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Old 25th November 2011, 10:17   #46
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Originally Posted by Sarvodaya

Sir What I am protesting is that the Bank is not giving an OPPORTUNITY to clear my dues. I did not willfully default. I am willing to repay the Loan Amount. But the Bank does not have any right sending goons to my house to catch my neck and demand to pay it one shot. Bank should recognise such genuine case and give an opportunity to clear the Loan.

God Forbid. If you had taken a Loan, paying EMI regularly, one fine day you land in hospital and did not pay EMI for five months. Obviously you would request the Bank to give time to clear your since you were in hospital. But that does not mean that Bank can send goons to hospital or your house and threaten you to clear you dues.

There are such thousand cases like me wherein the Defaulters are willing to pay, but with Banks sending goons and resorting to such criminal activities, this Scenario will continue.
Please don't take it otherwise but I'll ask u again. Didn't the bank give you any soft reminders before sending the goons? And if they did, did you not go there personally or atleast send them a letter/email explaining the matter. But again bro I'm sorry for saying this but if there is a non payment for five months I think then they have every right to recover the vehicle. If you haven't paid up or informed for five months then they would want their money in single shot rather than just getting the dues.
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Old 25th November 2011, 15:15   #47
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

Few points I would make
1. If it is fair on the part of a presumed genuine defaulter to expect time to repay then it is equally fair on part of the bank to repossess said vehicle till such time. This time to repay has to be limited however. There is no need for dispute or goons if both parties agree. "I cant pay my loan , I wont sell any other property to pay what i owe you and i want to keep using my car too" - not too convincing in my opinion.

2. If a goon comes home any of three things happen - you complain to the cops or you fight back physically(which I think is illegal unless you can prove self defence) or you just keep quiet. Now i dont think many would take to the 1st option since they either fear or do not trust the cops. Why expect the bank to trust the cop/judicial system.

3. When it comes to receiving money/something we paid for we cant wait and when it comes to giving money we want to keep others waiting. If a car company takes your money ,promises delivery in certain time period and then doesnt do so , how many of us are willing to wait irrespective of the excuse


As you might have got the drift of above ramble I dont like defaulters. But the only physical thing they need to do is take the car and at worst restrain you with a gentle "bear hug " if you try to stop them.
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Old 25th November 2011, 16:36   #48
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

To follow the rules doesn't mean that the bank has to file a case in the court to recover the dues. As per law, the bank has to follow the due process (serving notices, etc.,) and then take possession of the property. They have to follow the due process in auctioning the property and remit the balance if any to the borrower. What the SC has advised the banks is to follow the process and not use force as the first option.

Many banks want the default cases to be closed at the earliest. You can negotiate, get a waiver of penal interest and close the loan , by selling your car to a third party if you feel that you may default

Last edited by raju2512 : 25th November 2011 at 16:37.
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Old 25th November 2011, 17:06   #49
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

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Originally Posted by samyakmodi View Post
Please don't take it otherwise but I'll ask u again. Didn't the bank give you any soft reminders before sending the goons? And if they did, did you not go there personally or atleast send them a letter/email explaining the matter. But again bro I'm sorry for saying this but if there is a non payment for five months I think then they have every right to recover the vehicle. If you haven't paid up or informed for five months then they would want their money in single shot rather than just getting the dues.
It is not vehicle loan. It is Personal Loan. I gave a letter in writing. I also paid EMI for four months by Cash at the Counter. In the fifth Month they refused to accept the payment saying that my Case is transferred to Legal Cell. I called the Bank, personal visits, telephone calls yielded no results for four months. They every now and now then someone would come. Even if the Bank had accepted the Payment every month by this time my Loan would have got cleared by now.

Although this thread is related to Vehicle Loan, my point of argument is that whatever the Loan is, there are genuine cases like me who are willing to repay the Loan provided the Bank gives an opportunity. But catching someone neck and asking to pay it one shot, sending goons, threatening, is not ethical.
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Old 25th November 2011, 17:45   #50
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

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Originally Posted by Sarvodaya View Post
It is not vehicle loan. It is Personal Loan. I gave a letter in writing. I also paid EMI for four months by Cash at the Counter. In the fifth Month they refused to accept the payment saying that my Case is transferred to Legal Cell. I called the Bank, personal visits, telephone calls yielded no results for four months. They every now and now then someone would come. Even if the Bank had accepted the Payment every month by this time my Loan would have got cleared by now.

