Go Back   Team-BHP > BHP India > The Indian Car Scene


Reply
 
Thread Tools Search this Thread
Old 9th July 2007, 17:03   #1
BHPian
 
sqwall's Avatar
 
Join Date: Jun 2007
Location: Madison, USA
Posts: 59
Thanked: 0 Times
Default Palio Not considered as a good buy by banks??

Hi,

I have my heart fixed on buying the Plaio 1.6 stile sport.
Took a TD sometime back and fell in love.

When it came to finance I applied for a seven year term loan(wanting to keep my monthly outgoing minimum), but the bank only approved for 5 years.When I asked for the reason they told me that Palio is not considered to be a good buy.I was taken aback by this silly comment.
I even tried to talk with SBI guys they told they can finance it for 5 and not 7 years , no reason provided.

Is it true that Palio has a bad rapo with banks?

Do i still go ahead and get the car?
sqwall is offline   Reply With Quote
Old 9th July 2007, 18:03   #2
Team-BHP Support
 
Jaggu's Avatar
 
Join Date: May 2004
Location: Bangalore
Posts: 17,742
Thanked: 7,449 Times
Default

go ahead its a good car, banks look at resale and residual value and both of them are bad in Palio's case and hence the issue.
Jaggu is online now   Reply With Quote
Old 9th July 2007, 18:07   #3
Team-BHP Support
 
moralfibre's Avatar
 
Join Date: Dec 2004
Location: MH-12
Posts: 6,622
Thanked: 6,144 Times
Default

As Jaggu stated, the Palio's command a very poor resale value thereby making it difficult for the banks to recover the loaned amount in case you default to make payments in time. Hence to minimise risks involved they give you a lesser term period and in case of stupid banks like ICICI, they charge a higher rate of interest. Me and a friend took loans from State Bank of India and they voluntarily gave it at 9.75% for 7 years to my friend and at 9.50% for 5 years for my car. Mind you this is On - Road funding and it was worth the hassle I took for documentation!!
moralfibre is offline   Reply With Quote
Old 9th July 2007, 18:08   #4
BHPian
 
Hellcat's Avatar
 
Join Date: Jul 2005
Location: Bangalore
Posts: 222
Thanked: Once
Default

Why don't you speak to the dealer for the finance, I am sure they will work out a loan term you are looking for. Have you tried UTI Bank and Kotak Mahindra.

Hellcat
Hellcat is offline   Reply With Quote
Old 9th July 2007, 19:02   #5
Team-BHP Support
 
moralfibre's Avatar
 
Join Date: Dec 2004
Location: MH-12
Posts: 6,622
Thanked: 6,144 Times
Default

As opposed to Hellcat's view, I wouldn't take a loan by keeping my dealer in loop simply because the dealer sales team get a commission amounting to a certain percentage from the finance company for recommending and signing up a customer for their banks loan option. Its better to do it directly with banks and working out a deal.
moralfibre is offline   Reply With Quote
Old 9th July 2007, 19:08   #6
BHPian
 
Nimz's Avatar
 
Join Date: May 2007
Location: Bangalore
Posts: 468
Thanked: 11 Times
Default

As far as I know.. SBI does not look at the brand of the car you get for approving a loan. But I guess in your case they have.. beats me!!
Nimz is offline   Reply With Quote
Old 9th July 2007, 19:10   #7
Team-BHP Support
 
theMAG's Avatar
 
Join Date: May 2006
Location: Long Island, NY
Posts: 7,036
Thanked: 1,470 Times
Default

Wow - that was some news. While the banks look at it from a purely biz sense, if you like the car pick it up. You'll be long harping abt its brilliance to your grandchildren. This being the Palio 1.6, btw.
theMAG is offline   Reply With Quote
Old 9th July 2007, 19:26   #8
Distinguished - BHPian
 
Mpower's Avatar
 
Join Date: Mar 2005
Location: Bangalore
Posts: 10,432
Thanked: 1,682 Times
Default

hi depriciation = high risk = higher interest rate (this is how it should work)
Mpower is offline   Reply With Quote
Old 9th July 2007, 19:28   #9
Senior - BHPian
 
Join Date: Jul 2006
Location: Bangalore
Posts: 2,254
Thanked: 31 Times
Default

Pailo is good car buy it if you liked it. I have heard same story about Banks
not ready to give long term loan on cars with poor resale value.

