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Old 27th January 2011, 13:52   #1
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Default 7 year finance / loan on cars

Guys,

Is it possible these days to go for a 7 year loan? I may prefer this type of loan to keep my EMI down and buy a bigger car for the same EMI. The car that I buy will be with me for 5-7 years, so I don't mind paying off more amount in total.

Is any bank offering such a scheme these days?

PS:Mods, I couldn't locate any meaningful discussion for a 7 year loan going on. If you find this repetitive, remove the thread and point to the right loop!
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Old 27th January 2011, 13:56   #2
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Default Re: 7 year loan

Only Public Sector Banks offer seven year loan. Private Banks don't. Also, Public Sector Banks offer loan upto 80% of on-road price. But Private banks give loan upto 85% of ex-Showroom price.
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Old 27th January 2011, 14:02   #3
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Default Re: 7 year loan

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Originally Posted by funkykar View Post
Only Public Sector Banks offer seven year loan. Private Banks don't. Also, Public Sector Banks offer loan upto 80% of on-road price. But Private banks give loan upto 85% of ex-Showroom price.
the seven year loan will also not be fixed, which means that you will have to pay the interest percent that is applicable for that month,

you will have to check with state banks for this.
also I guess to qualify for a seven year loan is more tedious.
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Old 27th January 2011, 14:07   #4
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Default Re: 7 year loan

You could try Karnataka Bank. They offered me a 7 year loan on my Maruti Omni in 2008. I opted for a 5 year loan instead and paid it off in full in August last year.

Their interest rate however is slightly higher at 14%.

Cheers

KD
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Old 27th January 2011, 14:08   #5
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Default Re: 7 year loan

Quote:
Originally Posted by Abhi_Automobile View Post
Guys,

Is it possible these days to go for a 7 year loan? I may prefer this type of loan to keep my EMI down and buy a bigger car for the same EMI. The car that I buy will be with me for 5-7 years, so I don't mind paying off more amount in total.

Is any bank offering such a scheme these days?

PS:Mods, I couldn't locate any meaningful discussion for a 7 year loan going on. If you find this repetitive, remove the thread and point to the right loop!
As already stated by others, the 7 year Loan is only available from PSU Banks. I actually have a 7 year loan and when I took it in May 2009, the scheme was flat 10% for first year and then 0.25% below SBAR. SBI does upto 85% of the on-road price of the car.

The present scheme is 9% for first year and 10% for next 2 years and the regular rate thereafter.
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Old 27th January 2011, 14:35   #6
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Default Re: 7 year loan

please avoid a 7 yr loan, your interest payout will be much higher and the the EMI difference is not that much either. 3 is best, if not then go for a 5 yr.

eg. for a 3 yr loan of 1 lac @11%, the total interest cost is around 16.8k (EMI @ 3244/-); for 5 years its 29.2k ((EMI @ 2154/-) and for 7 yrs its 42.5 k (EMI @ 1696/-) - thats nearly 40% additionally on interest. So, if you look at the numbers when you buy a 7-10 lac car it does not make sense.
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Old 27th January 2011, 14:43   #7
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Default Re: 7 year loan

SBI offers 7 years car loans.I took it for my Swift D back in 2007 and managed to close it out by 2010.
There are some very exciting schemes that they offer for car loans.They recently conducted a loan mela which had these offers on display
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Old 27th January 2011, 14:51   #8
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Default Re: 7 year loan

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Originally Posted by hallik9 View Post
SBI offers 7 years car loans.I took it for my Swift D back in 2007 and managed to close it out by 2010.
There are some very exciting schemes that they offer for car loans.They recently conducted a loan mela which had these offers on display
+1. I inquired about this few days ago and was told by relationship manager that there was some limited period offer on the interest rate. Do not remeber the exact details.
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Old 27th January 2011, 15:15   #9
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Default Re: 7 year loan

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. I inquired about this few days ago and was told by relationship manager that there was some limited period offer on the interest rate. Do not remeber the exact details.
This is the present scheme
Quote:
Originally Posted by MileCruncher View Post
The present scheme is 9% for first year and 10% for next 2 years and the regular rate thereafter.
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Old 27th January 2011, 15:38   #10
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Default Re: 7 year loan

