Pls guys!! Loan interest rates advise!!! - Team-BHP

rndsoft1 · 30th August 2007, 20:19

Dear Friends, i m very new here. but i m really amazed with kind of idea... well done moderators... it really helps any new car buyer...
within two days i m planning my new car as Honda Gxi, for which i m planning loan amt of 600000. and i've been offored rate of interest 9.29% deminishing & 4.77% flat. which makes my emi as 19027, total interest of 85933 for 36 months. no processing fees. preclosure panelty of 5%.. pls advise if the deal is worth signing or no. the guy is going to come tomorrow. pls help!!! and require your suggestion soon!!!!

Zappo · 30th August 2007, 20:39

Hmmm the rate of interest sounds really good. And in fact at 9.29% monthly diminishing the EMI works out to 19161 and the interest paid should be 89793. So if your calculations are right you may very well be getting even less than 9.29% rate.

Only hitch is, I wonder whether the 5% pre-closure is not a tad too high. Nonetheless considering that you are anyhow going in for a 3 year loan and unless you seriously think you may want to foreclose it within 1.5 to 1.75 years (after that foreclosure is foolishness) there is no point in worrying about it.

msdivy · 30th August 2007, 21:10

Rate is good, EMI is correct.
Usually they charge .1% as processing/administrative fee. In your case its comes to Rs 600. If possible, bargain and say you will pay the processing fee for zero pre-closure charges. In that case you can close the loan anytime you want without any hitch.

nutmello · 30th August 2007, 21:27

Quote:

Originally Posted by rndsoft1

Dear Friends, i m very new here. but i m really amazed with kind of idea... well done moderators... it really helps any new car buyer...
within two days i m planning my new car as Honda Gxi, for which i m planning loan amt of 600000. and i've been offored rate of interest 9.29% deminishing & 4.77% flat. which makes my emi as 19027, total interest of 85933 for 36 months. no processing fees. preclosure panelty of 5%.. pls advise if the deal is worth signing or no. the guy is going to come tomorrow. pls help!!! and require your suggestion soon!!!!

hi sincere suggestion. why buy a new car and loose very heavily on interest and depreciation? why not a well maintained used vehicle? huge choices abound. think cooly. today, money saved is money earned!

crazydiablo · 30th August 2007, 21:34

I think its a very good rate. Rates have increased from last April, so this is as good as the old rates.

musicmanaman · 30th August 2007, 21:37

Those rates are good, go for it, 5% preclosure is a tad high, but all else is good. I really think it's a good deal at those rates.

adityamunshi · 10th September 2007, 18:44

what bank is this ? the lowest rate here is 11.5%

csentil · 10th September 2007, 19:37

Ok ! Have they asked you for 1 month prepayment of EMI?

Have you been offered any discount on the car. If not, the discount has probably been passed on to the financing bank and you would be getting a lesser rate of interest. Was this bank suggested by the dealer itself?

5% prepayment penalty is the norm. One of the reasons for giving lesser rate of interest is that you will pay the EMI for the entire tenure thus helping the bank make more money than when you preclose.

Find out if there is partial prepayment. Some banks have it, some don't.

Its also a good idea to directly approach other banks and see what kind of deal they have. Government banks sometimes have good deals except that the paperwork process and loan disbursement may take a tad longer.

thefreak · 19th September 2007, 14:22

Please advise as to which bank is this? Looks like a steal!

thefreak · 19th September 2007, 16:48

Quote:

Originally Posted by praJEEP

coz if am not wrong it comes to 9.71% reducing balance. which i think is the best deal. try and negotioate to 9.00% which is the bank you have not mentioned.

How does thing work? Diminishing interest rates that is? Please elucidate...

dadu · 24th September 2007, 17:19

I have another question related to this, do Loan rates vary based on the type of car you are buying ???

Does someone(who has already explored multiple banks) has a list of existing car loan rates compiled for various banks ???

csentil · 24th September 2007, 17:50

Yes, Loan rates vary based on the car you buy. If its a car with good resale value, the risk associated to the bank in case of non payment is less.

Next, there would be a tie up between the dealer and a bank. So the bank offers the best deals to the dealer who passes it on to the customer. Typically the dealer has a list of 3 banks that he has tie ups with.

There are a lot of hidden dealings that happen. The car dealer usually has a discount that he's ready to offer for a car. If you want very less interest rates he'll pass that discount on to the bank and the bank will give you a lesser rate of interest. Coz the bank already has some principal repaid !! This is not known.

Another is the pre-emi. You pay 1 emi right away. This they say will be fully deducted against the principal. Now obviously without any interest period you have repaid some amount of the principal. Therefore the interest rate offered to you is less.

dadu · 25th September 2007, 18:14

See this guy here (Aveo 1.6 / Verna XXi / City Vtec / Cedia Spirit / SX4) got 4% off (3% cash payout + 1% EMI adjustment) out of the 14% car loan.

nikunj_cal · 26th September 2007, 13:43

Quote:

Originally Posted by dadu

See this guy here (Aveo 1.6 / Verna XXi / City Vtec / Cedia Spirit / SX4) got 4% off (3% cash payout + 1% EMI adjustment) out of the 14% car loan.

All i can say is please check all fine prints before you go for it.

dadu · 27th September 2007, 12:32

That should be done irrespective of the discounts

Quote:

Originally Posted by nikunj_cal

All i can say is please check all fine prints before you go for it.

