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-   -   ARTICLE: How to get the lowest EMI & the best Finance Deal (https://www.team-bhp.com/forum/buying-car/18526-article-how-get-lowest-emi-best-finance-deal-10.html)

Guys, this may be a bit off topic but important. Seem there's a lot of negative sentiments about Banks (Private/MNC banks in particular). So here I am defending my turf. Some pointers-

1. Banks are Commercial entities, profit is one of the major motives. It would have been the same if you were lending. So do not grudge them for making money.
2. Lending is a very very risky business. A lot of background work goes in giving you that loan. So if the documentation is long, its for everyone's good.
3. The Global economy (& the Banking sector) in particular has gone through unprecedented upheaval. The rates keep on changing month on month. There is a lot of pressure for the bank to remain healthy (We all know what happened in 2009 when the financial system could nt sustain itself). Bcoz of this mistakes may happen. Not being vigilant & lying all error at the Bank's door is wrong
4. RBI has a lot of deterrents in place. Its just that we (the public at large) do not know of it. I personally know of how banks champion the 'customer first' cause (& Yes !! its because of competition too)
5. Although there are steps & processes for each, there can still be people who r out to cheat you. Its like getting a lemon for a Car, it was not the manufacturer's aim, it happens. So be vigilant, ratther than pushing blame onto the banks.
6. Private banks/ MNC banks are as trust worthy as PSB's. The only tangible difference is that PSUs, because of their cash surplus, can provide you with better interest rates. And as they are risk averse & technologically not that competent, they follow more documentation, meaning more time. Which is where the MNC/ Private banks triumph

Finally everyone has a job to do. Getting the maximum out of a loan for the Bank is a banker's role. Till its not illegal & unethical, we shouldn't be passing or intending to pass snide remarks.

I am being offered a loan @ 13% fixed by the dealer. Is this the current rate out there? Or should I shop around on my own with the banks to get a better rate? What would be better?

I think that %ages are highly deceptive. What I normally compare is the EMI per lakh. This gives a very clear picture of your cash flow and different quotes become very easy to compare.

Also remember to ask to for a 2% cash discount on your loan amount. And then choose to take it upfront rather than accepting their offer of reducing your EMI.

I hope this helps.

Please never take loans at Fixed rate. Always ask for reducing/diminishing rates. Why ?
Read here:
13% fixed rate is almost 21.79% reducing for 5 yr term and 19.76% reducing for 10 yr term.

That doesn't quite explain what a Fixed Rate Loan is. A reducing rate of interest is a different thing all together.

What is Fixed Rate?
A loan or mortgage with an interest rate that will remain at a predetermined rate for the entire term of the loan.

The opposite of this is a Floating Rate?
An interest rate that is allowed to move up and down with the rest of the market or along with an index. This contrasts with a fixed interest rate, in which the interest rate of a debt obligation stays constant for the duration of the agreement.

There is no such thing as a reducing/diminishing rate. The terminology is alright when speaking theoretically. However, there are no such reducing rate loans in the practical world. What you probably mean is a Loan where your interest is calculated on reducing balance. All the car and house loan EMIs are calculated on reducing balance only.

My friend is applying for loan first time & he's self employed age 24, he's been asked to opted for co-applicant than their loan will be approved by icici so he denied as he wants to buy car on his own without any help from parents, so which bank to approach ? please help

It is unlikely that a sensible bank would offer loan to a person with that kind of profile. Self employed at 24 years means not enough credit history and unstable source of income. I don't think your friend should have an issue with having Parents as co-applicant unless he is envisaging financial trouble during the duration of the loan. Read defaulter.

He's paying ITR , he just want to buy at their own without anyone Involvement of anyone's, so no hope ?
Ps: If he'll apply co-applicant as father then on cibil it will show in both profile about that loan ?

