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Old 17th February 2011, 17:02   #31
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Default Re: Foreclosing an Auto loan - why the circus?

This thread couldn't have been more timely for me. I just booked a Fiat Linea MJD (yesterday) and am looking out for loan options.

I'm a classic customer (not that it means anything to me!) at HDFC and they provided me a "special" interest rate of 12% (which seems to be for everyone, as it appears on their website). And the agent even after repeated request (and after speaking with his so called higher "authorities") wouldn't budge on the foreclosure penalty or even the interest rate!

I'm currently looking at two options - Tata Motor Finance (available at the dealer) and Punjab National Bank (I know someone there).
TMF - 11% fixed. Foreclosure penalty - 4% (might be waived a little - 2.5 - 3% depending on the time of closing and NO part prepayments allowed!)
PNB - 12.5% floating. Flexible part prepayment, NO penalty on foreclosure or part prepayment.

After reading the replies, wondering if I should just go with PNB in-spite of the higher ROI (Got to finalize by tomorrow).

None of the nationalized banks penalize on foreclosures. Even RBI is quite against it (though they haven't yet passed any rule against it!). It just seems an unethical banking process (at least to me).
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Old 17th February 2011, 17:13   #32
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Default Re: Foreclosing an Auto loan - why the circus?

Go with a nationalized bank which allows pre-payment and automatically reduces interest in case of pre-payment.
Then the extra 0.5% won't matter.
You can deposit a little extra in the months when you have savings, and your interest will keep getting reduced.
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Old 17th February 2011, 17:20   #33
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Default Re: Foreclosing an Auto loan - why the circus?

Quote:
Originally Posted by cssrk View Post
...PNB - 12.5% floating. Flexible part prepayment, NO penalty on foreclosure or part prepayment.

After reading the replies, wondering if I should just go with PNB in-spite of the higher ROI (Got to finalize by tomorrow).
Why not try SBI? Their rate is 9% for first year and 10% for 2nd and 3rd year, 10.75% for 4th to 7th year. Have heard some people got loan from SBI in flat 5-6 days. And there is no pre-payment penalty for any loan in SBI.

Note - I have no commercial association with SBI. Just that I like their competitive rates on loans and deposits.

Last edited by amit1234singla : 17th February 2011 at 17:29.
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Old 17th February 2011, 18:27   #34
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Default Re: Foreclosing an Auto loan - why the circus?

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Originally Posted by GTO View Post
I recently cancelled an extra Vodafone SIM card of mine and boy, they put me through absolute hell (innumerable request calls, new formalities every visit and so on).
3 years back when I wanted to cancel my Reliance CDMA connection, they gave me a huge list of procedures to follow. Instead I simply requested for a change from post-paid to pre-paid connection after paying of the balance amount. Spent extra Rs10/- which was mandatory for pre-paid and then switched off the phone. No other extra charges and time saving.
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Old 17th February 2011, 20:28   #35
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Thumbs down Re: Foreclosing an Auto loan - why the circus?

Here is my experience. Had my car loan with SBI.
- Go to a branch for foreclosure
- Get the amount after waiting for over an hour (token system)
- Get ready to write cheque and then find out that if it is not a local SBI cheque then the interest will add on until the money is received and so the amount could vary
- Write a cheque anyway for the most part of the amount
- Come back again after the cheque clears with cash to close the remaining amount. This is really ridiculous as the balance is around 500.
- Wait an our to get the amount
- Go to another floor and wait for another hour to pay the cash
- Wait after that for a seal which is available with only one Manager
- Get the sealed receipt and then go to another branch
- Push and pull there to even get into the floor
- Show all the proof and then pray that you get the NOC the same day
- Thank your stars when you get it and walk away

Fun story for an evening with friends
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Old 17th February 2011, 20:34   #36
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Default Re: Foreclosing an Auto loan - why the circus?

