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|14th September 2009, 21:26||#1|
Join Date: Nov 2006
Thanked: 11 Times
Selling car in the first year - What happens to auto loan?
One of my good friend wants to sell his 9 month old verna and get another car. He has a 7 year loan on the car. What happens to the loan if he sells the car and gets another car instead?
Is there a way to continue the same loan?
|14th September 2009, 21:37||#2|
Join Date: Aug 2009
Thanked: 7 Times
According to my knowledge, you need to close the existing loan before selling the car, then have to go for a new loan for the next car.
Most banks will charge a preclosure penalty - may vary from 2-6% of the outstanding amount. HDFC may charge you 6%, SBI wont charge penalty if it is after the first year of loan period.
|15th September 2009, 00:36||#3|
Join Date: Mar 2009
Thanked: 193 Times
Kite Runner is right, he'll need to settle the Loan first and obtain a "No Due Cert." from Bank,
cause the RC papers would be having Hypothecation to Bank, once he get this removed from RTO, by submitting the "No Dues certificate" one can freely sell the car and then choose a new dream.
last time i checked ICICI charged 5% as pre-payment fee.
only nationalized banks are happy with pre-closure of loans, most, if not all Pvt. Bankers would charge from 5-8% on due amount.
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