Although this thread is related to Vehicle Loan, my point of argument is that whatever the Loan is, there are genuine cases like me who are willing to repay the Loan provided the Bank gives an opportunity. But catching someone neck and asking to pay it one shot, sending goons, threatening, is not ethical.
Agreed. There are numerous instances where the Banks have not properly handled these cases. They typically lead the cases to go to legal cells. Maybe there is an understanding that a certain number of cases will be sent to legal cells/recovery agents.

These 'legal' cells employ all tactics to ensure the customer is harassed to the max, large monies are collected. In fact, cheque bounce cases are misused by these people. Customers are tempted to pay in higher number of instalments in case of post dated cheque payments. This apparently is to boost the chances of a cheque bouncing.
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Old 26th November 2011, 10:29   #51
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Quote:
Originally Posted by Sarvodaya

It is not vehicle loan. It is Personal Loan. I gave a letter in writing. I also paid EMI for four months by Cash at the Counter. In the fifth Month they refused to accept the payment saying that my Case is transferred to Legal Cell. I called the Bank, personal visits, telephone calls yielded no results for four months. They every now and now then someone would come. Even if the Bank had accepted the Payment every month by this time my Loan would have got cleared by now.

Although this thread is related to Vehicle Loan, my point of argument is that whatever the Loan is, there are genuine cases like me who are willing to repay the Loan provided the Bank gives an opportunity. But catching someone neck and asking to pay it one shot, sending goons, threatening, is not ethical.
Then I think you should speak to someone senior in the bank. Some guy who is at the national level. Or maybe the branch head. This is not right.
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Old 26th November 2011, 10:52   #52
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

first of all why borrow to buy a rapidly depreciating product? why not use the down payment amount to buy a used product, cash down? emis are a never ending story with 50 % of loan tenure just going towards servicing the interest component only. by the half of the loan tenure the interest in the car would be almost dead and if you try to sell then, you will end up with very big hit interms of depreciation and interest paid to banks. if the asset appreciate in terms of value, then it is a different issue. a new car typically will make you poorer and also lastly do remember every emi paid is reflecting in CIBIL report. every delay is also reflected in the CIBIL, it even shows by how many days. delays, bounced cheques all will make your credit history bad, there by denying any loans in future.
plan very well. new cars may look appealing. but if borrowing ,then it soon can become a pain in the neck.
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Old 26th November 2011, 14:27   #53
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

Banks handle personal loans differently from car/home loans which have the car/property as the security.

RBI should put some strict conditions on personal loan norms. Banks advertise personal loans for vacations!!!. Why at all should some one go for a vacation when you can't afford it cash down. Even personal loan to invest in stock market is not advisable. Any loan taken should be to buy an asset and never allow the EMI for car loans to exceed 50% of your disposal income
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Old 28th November 2011, 20:12   #54
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

Any application of force and mental harassment is a crime while inability to payback debt is NOT.

Higher interest rates already factor-in the default rates for that category. So, it would be idiotic on my part if I state that the guy X shouldn't have taken a loan in first place.
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Old 28th November 2011, 20:54   #55
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

i would go a step or two further and say that a vehicle loan's monthly EMI should never exceed more than 10-15% of your disposable monthly income, max. if you cant buy it now, then dont buy it. save for it and put in the max downpayment that you possibly can and then buy it. ok maybe I will stretch a point and say allow it to go to maybe 20% or at the absolute max 25% if you are really mad about the vehicle. but you should try and ensure you take a loan which offers flexible part-prepayment plans so that you can strive a bit and become loan free sooner than later.
yes, this might sound crazy in these days of instant gratification, but a little prudence goes a long way, most definitely.

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Originally Posted by raju2512 View Post
Any loan taken should be to buy an asset and never allow the EMI for car loans to exceed 50% of your disposal income

Last edited by shankar.balan : 28th November 2011 at 20:58.
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Old 28th November 2011, 23:00   #56
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

Living outside one's means is is more of then not the reason why people borrow for aspirational acquirisitions which are out of their reach. This causes defaults. Those who know their capability is an EMI of Rs X and stick to the limit and buy what they NEED within that limit are NOT being referred to here. I say this based on experience as a financier who has dealt with both kinds of people.