I am a repeat customer for SBI. I like their no nonsense attitude and lower interest rates. My Jazz loan came in 5 days processed at a local branch. Processing center takes 10 days or more.

Only issue is they dont relax any documentation. If your papers/credit history is clear, SBI makes sense.
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Old 18th February 2011, 00:06   #37
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Quote:
Originally Posted by cssrk View Post
I'm a classic customer (not that it means anything to me!) at HDFC and they provided me a "special" interest rate of 12% (which seems to be for everyone, as it appears on their website). And the agent even after repeated request (and after speaking with his so called higher "authorities") wouldn't budge on the foreclosure penalty or even the interest rate!
Try again. A lot of water has flown under the bridge since I took my car loan from HDFC last July, but I was able to negotiate a rate 1% less than the one on the website. 0.5% was due to me enjoying "classic customer" (or privileged or whatever) status and the other 0.5% was due to my extremely poor negotiating skills. I know people who could've arm-twisted them a little bit more. I even get a 50% waiver off the processing fees due to the relationship with the bank.

Later on (a month or so after my loan amount was disbursed), they introduced a scheme with 0.25% (or 0.5%) higher rates but absolutely 0 foreclosure penalties.

The final rate I got was 8.75% (or 9.03% if you remove the processing fees + stamp duty out of the equation). The base rates are much higher now, but if the website says 12%, you should be able to get 11.5% straightaway at a minimum on account of being a classic customer. Some cars attract higher RoI than others, though. I think the Linea is classified as a C-segmenter, which carries around 0.5% higher rates than for C+ (erstwhile D) segment cars.

That said, I've realized the beauty of a loan account. So if PNB is offering you a loan account (pay any amount any time without any penalties), go for it even if it comes with a slightly higher RoI. You can just dump spare cash into the account and negate the higher rate.

Regards,
spadix
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Old 18th February 2011, 12:24   #38
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Default Re: Foreclosing an Auto loan - why the circus?

I had no such experience while closing my ICICI Bank CAR Loan, it was single window process and took not more than 45 Minutes. Yes I was charged the pre-closure of 5%, negotiated to 4%. This was last year.
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Old 18th February 2011, 18:17   #39
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Default Re: Foreclosing an Auto loan - why the circus?

Quote:
Originally Posted by PAVAN KADAM View Post
I beg to differ on eveyone's views.

Being associated with the loan department with HDFC since the last 11 years, i can confidently vouch by saying, HDFC Bank has the best team involved here.

Step1:
Call customer service and place a request for Pre-closure. The pre-closure letter reaches you within the next 7 working days time. Send a DD for the amount mentioned. Once its realised, within the next 15 days time, you receive the Loan closure letter and HP cancellation letter.

Step2:
Go to your nearest HDFC Bank. Request for the loan closure letter, pay the closure amount at the counter, get an interim loan closure statement. Within the next 15 working days, you will receive the loan closure and HP cancellation letter.

3% pre-closure penalty is common across all Banks, While Citi charges 5%.

While you guys harp about other banks, please get in touch with your friends who have closed loans with other banks and you will realise, how hard they are trying to get the refund of the Next EMI deducted from their account after closure.
Hi Pavan, 2 questions:

1) Why only DD and not online banking or a cheque payment?
2) Why should it take 15 days for a DD to be encashed?
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Old 18th February 2011, 18:48   #40
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Default Re: Foreclosing an Auto loan - why the circus?

Quote:
Originally Posted by ajitsank View Post
I had no such experience while closing my ICICI Bank CAR Loan, it was single window process and took not more than 45 Minutes. Yes I was charged the pre-closure of 5%, negotiated to 4%. This was last year.
Same experience here wth ICICI. Late 2009 I foreclosed the autoloan of our Ikon. First step was calling the customer care. Next step visit a branch with papers. Withing 15 minutes the process is over. Paid some % preclosure fee, dont remember the value. In a week's time NOC was delivered to our flat. No complaints.

