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Old 30th April 2012, 12:06   #61
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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Originally Posted by Abes View Post
if i have only 7 lacs in hand to spare & i want to buy a 7 lac car, i can deposit the entire 7 lacs in that loan account, knowing that i can withdraw any amount out of it if ever i require it, and have an interest free loan! And I dont have to worry about the EMI at all!!

Also, I dont have to worry about the tax guys coming after me, as the vehicle has been purchased on a loan!!

Only if you can officially account from "where" you managed to procure 7 lacs to deposit in one day!

To me it sounds like the borrower has not only "borrowed" the car, but has also "mortgaged" his own money - at the expense of liquidity.

Correct me if
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Old 30th April 2012, 13:18   #62
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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Only if you can officially account from "where" you managed to procure 7 lacs to deposit in one day!
If you read the first page carefully, I have clearly stated that this is for those people who are sure that they will be able to procure the required funds by careful planning (or otherwise). The example given here is an extreme case scenario - (I did not do this on day one, I did it in 3 months) - just to show how this can help. If you take the other extremity (which is not topping it up at all, you will see a total loss scenario)

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To me it sounds like the borrower has not only "borrowed" the car, but has also "mortgaged" his own money - at the expense of liquidity.
You seem to have not understood the scheme at all! The only thing mortgaged is your car - you don't mortgage your money! And it is not "at the expense of liquidity" - rather, you get liquidity. If you would have paid 5 lakhs upfront for a car, that is loss of liquidity. Here, you take a loan and put the 5 lakhs in this account, so this 5 lakhs is STILL USABLE - which is 5 lakhs of liquidity.

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Correct me if
Corrected!
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Old 1st May 2012, 01:19   #63
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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If you read the first page carefully, I have clearly stated that this is for those people who are sure that they will be able to procure the required funds by careful planning (or otherwise). The example given here is an extreme case scenario - (I did not do this on day one, I did it in 3 months) - just to show how this can help. If you take the other extremity (which is not topping it up at all, you will see a total loss scenario)
My response was only for the "not being worried about the tax guys as the car is on loan" idea - all bank transactions, including loan repayments can be monitored by the IT dept through PAN. So hypothetically your income in the "top up" phase cannot be less than the amount you top up!



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Originally Posted by keyur View Post
You seem to have not understood the scheme at all! The only thing mortgaged is your car - you don't mortgage your money! And it is not "at the expense of liquidity" - rather, you get liquidity. If you would have paid 5 lakhs upfront for a car, that is loss of liquidity. Here, you take a loan and put the 5 lakhs in this account, so this 5 lakhs is STILL USABLE - which is 5 lakhs of liquidity.
Corrected!
I think I have understood - I also have a SBI Maxgain HL. Your liquidity of 5L [just for quoting a figure] will be "apparently" available - any withdrawal from your OWN deposited money makes your loan A/C negative, which means you end up owning more money to the bank. And this scenario continues till the end of the loan tenure or in the event of you closing the loan A/C prematurely - either way your liquidity is only on paper I figure.
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Old 1st May 2012, 05:26   #64
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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My response was only for the "not being worried about the tax guys as the car is on loan" idea
This thread is meant to explain the scheme and it's benefits - tax, saving tax, staying away from the IT scanner etc.. are not affected in anyways - they (probabilities and repercussions) remain the same - with or without this scheme!


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I think I have understood - I also have a SBI Maxgain HL. Your liquidity of 5L [just for quoting a figure] will be "apparently" available - any withdrawal from your OWN deposited money makes your loan A/C negative, which means you end up owning more money to the bank. And this scenario continues till the end of the loan tenure or in the event of you closing the loan A/C prematurely - either way your liquidity is only on paper I figure.
I don't think you have understood this - the MaxGain's major advantages are the controllable ROI and the liquidity! You have ready cash available that can be withdrawn whenever you need - it has been clearly stated that you will be charged interest for that period for which the cash is withdrawn!
The point is to use it wisely and refill the account as soon as possible.

