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Old 17th March 2008, 16:04   #1
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Default Quoted 13.5% From HDFC Reducing Loan

Principle car amount is Rs4,22,802. I am taking Loan for Rs 350000. I got 15000 loan discount. I have to pay Rs11746 for 35 months for loan to be completely paid off. This is reducing loan so the average loan percentage comes to be around 10.5%

What do you think guys?
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Old 17th March 2008, 21:07   #2
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Check using the loan amortization worksheet given here. Your numbers don't seem to fit, maybe I tried it wrong.

If you haven't already, read the thread (ARTICLE: How to get the lowest EMI & the best Finance Deal)How to get the lowest EMI & the best Finance Deal.

IMHO, PSU/Govt banks are any day better than the private guys.

Check out the processing fees, part-payment penalty and pre-closure penalty clauses.

IIRC, Bank of Maharshtra provides vehicle loans at 10.75% for 3 years with Rs.2k processing fees, but no part-payment or pre-closure penalty. When a friend and I did this review sometime ago, BoM proved to be the best option anywhere, anytime.

Shop around and be very clear about the additional clauses.

Disclaimer: I don't work for BoM, nor do I hold any stake in them
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Old 17th March 2008, 23:28   #3
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13.5% reducing is high. SBI has it for around 11.5% or lesser. You can even see it on their website.

HDFC as far as i know (AFAIK) doesn't have a full or partial prepayment facility. Neither does ICICI. Try government banks. Corporation Bank, PNB all have good rates and sometimes good payments options as well. Only issue is they need a bit more paperwork and might take a couple of days longer. But far better than ICICI !!

There's a thread about this somewhere. Do a check.
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Old 17th March 2008, 23:32   #4
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ICICI is giving 10% - 10.50%, check them out (I got 9.75%, due to previous loans history). Dont hurry into paying more.
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Old 18th March 2008, 10:31   #5
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stay away from ICICI as far as possible
Indian bank offers 10.5% fixed for 3 years and 11% for 5 years and above . both rates fixed.processing fee is 0.25% ( check their website)

Last edited by rkg : 18th March 2008 at 10:35.
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Old 18th March 2008, 13:54   #6
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Agreed on ICICI. Just search for ICICI on this forum. Looks like the government banks still have better deals. Just make sure you have the proper documentation. They have stringent address proof list and just don't take anything as address/identity proof.
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Old 18th March 2008, 19:33   #7
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Quote:
Originally Posted by somebodystopme View Post
Principle car amount is Rs4,22,802. I am taking Loan for Rs 350000. I got 15000 loan discount. I have to pay Rs11746 for 35 months for loan to be completely paid off. This is reducing loan so the average loan percentage comes to be around 10.5%

What do you think guys?
In september 2007 i was getting a car loan for interest rate of 11.5% from HDFC for 3 year tenure.
Now things have changed and you should be getting at int rate between 10 to 10.5%
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Old 19th March 2008, 14:26   #8
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Negotiate with them . Its months end approaching with long weekend and they will come down to 10%. I have the offer of 10% for Civic and it holds good for all fast moving cars like Indica, Marutis, Hyundai Santro and Verna and Corolla too. For Mitsubishi and SUVs they have different rates / little difficult to relax the norms - for unknown reasons. If you have a bank account in HDFC - it helps a lot. try other financers like reliance and kotak too. Its year end/ month end so you will definitely get the best deals.

And yes, please, exclude ICICI Bank. BTW which car are you going for?
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Old 19th March 2008, 14:50   #9
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ICICI Bank is No where on my list. Actually this 13.5% Reducing is offered to me by hyundai itself. Am going for Hyundai I10. Processing fee is around 2760/-. I'll Write the whole thing in detail as given to me by Hyundai sales rep.
422802 Price on Road
+350000 Loan amt
_______
=72802
+2760 Processing fee
+11746X35 Emi advance
____________
87308
-15000 Loan Discount
-2000 Discount on Car
____________
70308
-4788 (its less for not having rust paint)
______________
68520 Down payment.

Now i hope everythig is clear. I dont have much knowledge abt loans and all so Kindy help.
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Old 19th March 2008, 15:09   #10
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This processing fees includes stamp duty or not? also , please, ensure that there are no other charges like depot charges etc. which dealers sometime add. For a loan of 3.5 lakhs @ 10.5% for 36 months - EMI should be Rs 11376/-. while for the same amount the EMI should be Rs. 11877/- pm @ 13.5%.

