ARTICLE: How to get the lowest EMI & the best Finance Deal

[GTO]

I would like to have a proper understanding about this.IN magazines like Autocar and all its mentioned 4.5% discount on the loan amount.Is this discount that you have mentioned that they are talking about.Is discount on principal that is being asked or on the amount that has been received by them as inerest.

The amount that will / has been received by them in interest. Yes, Autocar speaks about the same thing.

[rohitbagai]

Originally Posted by GTO

The amount that will / has been received by them in interest. Yes, Autocar speaks about the same thing.

4% is of the amount of loan that we take up and not the interest income. Suppose I take up a loan of 4,00,000. I will get a discount of 16000 for sure. Also most ppl dont know that there is a discount on the interest we pay too. If the total interest we pay is 1,50,000 the DSA's of many banks give additional discount of 2.5% of it. i.e. Rs. 3750.

EDIT:- Also if getting a loan through DSA/DMA discuss with them what more discount they can give if you get your car insured through them. I have seen many of my friends get 50% off on insurance. For a car like verna it could be around Rs. 13000 additional discount. Ask them to adjust in EMI and you will pay full.

[jobinjv]

Originally Posted by rohitbagai

4% is of the amount of loan that we take up and not the interest income. Suppose I take up a loan of 4,00,000. I will get a discount of 16000 for sure. Also most ppl dont know that there is a discount on the interest we pay too. If the total interest we pay is 1,50,000 the DSA's of many banks give additional discount of 2.5% of it. i.e. Rs. 3750.

EDIT:- Also if getting a loan through DSA/DMA discuss with them what more discount they can give if you get your car insured through them. I have seen many of my friends get 50% off on insurance. For a car like verna it could be around Rs. 13000 additional discount. Ask them to adjust in EMI and you will pay full.

Thanks mate.. But more doubts are coming up.. First, could u abbreviate on DSA/DMA.. Say I plan on Verna and the Hyundai dealer has ICICI at there disposal but I want a loan for a nationalized bank say SBI, will they willing to give me the so called discount or i can have it only if I am to go through the dealer specified bank.

Things confusing

[rohitbagai]

Nationalized banks don’t give such discounts. Private Banks like ICICI HDFC Etc give these types of discounts. DSA/DMA's are Direct Sales Associates/Direct Marketing Associates for the private banks. Many small financers are DSA/DMAs of private banks. They usually give better discounts than bank itself. Dealers are least bothered to give you best discounts as they have other streams of revenues. They just need DO (Delivery Order) from bank or financer to deliver you the car. Also if you have an existing relationship with the bank for example a home loan or a credit card from ICICI. The bank will give additional 0.25% discount on the overall rate of interest. On the other hand the FI report is not necessary in such a case and you can get loan disbursed more quickly.

[wizardofid]

Originally Posted by cpserrao

Many thanks for posting this information. Using this information I was able to play ICICI bank against SBI and Citi and negotiate a rate 0.5% less than what was originally quoted. Got an effective rate on 9.65% (after finance payout etc) on 4.75L for 36 months. Managed to lock in the rate before the increase happens.

How much does that work out to in EMI? How did you calculate effective rate? I did this quick calculation based on infor available at the HDFC website for 13.5% interest (which is what I think they are offering)

amount yrs EMI
total diff % higher 350000 3 11878 427608 77608 22.17371 350000 5 8054 483240 133240 38.06857

It seems like we payout 1,33,240 more for a 3,50,000 loan amount over 5 years. Crazy difference, if you ask me.

[supremeBaleno]

Originally Posted by jobinjv

@supremeBALENO, You had stated of one document that you wanted to be removed.Was there just one or more than that.if so please provide information.

There were atleast 3-4 such pages in that thick booklet. He wanted me to sign all. I only signed the ones that were relevant and crossed out the illogical / irrelevant ones.
Take the time to read through the pages and you will know which ones to sign and which to avoid.

[esteem_lover]

One of the declarations that they wanted me to sign was "Even if all the EMI cheques were honoured, they still retain the right to seize my car".

Dont tell me the manager's name is Don Corleone. man, which bank was that ?


And always insist on a copy of the document that you have signed, which will be very useful for future references.

[supremeBaleno]

Originally Posted by esteem_lover

Dont tell me the manager's name is Don Corleone. man, which bank was that ?

GE countrywide. Yeah, they had some real stupid clauses in there.

Originally Posted by esteem_lover

And always insist on a copy of the document that you have signed, which will be very useful for future references.

Yes, this is also a point to remember. Also, do not sign anything which has blanks (interest rates etc) that they will fill later.

[ScarySkulls]

Brilliant Topic.

Discounts can be had on used car loans too..??
I'm keen on SBI

[GTO]

Discounts can be had on used car loans too..??

Absolutely yes; in fact the potential for bringing down the rates for used car loans is more than on new cars (due to the inherently higher rates).

[ScarySkulls]

That is good.

Asked because the rates are Really pretty high
18% reducing for pvt banks like ICICI
around 14% reducing for SBI Etc.

[GTO]

Added a superb "Loan Amortization Schedule" excel sheet to the opening post; members can download the same. Thanks to BHPian nikunj_cal for sharing it with us. It will help you to calculate the EMI for different loan amounts, juggle between interest rates, calculate total interest, calculate foreclosure charges and so on.

[adityapd]

Guys,

Are the interest loans on cars on a downward trend these days ?
saw a couple of ads with Optra being offered at 7.5% and the xeta as low as 5.9% a couple of days back.

~A

[appuchan]

Its done by banks/financial institutions using special tie-up with car makers (who will compensate the bank for low rates). Since more than 75% of the car purchases were done with loans, car makers are now facing the heat due to high interest rates.

Please do take care to read the fine prints regarding the so-called low interest rates, as there may be some other clause like pre-payment penalty, freedom for the banks to hike the rate substantially after disbursement, no freebies from dealers, higher processing/admin/whatever fees etc.

[nikunj_cal]

Originally Posted by GTO

Added a superb "Loan Amortization Schedule" excel sheet to the opening post; members can download the same. Thanks to BHPian nikunj_cal for sharing it with us. It will help you to calculate the EMI for different loan amounts, juggle between interest rates, calculate total interest, calculate foreclosure charges and so on.

Wow thx GTO , !!!

Just a point to add , SBI calculates its installemnts on the basis of Daily reducing Balnce and my guess is so does the Excel Sheet . ICICI and UTI have their own funny ways of doing it .IMO Daily Reducing Method is the best as you end up paying more towards the principal and less towards the Interest !!!