Also, the OWN deposited money brings down your ROI - hence your every EMI is now purely the principal - as more and more principal gets repaid, your effective ROI at a point in time will still be lesser than the original ROI.
(This depends on your amortization schedule).

In short, liquidity is REAL - I have used it multiple times to good advantage!
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Old 4th May 2012, 14:39   #65
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

I could not find any online references to this Advantage loan. The SBI website seems to only talk of the standard new and used car loans. However, the last line cryptically mentions 'overdraft facility available' :-)

Can anyone provide an official link to this scheme?

Last edited by itwasntme : 4th May 2012 at 14:46. Reason: Update
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Old 5th May 2012, 23:11   #66
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Question Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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Originally Posted by keyur View Post
I am enjoying the advantage of this scheme, so would like to share it with all of you.
.....
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Originally Posted by itwasntme View Post
I could not find any online references to this Advantage loan. The SBI website seems to only talk of the standard new and used car loans. However, the last line cryptically mentions 'overdraft facility available' :-)

Can anyone provide an official link to this scheme?
This was precisely my concern as well up until yesterday. The SBI agent at the Chennai Ford showroom kept denying that there is no such overdraft facility available for Car Loans. The local SBI branch also claimed ignorance, but was polite enough to offer to check with the HeadOffice and get back to me on Monday.

Given my growing impatience, I paid a visit myself to the HeadOffice in College Lane, Nungambakkam this morning. Met a senior person in the Personal Banking section there and he confirmed that such an option is definitely available. He explained that it isn't a different scheme by itself, just that the loan processing branch has to ensure that it is linked to a OD account (and of course a higher rate of interest applied). He also suggested that I visit the Aminjikarai SBI branch.

I decided to talk to the showroom agent once again and see if he had anything different to say. This time, he checked with (or pretended to) his senior officers and came back saying, that this option 'was' available, but has been discontinued now.

Deciding not to accept that crap, I paid a visit to the Aminjikarai branch and inquired with the branch manager. She too wasn't sure of such an option at first. After insisting that a few of my friends have availed the same and that the HeadOffice confirmed it as well, she went through a few document softcopies and found that it indeed is an option that can be availed.

I have been asked to come back on Monday, with the filled up application and other document proofs, to get the loan processing going. And she promised that it should not take more than 2-3 days for the processing, as it will be done locally at the branch and not sent to the processing centre (whatever that means in banking parlance).

The application form available here on the SBI website, shows an option wherein you can opt for a regular loan or a overdraft loan. The hardcopy of the application form that I received from the SBI manager, does not have a similar option, but the manager mentioned that she can put in a note herself to indicate that.

Now this has led to a slew of questions:
1) With me taking up the loan processing personally bypassing the agent, what are the steps and that I will have to follow? In what sequence?
2) Will the bank send a cheque to the dealer directly?
3) I will be doing the booking by paying a 10K advance on Monday. Should I be submitting a copy of the booking receipt as well to the bank?
4) How will documents like the RC, Insurance certificate etc, get hypothecated with the banker's name? Will it be sent to the bank directly by the dealer?

@keyur, can you help answer these questions, given my situation? Or probably an outline of sequence of steps that will happen will also be helpful.

Thanks in advance.
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Old 6th May 2012, 22:43   #67
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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Originally Posted by itwasntme View Post
I could not find any online references to this Advantage loan. The SBI website seems to only talk of the standard new and used car loans. However, the last line cryptically mentions 'overdraft facility available' :-)

Can anyone provide an official link to this scheme?
The details about this are only in the internal circulars. You have to insist on the overdraft option, that's it!






See this specific note that I had written here (The Cheap Loan or the Smart Loan - SBI Advantage Car Loan)-

This is FOR you if :
  • You are ready to deal with bank officials who might not know that there is a scheme called as the Advantage Car Loan available (among many other things)
So, you DID experience this, and it's good you persisted. You will reap the benefits!