Now coming to the main issue at hand - forcible recovery. The big banks have been the most serious violators of the law. An american bank currently in operations in India had to sell off it's loan portfolio to a local Indian run outfit because of absolutely messed up sanctions, even more messed up back office resulting in debits where there should have been credits and finally hiring goons to recover vehicles. Who were these goons working for? Retired policemen running debt recovery outfits, who have a policy of quid pro quo with their erstwhile subordinates who were now running the thaanas and the districts. People who had paid their loans were attacked vehicles repossessed. Ever hear of a banker go to jail for any such incident? Two Indian private sector banking behmoths were equally guilty. Ever heard of any of their executives do some time for their misdemeanors?

So where do I stand on this as some one who has been a part of the industry? The onus of strict due diligence and discriminatory sanctions is on the financiers. If the financiers run up bad assets in a race to build assets they must face the music. How then to tackle the defaulters? The law MUST be followed. That is non-negotiable. If the financiers find the protection available to them under the law is NOT upto the mark stop doing business!!

Am I being simple minded? No. Any civilised society HAS to follow the rule of law in ALL spheres of activity. Any arguement arguing against that is based on reasoning which is simple minded. Period.

Last edited by RS_DEL : 28th November 2011 at 23:04.
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Old 28th November 2011, 23:13   #57
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

Quote:
Originally Posted by shankar.balan View Post
i would go a step or two further and say that a vehicle loan's monthly EMI should never exceed more than 10-15% of your disposable monthly income, max. if you cant buy it now, then dont buy it. save for it and put in the max downpayment that you possibly can and then buy it.

I would actually say that the total cost of ownership should not exceed 20% of your salary.

By total cost, I mean the emi+fuel+servicing costs.

My bike and my car were both bought under loans. Bike was purchased new. Never defaulted on a single payment.

Car was purchased pre-owned. Used a personal loan to finance 66% of the price. Paid off in 3 years. No defaults.

I would hate to pay higher interests simply because some people did not pay their EMI's.

But due process is very important. Banks should check before they lend money. Especially in the case of depreciating assets like an automobile.
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Old 29th November 2011, 13:08   #58
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

While I totally agree that if you can’t afford EMIs don’t take loan but then it also holds true for banks. If you can’t afford bad debts and are unable to follow the law of the land then don’t enter finance business. Like nobody had forced me to take a loan similarly no one is forcing the bank to enter this business.

Also agreed that the law takes it own time but does it mean you’ll take short cuts? Banks knew this when entering this business. But they were also aware about the laxity in our laws and how they could grease palms so that law enforcers would look the other side.

And they don’t have the right to employ goondas, for whatsoever noble purpose it may be. If anyone harasses you don’t indulge in any discussions, go lodge FIR. If the police station is not cooperative meet seniors. It takes time but it works.

This is not to say default willfully, and if you have defaulted your first priority should be clearing the debt even if it means selling the vehicle but don’t take this lying down.

Now coming back to the general discussion do we have any figure on the percentage of loan defaulters in our country? With CIBIL, I am sure that of late it would hardly be of any significance so as to cause losses to the banks. Yet another reason to go in for the due process of law. For honest citizens like us this in itself is a scary proposition. And for habitual defaulters, it would be such a miniscule percentage, that the time taken in court would hardly matter to the banks.

At the same time banks should also devise a mechanism to take care of such cases rather than employing goondas which is a criminal offence.

And indeed this judgment is in the right direction. On the lighter vein let’s see it results how many banks are winding up their vehicle loan business, like Citibank did 3/4 years ago. Incidentally this was the bank which sanctioned the loan (Rs. 2 lakhs) for my Wagon R when 2 other banks had refused, which I fully repaid in 2 years time.

Last edited by anandjha : 29th November 2011 at 13:13.
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Old 29th November 2011, 17:52   #59
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

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Car was purchased pre-owned. Used a personal loan to finance 66% of the price. Paid off in 3 years. No defaults.
bblost,

Any special reason why you took a personal loan for a car ? Interest rates are 16-25% for personal loan but only 13% at the max for used car loan.

Was it "hypothecation" or something else that made you go for a personal loan ?
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Old 29th November 2011, 20:51   #60
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Default Re: Finance companies cannot forcibly take possession of loan-default vehicles

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Any special reason why you took a personal loan for a car ?
Finance companies do not fund for cars where production has stopped or where the current age of the car + tenure of loan exceeds 5 years. For example assume you are taking a loan in 2011. Hence for a 2009 model maximum tenure will be 3 years. For a 2008 model maximum loan tenure will be 2 years etc. Rarely are used taxi's funded.

Cheers

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