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Old 19th March 2007, 20:44   #16
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Default What are the current New and Used Auto interest rates?

Does anyone have an idea what the current (march 2007) interest rates are for New and used cars in the 2.5~5lakh categories?
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Old 19th March 2007, 21:08   #17
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Originally Posted by wizardofid View Post
Does anyone have an idea what the current (march 2007) interest rates are for New and used cars in the 2.5~5lakh categories?
HDFC and ICICI quote between 11.5% ( Open) to 14%-15% ( disguised). My recommendation is to go for a nationalised bank for any kind of loans including auto loans like SBI, Punjab National Bank etc. They are way way cheaper than the privatised banks. Thumb rule is follows:

Privatised Banks: Easy Entry, Very tough Exit

Nationalised Banks: Tough Entry, Very Easy Exit
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Old 19th March 2007, 21:28   #18
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going rates are at 13 to 14 for private and 11-12 for nationalised banks
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Old 22nd March 2007, 11:32   #19
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Originally Posted by mobike008 View Post
HDFC and ICICI quote between 11.5% ( Open) to 14%-15% ( disguised). My recommendation is to go for a nationalised bank for any kind of loans including auto loans like SBI, Punjab National Bank etc. They are way way cheaper than the privatised banks. Thumb rule is follows:

Privatised Banks: Easy Entry, Very tough Exit

Nationalised Banks: Tough Entry, Very Easy Exit
Very well said. The good news is, Nationalised banks too are becoming customer friendly now a days, especially those in the smaller places.
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Old 22nd March 2007, 12:16   #20
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Very well said. The good news is, Nationalised banks too are becoming customer friendly now a days, especially those in the smaller places.
Employees of nationalised banks who are upwards of 45 years are out on the field like young sales guys and closing the deal and it definetly is an eye opener to see the processing happen so swiftly, sometimes better than privatised banks.
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Old 23rd March 2007, 14:17   #21
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Originally Posted by msdivy View Post
Assume you have 8L.

Option 1: Spend all 8L & buy 8L car. After 5 years, you have only the car.

Option 2: Pay 1L as downpayment and take 7L loan (max funding) @ rate 10% for 5 years. You will pay 10.8L to bank in 5 years.
Invest 7L in mutual fund. Assuming the fund returns 20% every year, in 5 years, you will end up with 14L. So after 5 years, you have car & 3.2L cash.

Caveat emptor: The fund should return 20% every year for 5 years.
Hi, Your Option 1 misses out on one point. The EMI's that are saved will also be in your kitty (10.8 l); invest it in a SIP as you would pay the EMI and it will work out to quite a sum at the end of it.
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Old 23rd March 2007, 15:04   #22
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Originally Posted by navdeep View Post
Please throw some light on this
Navdeep, For non salaried persons, you do get tax deduction on the interest you pay for car loan....

Abhi
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Old 6th May 2007, 11:22   #23
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But if u make a full payment on buying the car, i heard u got to pay 30% tax for it and we will be intimated to the IT guys....

can u tell me how to take a loan with a cheaper interest rate and close it prematurely.. as i have full 9L but i dont want to get into IT trouble.
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Old 6th May 2007, 16:46   #24
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Originally Posted by drsvijay View Post
But if u make a full payment on buying the car, i heard u got to pay 30% tax for it and we will be intimated to the IT guys....

can u tell me how to take a loan with a cheaper interest rate and close it prematurely.. as i have full 9L but i dont want to get into IT trouble.
You don't pay Income tax for expenditure, only for Income. :-)

Intimation to the IT folks can happen as all large transactions are to be reported to IT. No one would do a cash transaction. If you give a cheque for a big amount, the bank will notify IT about it. This is standard procedure across all banks and the car agency will also ask for your PAN.

Now if the money that you have is unaccounted for and you cannot show a proper source of income for it or have not paid taxes for the said income, then you "could" land up in trouble with the IT dept. But this will not happen immediately, as they would scrutinize your IT records, other transactions made, assets, etc etc.

If you are still worried, go to a bank like Corporation Bank. Interest rates are low there, and they also have no partial or full prepayment charges or minimum wait period. You can pay off the loan in 6 months. Trouble is they would ask for salary proof, last 2 years IT returns, guarantor etc.

If your source of funds is fully explained for, you don't have to worry, just pay the money and get the car.
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Old 6th May 2007, 18:26   #25
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It is a question of opportunity cost of funds. Simply, if the return that you can get on your funds exceeds the cost of loan (which is more than 12%), then take a car loan and use your funds to invest in a higher return investment. Of course, consider liquidity if you invest your whole savings in a depreciating asset (car). Best choice: If interest rates are high, and you cannot pay cash down for car, pay off the max as downpayment, take the balance as loan, and then try to repay before time.
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Old 7th May 2007, 10:53   #26
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Originally Posted by drsvijay View Post
But if u make a full payment on buying the car, i heard u got to pay 30% tax for it and we will be intimated to the IT guys....

can u tell me how to take a loan with a cheaper interest rate and close it prematurely.. as i have full 9L but i dont want to get into IT trouble.
Take a loan from SBI bank as their rates are most competitive and they allow you to close the loan after 6 months ( shortest term i think any bank offers) without any pre-closure charges. They also dont ask advance EMI's like all other private banks which takes your interest rates to a different level.

Ofcourse you dont tell them that your plan is to close it after 6 months
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Old 8th May 2007, 23:14   #27
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Even if you have the money to purchase a car, it makes sense to take a loan- that too from a nationalised bank. After taking the loan, prepay 30-40 %, or even more of the loan from the money that you alreay had. That way, the interest component of the EMI ( which kills off the loan taker) will get reduced considerably. With the loan component of the EMI having reduced drastically thanks to the prepayment, the loan will become a low interest loan for you.

Just do the maths and find it out for yourself.
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Old 9th May 2007, 13:14   #28
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Originally Posted by squarecut View Post
Even if you have the money to purchase a car, it makes sense to take a loan- that too from a nationalised bank. After taking the loan, prepay 30-40 %, or even more of the loan from the money that you alreay had. That way, the interest component of the EMI ( which kills off the loan taker) will get reduced considerably. With the loan component of the EMI having reduced drastically thanks to the prepayment, the loan will become a low interest loan for you.

Just do the maths and find it out for yourself.
hey.... kindly clear my doubts.... im palnning to buy verna SX which costs 9L OTR. I just want to take a loan to ward off IT guys. So if i take 6L loan and i can prepay about 4L after 5 months and pay the rest by EMI. The loan iam gonna take is a diminishing EMI..
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Old 9th May 2007, 15:04   #29
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Originally Posted by drsvijay View Post
hey.... kindly clear my doubts.... im palnning to buy verna SX which costs 9L OTR. I just want to take a loan to ward off IT guys. So if i take 6L loan and i can prepay about 4L after 5 months and pay the rest by EMI. The loan iam gonna take is a diminishing EMI..
As already advised in my post no.26. you can take a loan from SBI and you can either fully or partially close the loan after 6 months. you will obviously save a lot and also at the same time keep the IT guys at bay
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Old 9th May 2007, 17:20   #30
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Originally Posted by mobike008 View Post
As already advised in my post no.26. you can take a loan from SBI and you can either fully or partially close the loan after 6 months. you will obviously save a lot and also at the same time keep the IT guys at bay
Please confirm with any bank that you take loan from including SBI, what the prepayment clauses are. SBI tends to differ from branch to branch. I've had differences in interest rates, prepayment clauses, even paperwork across different branches in Bangalore.
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