Quote:
Originally Posted by sara.ramli View Post

1) With me taking up the loan processing personally bypassing the agent, what are the steps and that I will have to follow? In what sequence?
Tell the agent that you are getting the loan done by yourself, but ask him to ensure that he picks up the cheques and gives the documents to the bank. (Basically, you initiate, he follows up)

Also, after you have enquired about the loan amount, and your eligibility, pay the difference (or higher amount) to the car agency - take the receipt for this amount.

Go to the bank with a quotation (for on-road price as SBI gives loan on on-road price), your required documents and the own-contribution receipt.

Take a letter of loan approval and give it to the showroom, and ask them to follow up and collect the cheque from the bank.

Quote:
Originally Posted by sara.ramli View Post
2) Will the bank send a cheque to the dealer directly?
Yes - you need to give an authority letter - the agency person will pick it up.

Quote:
Originally Posted by sara.ramli View Post
3) I will be doing the booking by paying a 10K advance on Monday. Should I be submitting a copy of the booking receipt as well to the bank?
You need to pay the entire difference and submit all the receipts to the bank.

Quote:
Originally Posted by sara.ramli View Post
4) How will documents like the RC, Insurance certificate etc, get hypothecated with the banker's name? Will it be sent to the bank directly by the dealer?
There is a particular form that the agency person will get signed by you. He should do the required followup with the bank and get it hypothecated.

Last edited by keyur : 6th May 2012 at 22:50.
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Old 10th May 2012, 19:34   #68
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

HI Team,
Can SBI Advantage car loan be taken by a private limited company?

The officer in SBI is willing to give the loan but not with OD facility to the company. She says it may be applicable for personal segment but not on SME segment. Do any of our members have taken it in the name of the company?

Please give some input to convince her.

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Old 28th May 2012, 18:10   #69
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

i understand we need to provide a an estimate to bank while requesting loan, if I give estimate from Dealer A and later decide to move to Dealer B for purchase, do I need to apply for reprocessing the loan or its just a simple procedure?
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Old 28th May 2012, 18:16   #70
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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Originally Posted by kochicar View Post
HI Team,
Can SBI Advantage car loan be taken by a private limited company?

The officer in SBI is willing to give the loan but not with OD facility to the company. She says it may be applicable for personal segment but not on SME segment. Do any of our members have taken it in the name of the company?

Please give some input to convince her.
The loan as well as the car taken by a pvt ltd company will be in the name of the company - hence the tax, registration etc will be different. Also, in such a case, the personal car loan will not apply, hence the OD too will not apply.

Quote:
Originally Posted by Thilak29 View Post
i understand we need to provide a an estimate to bank while requesting loan, if I give estimate from Dealer A and later decide to move to Dealer B for purchase, do I need to apply for reprocessing the loan or its just a simple procedure?
While taking the loan, you need to provide the quotation from the dealer. So, if the prices remain same with both dealers, you can initially apply for the loan for principal approval, and then while finalizing the papers, submit the revised quotation from the other dealer.
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Old 29th May 2012, 13:32   #71
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

Thanks Keyur, very informative thread. I heard about this last year for my home loan, but since my interest rate is 9% and kept my liquidity somewhere else.

Again I think this wouldn't work for Used Cars/Pre-owned as the interest rate is 16% for pre-owned and used one is 17%. Of course if we deposit the full amount you don't need to worry about the interest or deposit some amount so that you bring it 11% which they offer new vehicles.
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Old 10th June 2012, 02:00   #72
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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[*]You are sure that you will be able to cover the loan amount in about 2 years. (You don't actually have to pay it back - you just need to put the money in a bank account - accessible to you at all times). This is best for those who are planning an all cash purchase or are planning to plonk down a big downpayment


You MUST take this loan if you have more than 50% of the cash required.
Keyur, hats off to you on this thread and the fact that you have patiently answered all the questions through out the thread.