30th August 2007, 20:19	#1 (permalink)
rndsoft1 Newbie Join Date: Aug 2007 Location: Coimbatore Posts: 4	Pls guys!! Loan interest rates advise!!! Dear Friends, i m very new here. but i m really amazed with kind of idea... well done moderators... it really helps any new car buyer... within two days i m planning my new car as Honda Gxi, for which i m planning loan amt of 600000. and i've been offored rate of interest 9.29% deminishing & 4.77% flat. which makes my emi as 19027, total interest of 85933 for 36 months. no processing fees. preclosure panelty of 5%.. pls advise if the deal is worth signing or no. the guy is going to come tomorrow. pls help!!! and require your suggestion soon!!!!

30th August 2007, 20:39	#2 (permalink)
Zappo Team-BHP Support Join Date: Oct 2005 Location: Hyderabad Posts: 3,689	Hmmm the rate of interest sounds really good. And in fact at 9.29% monthly diminishing the EMI works out to 19161 and the interest paid should be 89793. So if your calculations are right you may very well be getting even less than 9.29% rate. Only hitch is, I wonder whether the 5% pre-closure is not a tad too high. Nonetheless considering that you are anyhow going in for a 3 year loan and unless you seriously think you may want to foreclose it within 1.5 to 1.75 years (after that foreclosure is foolishness) there is no point in worrying about it. __________________ Announcements are important. Read the Advertising Announcement here. Classifieds section has its rules. Read here

10th September 2007, 19:37	#8 (permalink)
csentil Senior - BHPian Join Date: Feb 2007 Location: Bangalore Posts: 1,113 View My Garage	Ok ! Have they asked you for 1 month prepayment of EMI? Have you been offered any discount on the car. If not, the discount has probably been passed on to the financing bank and you would be getting a lesser rate of interest. Was this bank suggested by the dealer itself? 5% prepayment penalty is the norm. One of the reasons for giving lesser rate of interest is that you will pay the EMI for the entire tenure thus helping the bank make more money than when you preclose. Find out if there is partial prepayment. Some banks have it, some don't. Its also a good idea to directly approach other banks and see what kind of deal they have. Government banks sometimes have good deals except that the paperwork process and loan disbursement may take a tad longer. __________________ Everyone is born right-handed, only the gifted overcome it. This is my car and I have my wife's permission to say so.

24th September 2007, 17:50	#12 (permalink)
csentil Senior - BHPian Join Date: Feb 2007 Location: Bangalore Posts: 1,113 View My Garage	Yes, Loan rates vary based on the car you buy. If its a car with good resale value, the risk associated to the bank in case of non payment is less. Next, there would be a tie up between the dealer and a bank. So the bank offers the best deals to the dealer who passes it on to the customer. Typically the dealer has a list of 3 banks that he has tie ups with. There are a lot of hidden dealings that happen. The car dealer usually has a discount that he's ready to offer for a car. If you want very less interest rates he'll pass that discount on to the bank and the bank will give you a lesser rate of interest. Coz the bank already has some principal repaid !! This is not known. Another is the pre-emi. You pay 1 emi right away. This they say will be fully deducted against the principal. Now obviously without any interest period you have repaid some amount of the principal. Therefore the interest rate offered to you is less. __________________ Everyone is born right-handed, only the gifted overcome it. This is my car and I have my wife's permission to say so.

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30th August 2007, 21:10	#3 (permalink)
msdivy BHPian Join Date: Aug 2006 Location: Bangalore Posts: 484	Rate is good, EMI is correct. Usually they charge .1% as processing/administrative fee. In your case its comes to Rs 600. If possible, bargain and say you will pay the processing fee for zero pre-closure charges. In that case you can close the loan anytime you want without any hitch.

30th August 2007, 21:34	#5 (permalink)
crazydiablo BHPian Join Date: May 2004 Location: Bangalore/San Francisco Posts: 774 View My Garage	I think its a very good rate. Rates have increased from last April, so this is as good as the old rates.

30th August 2007, 21:37	#6 (permalink)
musicmanaman BHPian Join Date: Nov 2006 Location: kolkata Posts: 562	Those rates are good, go for it, 5% preclosure is a tad high, but all else is good. I really think it's a good deal at those rates.

10th September 2007, 18:44	#7 (permalink)
adityamunshi BHPian Join Date: May 2007 Location: Baroda Posts: 717	what bank is this ? the lowest rate here is 11.5%

19th September 2007, 14:22	#9 (permalink)
thefreak BHPian Join Date: Aug 2007 Location: New Delhi Posts: 334	Please advise as to which bank is this? Looks like a steal!

24th September 2007, 17:19	#11 (permalink)
dadu Senior - BHPian Join Date: May 2007 Location: Bangalore Posts: 2,872 View My Garage	I have another question related to this, do Loan rates vary based on the type of car you are buying ??? Does someone(who has already explored multiple banks) has a list of existing car loan rates compiled for various banks ???

25th September 2007, 18:14	#13 (permalink)
dadu Senior - BHPian Join Date: May 2007 Location: Bangalore Posts: 2,872 View My Garage	See this guy here (Aveo 1.6 / Verna XXi / City Vtec / Cedia Spirit / SX4) got 4% off (3% cash payout + 1% EMI adjustment) out of the 14% car loan.