Last edited by dot : 18th February 2011 at 18:49.
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Old 18th February 2011, 18:59   #41
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Default Re: Foreclosing an Auto loan - why the circus?

Thanks everyone for your comments. I have finalized on Tata Motor Finance today and initiated the process.

Quote:
Originally Posted by tsk1979 View Post
Go with a nationalized bank which allows pre-payment and automatically reduces interest in case of pre-payment.
Then the extra 0.5% won't matter.
You can deposit a little extra in the months when you have savings, and your interest will keep getting reduced.
I needed the loan within a short timespan and PNB could not process it any earlier than next week (they had some audit going on or something)! They wouldn't give more than 75% of the ex-showroom price. And their processing charges were 7200 Rs. I did some quick calculations and found that either way it didn't have a big difference on pure financial terms. Also, I have decided to invest any surplus on other deposits for 2 reasons - possibly higher return on investment and better liquidity (just in case) So I guess I will not be foreclosing after all! So went for TMF.

Quote:
Originally Posted by amit1234singla View Post
Why not try SBI? Their rate is 9% for first year and 10% for 2nd and 3rd year, 10.75% for 4th to 7th year. Have heard some people got loan from SBI in flat 5-6 days. And there is no pre-payment penalty for any loan in SBI.

Note - I have no commercial association with SBI. Just that I like their competitive rates on loans and deposits.
I really liked the SBI scheme. But when I went to the local branch today it was way too crowded (almost like a crowded bus... well a little bit of exaggeration there, but almost similar ). Also, had to wait quite a while to even meet the respective person. Plus, it seems they do charge 2% foreclosure penalty now! I would have still gone for it, if not for the processing time (about a week).

Quote:
Originally Posted by spadix View Post
Try again. A lot of water has flown under the bridge since I took my car loan from HDFC last July, but I was able to negotiate a rate 1% less than the one on the website. 0.5% was due to me enjoying "classic customer" (or privileged or whatever) status and the other 0.5% was due to my extremely poor negotiating skills. I know people who could've arm-twisted them a little bit more. I even get a 50% waiver off the processing fees due to the relationship with the bank.
Spadix, I wish! They called me again today, but wouldn't come down from 11.75% and 4000 Rs. Processing charge. Not to mention their "strict" preclosure penalties (at least that's what they kept telling me!)

Even at Tata Motor Finance, they told me that once the loan term is completed, after about 15 days, I will have to go and show proof of last EMI paid (from bank statement) and then get the NOC. Not sure why the 15 day delay!
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Old 21st February 2011, 17:21   #42
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Default Re: Foreclosing an Auto loan - why the circus?

I just cannot understand why we are made to run around whenever we want to end any such relationship (credit card, bank account, loans, even SIM cards), the other day I wanted to cancel my Airtel postpaid mobile & the lady on the phone told me that I have to mandatorily give a reason for cancellation, i told her "When I took your mobile connection did you ask me why you needed a mobile phone, No, hence I need not give a reason for cancellation"
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Old 21st February 2011, 19:28   #43
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Default Re: Foreclosing an Auto loan - why the circus?

Because stock price of company is influenced by number of customers / subscribers. Thats why they have "retention" teams. Every loan termination / service discontinuation request goes though that team.

Perfomance incentives of this team are linked to numbers of customers retained, so they will try their best to get customer to cancel the request.
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Old 21st February 2011, 21:26   #44
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Default Re: Foreclosing an Auto loan - why the circus?

Sorry, I couldn't help asking, but would it be more advisable to avail a loan against an FD rather than a straight-up standard car loan? Does the concept of foreclosure penalty come into picture there at all?

Pardon my ignorance, but I would appreciate some good advice around this.
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Old 22nd February 2011, 00:11   #45
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Default Re: Foreclosing an Auto loan - why the circus?

This has been discussed elsewhere on the forum. Loan against FD is better in many aspects, E.g. no RTO formalities (For hypothecation) and no fees for foreclosure.
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