Hi Friends,

I recently booked a Tata safari and am in the process of hunting for the best deal in town. Here are some of the deals that i got initially

Loan amount - XX.XX ( not comfortable revelaing. Pm me if you want details )

Canara bank -

12.75 % for 5 years ( regardless of the amount )
11% for 3 years ( regardless of the amount )

SBI

12.00 % for 5 years ( regardless of the amount )
11% for 3 years ( regardless of the amount )

After more probing/using contacts etc here is what i found and have given the necessary documents

Axis bank

11.80 % for 5 years

Also want to highlight a fact that the per lac amount came out to be the lowest with Axis bank so far..Yes approx Rs 180 pm lesser than SBI on the total EMI pm.

The only advantage SBi had was 0% penalty on prepayment of the loan which i don't think i would be opting for.

I've zeroed in on this plan for now after about 10 days of scouting across other banks too.

Also I need the delivery of the vehicle on a particular date so i guess im already out of time and have to settle for this deal.

Also while negotiating i came to know a interesting fact that banks are a little careful while giving loans on SUV's as it's believed that these vehicles are mostly bought by anti-social elements or goons or consumers of same nature and there's a risk of payments not being made on time or other issues :Shockked:..As per the advisor very less salaried class go for SUV's :uncontrol.

Anyways that being said if there's anyone here who can help me get anything better would be really appreciated. i can rethink o n the delivery date if the amount saved is marginal as compared to what i'm getting.

Thanks in advance.

Got a call today as couple of documents were missing and were needed to further strengthen the case and push the interest rate down to 11.50%. This is the rate that i've been looking at since i started hunting for this loan and would end up saving atleast close to Rs 350 - 400 pm for the headache that i've taken.

Harish, intrest rate quoted looks great. Should say you got a deal, yes prepayment penalty would have been a dealbroker for me, however as you mentioned you not looking for that. But, did you also cross check with processing fee and are there any added requirements like you need to open Axis bank priority banking account or such?
Just asking since I had got a quote from Axis bank for home loan and they were ready to decrease the intrest rate by around .25% if I opt for Axis bank priority account. You are supposed to maintain an average quarterly balance of ~2 lac or so for that. Thought it made better sense if I didnt opt for that .25% intrest deduction and opted to decrease the loan amount if I was having that 2 lac with me.

Harish,

Your quote doesnt seem that good, to be honest. I've just gotten delivery of my Cruze and my rate worked out to 10.4%.
The best way to do negotiate is the way GTO described.

1. Shop around: Don't only talk to banks, speak to the dealer and DSAs as well. Pit them all against each other. The best rates I got were from DSAs.

2. Negotiate on the EMI, not the interest rate, because there are various ways to derive different EMI values for the same rate. Always negotiate based on the lowest EMI.

The best rates I got were from my DSA whom I bought my last car from and from my bank. If you've got a preferred customer status at your bank they really bend over backward for you.

This is exactly what the agent mentioned that he can take the interest rate further down if i was a axis bank customer however i was not interested in going for it.

I have no doubts in saying that GTO's way of negotiation is better however as i did mention that the total shopping around helped me get the initial quote of rs 14,700 ~ to Rs 14 , 350~ which i would not have saved if i had not put in the efforts ( generally i would not have if the vehicle would have been below 4 lacs or so.

Also managed to get about 50% discount on file charges after reading somewhere on the forum that it's negotiable too.

Currrently working on the discount on insurance as the TATA motors is offering the same @ Rs 26,400 and Iffco tokyo @ Rs 23, 500 which is further more a saving of about 3 K. A penny saved is a penny earned:)

Got the following quote from my bank (Axis Bank) for a loan for a C segment sedan:

EMI: 3272 per lac on a 3 year loan (interest rate quoted was 10.75%)
EMI: 2191 per lac on a 5 year loan

Additionally no processing charges (waiver of about 4500). I have my primary account (salary acc) with them. Does it look good ? What do loan gurus think?

Sealed the deal today from AXIS Bank and here is the break up

Loan Amount - Rs 6 , 36, 000
DP - 2 , 14 , 000
Interest Rate - 11.75 % ( Whew had to beat the sh** out of the loan guy )
EMI - 14,067 pm
Tenure - 5 Years
Processing charges - Rs 2360 ( Discount of About rs 2000 )
Insurance - Rs 3000 discount

Im pretty satisfied with this deal . How does it look to the experts ?