For a loan of Rs. 335000/- ( 15K discount)- EMI should be 11368/- @ 13.5%, . You are getting at EMI of 11746/- which works out at 12.75 % . However, if you consider the discount that you are getting upfront finance- is making it a sweeter deal at an overall ROI at 9.85%.( assume a loan of 365000/- as 350000 loan and 15000 cash that you get back- only if it makes you feel better.
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Old 19th March 2008, 17:09   #11
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Quote:
Originally Posted by shatrughna View Post
This processing fees includes stamp duty or not? also , please, ensure that there are no other charges like depot charges etc. which dealers sometime add. For a loan of 3.5 lakhs @ 10.5% for 36 months - EMI should be Rs 11376/-. while for the same amount the EMI should be Rs. 11877/- pm @ 13.5%.

For a loan of Rs. 335000/- ( 15K discount)- EMI should be 11368/- @ 13.5%, . You are getting at EMI of 11746/- which works out at 12.75 % . However, if you consider the discount that you are getting upfront finance- is making it a sweeter deal at an overall ROI at 9.85%.( assume a loan of 365000/- as 350000 loan and 15000 cash that you get back- only if it makes you feel better.
total loan on paper is 350000.

he has to pay 11746 immediately as first EMI

then he will get 15000 discount.

it is not 350000+150000= 365000 as loan amount

the rate of interest works out to be 14.2% not 12.75. because he has actually taken a loan of 338254 for 35 months only. as he has paid one EMI on the first day itself

what he is actually paying for car at the outset is 415266 ( 335000 loan + 11746 first EMI + 68520 initial payment)

total outgo for him due to loan is 11746 X 35 EMI = 411110 for a loan of 335000

II. If he takes same loan from Indian bank for same 35 months ( Rate of interest is 10.5%)

Principle 335000
His contribution = 80266 (11746+68520) same as above
Processing fee @Rs 250/ lakh = Rs 838/- ( this is extra)

Total payment for car = 335000+80266 + 838 = 416104

total outgo after loan repaid 11153 EMI X 35 = 390355 for a loan of 335000

The difference is 411110 - 390355= 20755 ( he can deduct another thousand for extra processing fee of 838/- and its interest for 35 months) then his savings will be 19755/=

this discussion on advance EMI Vs normal EMI was already there in another thread. kindly check

it is always beneficial to have normal mode of calculation so that one can clearly see what he is actually getting or paying.

highly paid finance guys work out all these schemes to confuse customers.

why should one has to do this much maths unless he has some benefit?

why charge higher rate and give a cash discount?

instead he can directly give lesser rate.

why he is not doing it?

because he is benefitting from it.

it is as simple as that
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Old 19th March 2008, 17:30   #12
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Do try SBI or so. They have lesser interest rates and there wont be issues with cheque bouncing issue etc.
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Old 19th March 2008, 18:46   #13
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If you are keen on getting a loan from HDFC then settle for 10 or max 10.5% interest rate for 36 months loan without any processing fee. Donot pay any advance emi. Tell them to make it 36 installments. This way you will save interest on advance emi which you will be paying without using the loan facility.

If you want best interest rate then check out Loans | Loans India | Personal Loans India | Credit Cards India | Home Loans India | Deal4loans | Personal Loans | Credit Cards | Home Loans or ApnaLoan: Car Home Personal Loans & Credit Cards in India where various financiers will compete to get you best possible rates.
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Old 19th March 2008, 21:03   #14
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Good calculations rkg. I remember the other thread on the same lines. Didn't someone give an Excel sheet for such calculations.

Loan discount. Man you get discount for everything. :-)

The discount for not having rust paint should be deducted from the car's value and not from what your downpayment. All discounts should be deducted on the offer price of the car. Then they should deduct your downpayment and calculate loan amount and all other nonsense.

How many people would have fallen for all these tricks !!
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Old 20th March 2008, 16:08   #15
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Hmmm...Thanks Friends...special thanks to shatrughana and rkg... am a bit slow in math let me calculate all the stuff you wrote and i'll get back...thanks alot...
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