Regards,

Ravi.
ravibhat is offline   Reply With Quote
Old 9th July 2007, 19:35   #10
Senior - BHPian
 
Sudipto-S-Team's Avatar
 
Join Date: Jun 2007
Location: Kolkata
Posts: 1,294
Thanked: 258 Times
Default

Quote:
Originally Posted by moralfibre View Post
As opposed to Hellcat's view, I wouldn't take a loan by keeping my dealer in loop simply because the dealer sales team get a commission amounting to a certain percentage from the finance company for recommending and signing up a customer for their banks loan option. Its better to do it directly with banks and working out a deal.
There is no known way of avoiding a commission being paid to someone - whether openly or secretly. Even if you go directly to a bank the loan will get officially routed through a DSA (in most cases the dealer from who you are buying) without your knowing about it. No bank will risk antagonising the dealer.

The best way to deal with this situation is to find out who will pass on the maximum commission back to you.

The dealer can recommend a few private financers but I doubt if you will get a decent deal from them as compared to the rates a bank can offer. I don't see any private financer offering you a loan for seven years on a Palio unless you pay them a substantially higher rate of interest.

Try raising the down payment amount a bit, if the monthly outgo is a major issue. Talk to multiple banks and choose the one that offers the lowest EMI. When you ask for a quote do tell them openly that you will take a quote from every one - don't feel shy about saying this. It will ensure that you get the best rate.

Sudipto
Sudipto-S-Team is offline   Reply With Quote
Old 9th July 2007, 19:35   #11
Senior - BHPian
 
hvkumar's Avatar
 
Join Date: Nov 2006
Location: Mumbai
Posts: 7,369
Thanked: 3,354 Times
Default

This is a normal credit risk management tactic by banks - where the car is not popular and has poor resale value, they either restrict or reject financing. Even insurance companies do the same thing - for instance, in the case of the Daewoo Matiz, I have been told that most insurance companies refuse to provide comprehensive insurance cover for the same reasons - non-production car, poor resale value, no company service support, etc.
hvkumar is offline   Reply With Quote
Old 9th July 2007, 19:42   #12
BHPian
 
Join Date: Feb 2007
Location: Jabalpur
Posts: 86
Thanked: Once
Default

Be it car loan or housing loan, ypu pay less if you take a loan for less duration, and lesser still if you prepay the loan. That way, I think it is in your financial interest to take a loan for less tenure and finish it off even earlier. If I were you, I will not be lulled by the hype that longer tenure is easier on the wallet. That is not the case, you just have to check it yourself.

If you can afford the higher EMI, you should go for a low tenure loan, and finish it even earlier. That way, you will save considerable amount of interest.
squarecut is offline   Reply With Quote
Old 9th July 2007, 20:21   #13
BHPian
 
sqwall's Avatar
 
Join Date: Jun 2007
Location: Madison, USA
Posts: 59
Thanked: 0 Times
Default

Doesnt the tie up with tata supposed to resurrect fiat in India.

A colleague of mine referred someone to process my loan, apparently he got a loan for 7 year term on a Maruti through this guy.
Later I find out that this loan guy works for the dealeship from whom I want to pick the car.
Anyways I feel the offer is not that bad with an emi of 2274 per lac(Please let me know your views on the figure).
sqwall is offline   Reply With Quote
Old 9th July 2007, 20:33   #14
Distinguished - BHPian
 
CrAzY dRiVeR's Avatar
 
Join Date: Jun 2006
Location: Bangalore / TVM
Posts: 8,943
Thanked: 16,619 Times
Default

Palio resale value goes really down to below 2L in 2.5 years.

Thats the main reason the banks dont give long term loan on the Palio. And one of the reasons why palio is the most VFM purchase as second hand car.
CrAzY dRiVeR is offline   Reply With Quote
Old 9th July 2007, 20:41   #15
BHPian
 
sqwall's Avatar
 
Join Date: Jun 2007
Location: Madison, USA
Posts: 59
Thanked: 0 Times
Default

I tried to get info from someother banks.
HDFC and Kotak also dont finace it for 7 years.

I dont mind taking the 5 year option, ill be saving on interest afterall.
sqwall is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Are Indian brands considered cheap & downmarket? raj_5004 The Indian Car Scene 64 22nd July 2010 23:14
Honda/Toyota cars considered very boring by 2nd Gen NRI kids? pgsagar The International Automotive Scene 23 6th February 2010 21:11
Can a 1969 Series 11a SWB Landrover be considered a classic with diesel conversion? eyedoc Post-War 13 13th October 2009 09:06
Can a 1995 car be considered brand new 4 import? _Crazi4Speed_ The Indian Car Scene 0 28th September 2004 13:43


All times are GMT +5.5. The time now is 16:15.

Copyright 2000 - 2017, Team-BHP.com
Proudly powered by E2E Networks