And so I also decided to take your opinion. Am planning to buy the XUV 500. The on road price as quoted by the dealer is ~14.8 lacs. I have 3 lacs in hand.
And planning to go for loan for the balance amount ~12 lacs. Now as per the EMI calculators
- 12 lacs @ 11.25 % for 7 yrs, the emi is 20705 (normal loan)
- 12 lacs @ 11.75% for 7 yrs, the emi is 21023 (OD loan)

On a monthly emi paying method the difference in interests paid for both this schemes would be ~26000Rs at the end of the 7 yr tenure.

Now coming to the part where I want your opinion. I do not have a bulk amount to put into the OD account initially. But with my current pay check, I believe I could manage depositing atleast an extra amount of 10000Rs on a monthly average, which would mean an extra of 1.2 lacs and more annually apart from the emi payments.
And I was planning to do the same with the normal loan payment also. But then I lose the option of liquidity with this extra cash.

So Keyur, what would you suggest - which would be the better option for me... considering the fact that I dont have 50% of the required amount with me initially and I have plans to put some extra money on the go .

FundaG
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Old 12th June 2012, 00:34   #73
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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And so I also decided to take your opinion. Am planning to buy the XUV 500. The on road price as quoted by the dealer is ~14.8 lacs. I have 3 lacs in hand.
Pay as less downpayment as possible (from 3L), and put the remaining funds into the OD account immediately. The amortization schedule which normally works against you will work for you!

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Originally Posted by fundagenie View Post


Now coming to the part where I want your opinion. I do not have a bulk amount to put into the OD account initially. But with my current pay check, I believe I could manage depositing atleast an extra amount of 10000Rs on a monthly average, which would mean an extra of 1.2 lacs and more annually apart from the emi payments.
And I was planning to do the same with the normal loan payment also. But then I lose the option of liquidity with this extra cash.

So Keyur, what would you suggest - which would be the better option for me... considering the fact that I dont have 50% of the required amount with me initially and I have plans to put some extra money on the go .
That's fine even if you don't have the money upfront. As long as you are planning a systematic investment, you should go in for this.
At the end of 1 year, even if you pay 1.2L (that is 10% of the 12L that you will borrow), the amortization schedule and the daily reducing balance of SBI Loans will work for you. Even without considering this, see this math :

Just for ease of calculation, assume that you pay 1.2L at the end of 1 year (not monthly). Remaining principal will be less than [12L -1.2L -principal part of your EMI (which will increase if you pay 10K per month)] - so lets say that it is approx 10.5L.
So from year 2 to 7, you pay the interest in 10.5L (10% less), but you still have the liquidity. As long as you go on putting in money regularly, you can't lose!

Also, instead of putting in just 10K, put your entire salary there. Activate this account for Internet Banking, Mobile Banking and get a Debit Card. Withdraw as you need. This will help you even more.

If there is cash lying around (doing nothing ) in your parents' or spouse's account, dump it here. You will be saving around 11% on that amount (the interest rate of your loan), whereas they will earn only about 6-7% (minus 30% TDS) on the same.





There is a simple concept to this thing :

1. The amortization schedule is such that the bank deducts a major part of your EMI as interest - only a tiny bit goes to the principal.
2. If you deposit some extra amount of money, that results in a direct principal deduction.
3. Because of this deduction from principal amount, you go ahead in the amortization schedule. So, the same EMI from which the major part goes in for interest will now result in a greater amount going to the principal and lesser to interest.
4. This increased amount going to the principal component further reduces the interest component and this cycle goes on!

So, beg, borrow, steal and put in a good amount atleast initially for a few months. Once this is done, your EMI itself will pay more towards principal.
So when the time comes to return the money, you are still ahead of what you would have been!

All the best and hope I did not confuse you!

