Insurance for a new car

[ubsmart]

I almost decided to go with Swift VXi. I want to ask this team couple of questions. This being my first car in India, I am apprehensive about lot of things. Nothing looks to be fair in the loan market.

1. I am going for a loan for 2L and I am offered the same with 11% interest(monthly rest) with a EMI per lack of 3249 with one EMI paid upfront. Is this a fair deal?

2. The loan comes with a clause that I need to book my insurance with them only. BTW, the bank is HDFC bank

3. The processing fees is Rs1500/- and 0.5% of the amount goes as document fees.

4. Maruti dealers are adamant and even trying to persuade me not to go with that clause and even ready to loose a prospective customer for not going with them for insruance. What is that they are looking for.

5. I am not promised any of the freebies. Is that a norm for Swift?..the response I get is .."sir bahut demand hai iske"

Please let me know if the above points are common ones or Am I being taken for a ride?

[reignofchaos]

You don't need to go for their insurance.... I have a loan from HDFC for my car too. I got my insurance from oriental.

[linuxtechie]

Yeah man, my friend also got the car loan from them, no need to have the insurance from them.

About freebies from dealer, well errr, Swift is in demand and there are few of them, so I guess the deal is at the dealer's term .

[RufRoc]

I think you should just put your foot down and let them know that they can't push you around, for their gain. If they insist let them know that your ready to look elsewhere (in the context of the dealer and the bank providing the loan).

[gods-envy]

Originally Posted by ubsmart

I almost decided to go with Swift VXi. I want to ask this team couple of questions. This being my first car in India, I am apprehensive about lot of things. Nothing looks to be fair in the loan market.

1. I am going for a loan for 2L and I am offered the same with 11% interest(monthly rest) with a EMI per lack of 3249 with one EMI paid upfront. Is this a fair deal?

2. The loan comes with a clause that I need to book my insurance with them only. BTW, the bank is HDFC bank

3. The processing fees is Rs1500/- and 0.5% of the amount goes as document fees.

4. Maruti dealers are adamant and even trying to persuade me not to go with that clause and even ready to loose a prospective customer for not going with them for insruance. What is that they are looking for.

5. I am not promised any of the freebies. Is that a norm for Swift?..the response I get is .."sir bahut demand hai iske"

Please let me know if the above points are common ones or Am I being taken for a ride?

1. Try the nationalised banks, i hear they are better. and also they dont charge u with any foreclosure charges.

2. u dont need to book the insurance with them, just some dumb marketing strategy. just put ur foot down and decline the insurance

3. Most privatised banks charge a processing fees of Rs 1500. When i took a loan for my palio, ICICI charged me Rs 1500 for processing fees. Nationalised banks usually charge something lesser.

5. U can get freebies with Swift Petrol. just need to haggle a bit

[HappyWheels]

if taking a Maruti, insurance is better with New India or Bajaj alliance. They have tie up with Maruti for quick claims. dont know if oriental is also in this tie up. i am with Bajaj Alliance.

and there is no need for you to take loan and insurance from same guy! tell them to get lost. I am sure a vehicle loan is not too much of a hassle to get (provided you meet the requirements).

[A.R]

Lending banks cannot force you to take vehicle insurance from. Neither can the car dealer. I have a car loan from ICICI, insurance from United India & Car from Sagar (Maruti). For the second year I switched over to Maruti Insurance (Sundaram rather) as it would be easy during cashless processing & Claims.

[ubsmart]

Thank you everyone. Yesterday after lot of nagging calls to dealerships and bank, I was finally able to get the dealer to accept the deal without insurance and I am now agreeing to the bank clause.

I want to know whether the rate of interest I am offered is good?

[GTO]

I have never paid a rupee of processing fees on any of my car loans. Why should you pay this fee? For the work they do to get your business?

[challasravi]

Couple of days back my friend got a new Verna SX VGT, for which the dealer had quoted a insurance premium of approx 24000/-. I was helping him with his car delivery.

I also have another friend, who happens to be a manager in Reliance insurance. He told me not to go with the dealer insurance, as it will cost us more. He also told me that there are huge margins for the dealer from the insurance company.

To my disbelief , the difference was 5K odd.
We haggled a bit with the dealer, to convince him that we are not going with dealer insurance, as stated earlier.

After trying to sell a little too much, he gave up.

Finally, we went with Reliance insurance which worked out to be 18K odd.

[supremeBaleno]

Originally Posted by GTO

I have never paid a rupee of processing fees on any of my car loans. Why should you pay this fee? For the work they do to get your business?

Exactly. Do not pay even a single rupee as processing fees or documentation fees. There is no need. They will ask you for this because they know that the average person would think this is mandatory and pay up. Just refuse to pay and after a few "But Sir..." kind of dialogues they will accept.

[Technocrat]

@challasravi: was the IDV in both cases same?

GTO & SB: I really would like to try this during my next purchase as I did try to convince the Loan agents for a couple of my friends new car purchases & none of the agents\banks agreed to waiving this off including SBI.

[challasravi]

Originally Posted by Technocrat

@challasravi: was the IDV in both cases same?

GTO & SB: I really would like to try this during my next purchase as I did try to convince the Loan agents for a couple of my friends new car purchases & none of the agents\banks agreed to waiving this off including SBI.

Infact, the IDV of the policy we got from Reliance (non-dealer) is 5% depreceated value of ex-showroom and from the dealer i.e Hyundai was approx 7%.

So the dealer is squeezing margins there too.

When enquired back with my friend after your post, he said it would approximate to 17k approx, had he caluculated the IDV from the dealer.
He also said, some of them do a 10% depreceated IDV which works to 16K approx.

[GTO]

Originally Posted by Technocrat

GTO & SB: I really would like to try this during my next purchase as I did try to convince the Loan agents for a couple of my friends new car purchases & none of the agents\banks agreed to waiving this off including SBI.

A fool and his money parted. Why should anyone pay *loan processing charges*? Paying a business $$$ for a transaction of which they are making money off you is ridiculous! Its not like you are a mobile phone customer who can change his supplier after a month. On an average, car finance customers are locked in for 3 - 5 years!

[dicorex4x4]

Originally Posted by ubsmart

2. The loan comes with a clause that I need to book my insurance with them only. BTW, the bank is HDFC bank

4. Maruti dealers are adamant and even trying to persuade me not to go with that clause and even ready to loose a prospective customer for not going with them for insruance. What is that they are looking for.

Is that a written / printed clause?

Often, the HDFC Bank (or any other bank) DSA will say they have a tie-up with XYZ Insurance Co. etc. But you are free to choose your own insurer.

If you don't want to fight or appear aggressive, you could say you have some personal contacts in ABC (where you want your car to be insured) who will be very offended and hurt if you insure elsewhere. (This personal contacts story works very well, believe me).

Same case with the dealer. Both will make some money out of the transaction if you go with what they say.

In my case, I told HDFC Bank very clearly that I wanted to insure my Safari with Tata AIG only. My dealer was Concorde so there was a choice of 2 insurance companies there, one of which was Tata AIG.

Eventually, it was the same DSA who did the paperwork with Tata AIG for me. Being polite and friendly yet firm with the DSA does help.