Used car loan rates

[Insane Devil]

In Hyd, i think the rates are around 10.99% quoted by ICICI Bank. so should be between 10-11%.

[sbasak]

Try to avoid foreign/private banks like ICICI, Stan Chat, Citibank etc. They are notorious for screwing up your money.
Go for nationalized banks eg. SBI, UBI, HDFC etc.

[Zappo]

Originally Posted by Insane Devil

In Hyd, i think the rates are around 10.99% quoted by ICICI Bank. so should be between 10-11%.

Actually ICICI Bank will charge something between 13-17% on the reducing balance basis on second-hand cars. I did a lot of research on this a few months back. Of course lot many factors come into play, primary being your negotiating skill. However getting anything below 13% (reducing) is difficult on second hand cars. And this I found holds good with most of the reknowned car financing companies...

There is another hitch in all this second-hand car finance. You do not get what you may actually need. Suppose you want to buy a car costing 2.5L. Now when you apply for the loan the first rider will be that the maximum finance will be say 85% of the "deemed car value".

The second hitch is that this deemed car value is decided by the bank's evaluators! You can rest assured that the evaluator will safely value it at upto 15-20% less than the price you are about to pay. Remember, if the evaluated price is much less than that you should go for a second opinion on the car (take it to a reputed garage, maybe!).

So where do we stand now? First the evaluator reduces the price, and this is what is the actual or the deemed price of the car. Then the bank will offer a max of only 80 or 85% of that value...

After looking at all these angles I felt that a safer alternative exists. At least if you work for some big time corporate organization. ICICI/HDFC was willing to give me a personal loan of any amount at 11%, reducing balance. That straight-away shaves off 2-3% at least from the EMI. On top of that I found for the employees of corporates the approval process is also much simpler (ICICI even offers Loan-On-Phone).

At the end of the day you not only get all the finance that you need but get it cheaper, faster and the process is simpler as a car loan inevitably means creation of hypothecation and other documents. These tie you down till you have not paid off the loan. Moreover after the loan is paid off you will have to once again visit the RTA to get the hypothecation removed from the RC book. A personal loan has no such hassles!

[adityapd]

Originally Posted by Zappo

Actually ICICI Bank will charge something between 13-17% on the reducing balance basis on second-hand cars. I did a lot of research on this a few months back. Of course lot many factors come into play, primary being your negotiating skill. However getting anything below 13% (reducing) is difficult on second hand cars. And this I found holds good with most of the reknowned car financing companies...

There is another hitch in all this second-hand car finance. You do not get what you may actually need. Suppose you want to buy a car costing 2.5L. Now when you apply for the loan the first rider will be that the maximum finance will be say 85% of the "deemed car value".

The second hitch is that this deemed car value is decided by the bank's evaluators! You can rest assured that the evaluator will safely value it at upto 15-20% less than the price you are about to pay. Remember, if the evaluated price is much less than that you should go for a second opinion on the car (take it to a reputed garage, maybe!).

So where do we stand now? First the evaluator reduces the price, and this is what is the actual or the deemed price of the car. Then the bank will offer a max of only 80 or 85% of that value...

After looking at all these angles I felt that a safer alternative exists. At least if you work for some big time corporate organization. ICICI/HDFC was willing to give me a personal loan of any amount at 11%, reducing balance. That straight-away shaves off 2-3% at least from the EMI. On top of that I found for the employees of corporates the approval process is also much simpler (ICICI even offers Loan-On-Phone).

At the end of the day you not only get all the finance that you need but get it cheaper, faster and the process is simpler as a car loan inevitably means creation of hypothecation and other documents. These tie you down till you have not paid off the loan. Moreover after the loan is paid off you will have to once again visit the RTA to get the hypothecation removed from the RC book. A personal loan has no such hassles!

ofcourse a personal loan is a very good alternative to a used car loan in most of the cases but seems you guys haven't really got the point i am trying to make,....

PNB IS ACTUALLY OFFERING USED CAR LOAN AT 7.5 % ON A REDUCING BALANCE BASIS....WHICH IS AT PAR WITH A NEW CAR FINANCE AND IS CURRENTLY THE BEST DEAL GOING AROUND IN TOWN.!!! so those of you who are interested, hurry up and don't go let of this opportunity !!!

~A

[Zappo]

Originally Posted by adityapd

ofcourse a personal loan is a very good alternative to a used car loan in most of the cases but seems you guys haven't really got the point i am trying to make,....

PNB IS ACTUALLY OFFERING USED CAR LOAN AT 7.5 % ON A REDUCING BALANCE BASIS....WHICH IS AT PAR WITH A NEW CAR FINANCE AND IS CURRENTLY THE BEST DEAL GOING AROUND IN TOWN.!!! so those of you who are interested, hurry up and don't go let of this opportunity !!!

~A

Uh oh! U mean its 7.5% at reducing balance, is it? Hey thats too good. I would say if this loan is without any down-payment requirements or additional lien-creations and comes without hefty pre-processing fees (at times as high as 3% of the amount), that is it has no other hidden charges then this gotta be the best deal in the country. Yes, I would say those interested should make the best of it.

[adityapd]

Originally Posted by Zappo

Uh oh! U mean its 7.5% at reducing balance, is it? Hey thats too good. I would say if this loan is without any down-payment requirements or additional lien-creations and comes without hefty pre-processing fees (at times as high as 3% of the amount), that is it has no other hidden charges then this gotta be the best deal in the country. Yes, I would say those interested should make the best of it.

Yup u got it right this time...this a part of their festival bonanza which is on till the year end and that's not all..this has minimal documentation and NO processing fees !!! so undoubtedly this is gonna be the best deal in the country.....

~A

[VKJ]

Mods, i did a basic search on this forum and found no matching threads.

Let's say vehicle cost is 10 lakhs.
I go for a personal loan instead of car loan for 5 lakhs. The point is the car dealer will be getting full cash payment against the delivery.

My question is will there be any hypothecation clause in my RC book in this case?

Hope i have made my thoughts clear.


Mod's Note: If you do not find an exact match look for the closest matching thread to post your queries.

Have a look at the post somewhere below in this same thread. You will get your answer.

[VKJ]

Thanks Mod, I was looking on the similar lines, but had a slightly different thought in mind to bring out the pros and cons of these two types of loan.
1. Can anyone please summarize these for poor man's sake..
2. Also I heard my dealer saying if it is not Hypo., it would attract the eyes of the IT dept. It's a myth or real fact?