the loan.

    PS: when you signed all the documents, was there any document which gives your consent to transfer the money to the dealer? If it is there, then bank is right to disburse the money. AFAIK, once all the formalities are done, you need to ask bank to hold the payment if you do not want the money to go to dealer immediately, but I can be wrong here.

    Basically, it boils down to what all documents you have signed. If you have given your consent, bank is right, If you have bot, bank is wrong.

    Bank loan is not tied up with a particular car, but I think the showroom need to give a proper invoice before the loan is disbursed. I am not sure VIN is a part of the invoice.
    Last edited: Sep 29, 2011
  9. dj.nish

    dj.nish Superiore

    Messages:
    543
    Mumbai
    Yes the bank has excellent relationship with the showroom. So much so that part of my documents were submitted at bank and part at the showroom. And the loan still got processed overnight.

    The bank guy says he was shown an invoice. How can there be an invoice for a balance payment when I have made none? And the booking invoice clearly states just the car model and colour. So no question of VIN anywhere.
  10. anoop

    anoop Superiore

    In that case, showroom have shown a fake invoice - showroom is at fault here.

    I remember that I paid the amount first and then only bank released the rest.

    (In my case, we have an excellent relationship with the showroom, so they did the TR and put the accessories just after I paid the amount - even before the loan amount was disbursed from the bank)

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