Quote:
please avoid a 7 yr loan, your interest payout will be much higher and the the EMI difference is not that much either. 3 is best, if not then go for a 5 yr.

eg. for a 3 yr loan of 1 lac @11%, the total interest cost is around 16.8k (EMI @ 3244/-); for 5 years its 29.2k ((EMI @ 2154/-) and for 7 yrs its 42.5 k (EMI @ 1696/-) - thats nearly 40% additionally on interest. So, if you look at the numbers when you buy a 7-10 lac car it does not make sense.
Agreed. However:

1. Each one has its own game plan. So, if aspire for a costlier car but do not want to kill myself under the loan, this MAY be an option.

2. It also frees up a 3-4k (depends on loan), each month. Actually, you are paying 10% interest for 2 more years and freeing up cash for your investments.

OK--> So no private bank then. Hmmm
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Old 27th January 2011, 17:20   #11
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Default Re: 7 year loan

Quote:
Originally Posted by MileCruncher View Post
This is the present scheme
i doubt that. it was till 31st december, unless it has again been extended.

SBI is the best bet for a 7 year loan. Here's what you should try:
a. get a 7 year loan.
b. keep making additional payments of ~25k as and when you can, post the first-year-penalty-period.
c. close the loan asap after 3.5-years-pre-closure-penalty period.

dont drag it till 7 years, its not worth it.

P.S: you may be able to reduce the EMI by spanning to 7 years, but the cost of maintaining the vehicle will increase for sure. do your math beforehand! as an example, accidental repair bills on a C+ ( optra/civic) car could be upto 100% higher for similar damage to aB+(say, punto/figo) car. and ofcourse, the insurance premium is higher.
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Old 2nd February 2011, 16:49   #12
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Default Re: 7 year finance / loan on cars

Abhi

On loan options, if you have sufficient cash the best is to go for OD on your deposits which will be charged at a lower rate than the conventional car loan.

If not as others have mentioned, go for PSUs as only they provide this option of 7 years I think. I myself took a car loan from a PSU at floating rate for 6 years, though I had to option of going for 7 years. The good thing with PSU is there is no penalty for part payment or pre payment of loan. So I closed the car loan within 2.75 years.

The only drawback with PSUs in my experience is that you have go through their bureaucracy.
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Old 2nd February 2011, 16:52   #13
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Default Re: 7 year finance / loan on cars

Just a thought experiment with hypothetical figures:
suppose you have the margin of about 10K per month.
if you go for 3 yrs loan, EMI: 10k
if you go for 7 yrs loan, EMI: 6K
Difference: 4K - If you put this in a regular SIP (ELSS perhaps)
then the returns after 7 years - your interest is covered - maybe even the cost of the car if markets are booming.

Kindly note that as this is the SIP, you get the benifit of dollar cost averaging.
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Old 2nd February 2011, 17:06   #14
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Default Re: 7 year loan

Quote:
Originally Posted by Abhi_Automobile View Post
Agreed. However:

1. Each one has its own game plan. So, if aspire for a costlier car but do not want to kill myself under the loan, this MAY be an option.

2. It also frees up a 3-4k (depends on loan), each month. Actually, you are paying 10% interest for 2 more years and freeing up cash for your investments.

OK--> So no private bank then. Hmmm
Why would you want to borrow at 10-12% and invest to get returns at 8-10%?.
Do the Math as someone said above. The maintenance, insurance, fuel consumption(not necessary though), miscellaneous expenses all go up.
Just my opinion.
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Old 2nd February 2011, 17:07   #15
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Smile Re: 7 year finance / loan on cars

Was in a similar situation two years back when I was too tempted to buy a Magnum on a 7 year loan.

Approached a few banks like SBI, PNB, Dena but was really put off by their service! These guys are in no mood to lend you money (in my case atleast!!)

After waiting for weeks, I settled for a smaller car (wayyy smaller!! bought a santro cng ) on a short term loan- 3yrs to save the headache of getting the loan passed by these dossers, higher maintenance/interest, insurance premium etc.

Craft a cost comparison spreadsheet for yourself, it'll help you decide the car, loan etc.

Happy buying!
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