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Old 13th August 2008, 17:00   #31
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Yes it does not make any sense to prepay during last 8 months of a 3 year loan at 12% interest rate (Regardless of loan amount).

Example:
Loan Closing - Some doubts.-prepayment.png
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Old 13th August 2008, 20:51   #32
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Quote:
Originally Posted by Zappo View Post
Guys here is a piece of advice. If you have a 3 years' car loan and it is already 1 year 8 months old or even more it does not make sense to foreclose the loan.
But if you want to sell the car, you have no option left but foreclose it right? ICICI said they dont have any scheme of a loan transfer to another person

Nirmal
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Old 14th August 2008, 19:26   #33
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Bit but still would like to know. I just recieved a call from a Guy in Kotak mahindra and regarding the car loan i inquired about for Swift Vdi. he said the waiting period is 3 months but he can ge me that for a premium in a week. I was surprised and asked how come.
He said They know the dealer well enough and on an Extra payment of 25k delivery can be done on 6-7 days. Which means i can get the car in BLACK.
Now what interets me is how will they do this. the simile solution is they will give someone else's booking number to me and hence that means increase in waiting period for that person who had booked initially!
Does anyone know something about this?
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Old 18th August 2008, 16:50   #34
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Originally Posted by nirmalts View Post
I plan to close my loan with ICICI. They are charging 5% + service tax as foreclosure charges. Any tips on how to bargain on this? Will the lady at the counter offer this? Do I have to talk to the manager?

Nirmal
Nope, the pretty lady on the counter does not have any authority to bring the rates down. You must speak to the manager. Shankar made a good point; if you are foreclosing the loan only to buy another car, have them finance your new purchase. That ought to help the foreclosing too.
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Old 6th October 2008, 22:09   #35
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Exclamation How to Quit Car Loan

Hello Friends,

I brought a swift in June 2007 and now I want to quit the entire loan.

Loan was taken for 3years.

Is this a wise decision and will the bank charge any penalty? Will paying upfront now save me any interest?

Please lemme know guys.
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Old 6th October 2008, 22:22   #36
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Yes, there will be a pre-closure penalty. You can check the loan papers or talk to your banker to know the rate.

And yes, I do think you might save on the interest, even after the penalty, on the loan.
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Old 6th October 2008, 22:22   #37
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Normally the return ratio is 60:40 percent principal:interest for a car loan.
and if you forclose a loan then it is with around 5.6 % charges on principal left.
You can do your quick calculation on these basis and then know for yourself how much you would save.
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Old 6th October 2008, 22:27   #38
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Since you are pre closing the loan almost within half of the total term you took the loan for I believe you will definitely be gaining in terms of the interest point of you.
Better be sure you work out the things ask for the pre closure penalty and the outstanding principal and figure it out.
Make sure you get the hypothecation cancelled in your RC from the RTO.
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Old 6th October 2008, 22:44   #39
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Use the EMI calculator I posted here... http://www.team-bhp.com/forum/indian...ting-emis.html (Calculating EMIs)

A) and see how much interest will you be paying using the schedule generated.

B) Talk to the bank to know the foreclosure charges.... at least for housing loans its in the league of 2%...

C) Compare the 2 interests .... if favorable to close the loan then goto step D

D) then run an inverse calculation....

if you were to invest the average outstanding amount i.e. say if you need to pay 1,00,000 today to close the loan.... calculate the income you'd earn out of investing 50,000 for the remaining period of the loan.

If A - B - C > 0 then foreclosure...

simple calculation.
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Old 6th October 2008, 22:46   #40
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Depends on the bank. Which bank did you take the loan from?
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Old 6th October 2008, 23:37   #41
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I have a loan for 3 lacs, started in May this year, at an interest of 11%..the EMI is 9700 per month and the prepayment penalty is 2%.
Am planning to pay off the entire outstanding next month, ie in the 7th month.
Is this foolhardy ?
Cant I do better with the money?
Any tangible benefits other than peace of mind ( assumed )?
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Old 7th October 2008, 02:04   #42
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Yeah,

Read my post above,

I have done this calculation for you, you'll save aproximately Rs 1,872/- by foreclosing the loan.

I have assumed a 9% return if you invest this money otherwise. Guess thats not too hard now-a-days.


EDIT: before someone asks how I got to, here's the calculation:-
Interest saved : 35,386
Foreclosure charges : 4,937 (assuming principal outstanding - 246,853)
Interest by investing : 28,577 (investing 123,426 for 29 months compounding annually at 9% - i.e. half of the outstanding principal)

You save Rs 1,872/-

Last edited by SLK : 7th October 2008 at 02:11.
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Old 7th October 2008, 08:49   #43
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Quote:
Originally Posted by iraghava View Post
Depends on the bank. Which bank did you take the loan from?
The million dollar question. I did a foreclosure of my SBI loan - one year after I bought the car(the loan had a 7 year tenure), and while the process could not be described as 'a walk in the park', it was hasslefree, nevertheless. Only thing was, I was treated like a second grade customer at Doorvaninagar branch of SBI(apparently, ITI customers take preference at this branch, we practice discrimination in whatever form we can). And I had to haul the documents from Doorvaninagar branch(the home branch for the loan, because the manager of ITPL branch took it with him when he got transfered) to RACPC Bangalore.

While it was hard for me to digest the second-rate treatment meted out to me by SBI, what saved the day was that there was no foreclosure charges !! yes you read that right. If you close the loan with your own funds(meaning, not from another loan), there are no foreclosure charges. My love hate relationship with SBI continues. It is a case of losing a bit of self esteem and gaining in blood pressure to save some money !

edit: My 666th post ! O' master, here I come !!

Last edited by kuttapan : 7th October 2008 at 08:56.
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Old 7th October 2008, 10:32   #44
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I had been told that one can close the loan without any penalty clause through a trick.

Assuming you have a loan of 4 Lakhs rupees

1) Walk in to you bank and ask them that you want "top-up" the loan amount, remember at no matter of time you should say that you want to "pre-pay" it, always stick with "top-up" word.

2) They might act prudent and tell that its not possible to "top-up" the said loan, but be strict and for reference you can show them fine agreement copy which was duly signed by you while picking up loan. There is no clause in the car loan agreement of any bank stating that you cannot "top-up" you loan amount.

3) Once they understand that you are well equipped with the information and all the policies, pay them 3.5/3.75 lakhs as a "top-up". Mind it, it is topped up without any penalty clause.

4) Tell them to convert the rest amount to EMIs for a 3/6 months, according to your convenience.

This way you'll be paying interest on rest 50K/25K for the said period which will be peanuts @ 11% or whatever rate you were paying

Though i haven't tried this trick myself but this is a trick told by a sweet friend working as branch manager in a bank only
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Old 7th October 2008, 20:06   #45
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I just spoke to the hotline(ICICI) some hours back. They said they will email be the entie amount with the penalty n other things I need to pay.

Just waiting for the email, then I can post what they said....
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