Last edited by keyur : 12th June 2012 at 00:53.
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Old 12th June 2012, 11:09   #74
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

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Originally Posted by keyur View Post

So, beg, borrow, steal and put in a good amount atleast initially for a few months. Once this is done, your EMI itself will pay more towards principal.
So when the time comes to return the money, you are still ahead of what you would have been!

All the best and hope I did not confuse you!
Thanks Keyur. Will be going to SBI sometime this week to discuss on the loan. Will check out this OD scheme also.

FundaG
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Old 20th June 2012, 12:33   #75
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Default Re: The Cheap Loan or the Smart Loan - SBI Advantage Car Loan

I sent an email to my local SBI branch. Here is the manager's response within 2 hrs. I had a good experience with this branch. I have taken the home loan with OD facility SBI through this branch.

One can also get a group SBI Life policy while availing these loans. These are single premium pure term policies. Premium is very low. Makes a lot of sense to take this. Whats more, they can include the premium in the loan.

Quote:
Dear sir,
Enjoy the SBI Advantage: Move ahead in life with SBI Car Loans! Absolutely No Pre-payment / Part-payment / Pre-closure penalty
Upto 85% on-road finance and accessories can be worth 5% of cost or Rs.25000/-, whichever is less. Longer repayment period of upto 84 months.
No hidden costs or administrative charges. Finance for one-time road tax, registration fee, insurance premium and accessories
No advance EMIs. (Some Banks/companies ask you to pay one or more EMIs at the time of disbursement of loan, thereby effectively reducing your loan amount.)
Complete transparency: We levy interest on daily reducing balance method. When you pay one installment, the interest is automatically calculated on the reduced balance thereafter. When you pay interest on an annual reducing balance, as charged by many other companies/banks, the interest amount for the coming year is determined on the amount outstanding at the beginning of the year. You continue to pay interest even on the amounts you repay during the year.

Always compare the Equated Monthly Instalments (EMIs) and the total payments you would be required to make and not the rates of interest.

Present Base Rate [BR] is 10.00%
Interest Rate 1.25% above Base Rate, effective 11.25%.
Processing fee 0.51% of the loan amount, Min Rs.1000/- & Max Rs.10000/-

Min NAI Rs.2.50 lacs
All EMIs (existing & proposed) can go upto 50%* -For NAI upto Rs.5 lacs ,60%* -For NAI > Rs.5 lacs & upto Rs.10 lacs, 75%* -For NAI > Rs.10 lacs
* Subject to Max 4 times of NAI

Documents required: While submitting the Application
1. 2 Passport size photographs
2. PAN Card / Passport / Driving License for ID proof
3. Latest 3 months Salary Slip with Form 16
4. Telephone Bill / Passport for Address Proof
5. Latest 2/3 years IT return / B&S / P&L
6. Salary A/c / Bank Statement for last 6 months
7. Cheque for the processing fees
8. Original Quotation

At the time of documentation:
1. ECS from the existing Salary Banker
2. Advance Paid Receipt.

For overdraft Car Loan
1.75% above Base Rate, effective 11.75%.
EMI /Lac Rs.1725/..

we will take 48 hours for sanctioning the loan provided you give us all the required papers as stated above, please find attached an application form.we would like to inform you that we also provide you Car Insurance which is 30% lower than any other Insurance company,

It is strongly recommended and advised that the cover of group life insurance policy should be taken so that in case of any unforeseen eventuality, the burden of closing the loan account does not fall on the legal heirs. The premium amount can also be sanctioned as a loan at the same rate of interest and the same tenure as the Car loan.

your banker for every Indian

Thanks & regards

D.MURLIDHAR
CHIEF MANAGER
RBI LAYOUT
PLEASE NOTE :THE BRANCH WORKING HOUR ARE FROM 9.00 AM TO 3.00 PM FROM MONDAY
TO FRIDAY
& 9.00 AM TO 1.00 PM ON SATURDAYS,
SUNDAY IS HOLIDAY

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