ARTICLE: How to get the lowest EMI & the best Finance Deal

tsk1979 · 24th May 2007, 14:40

Quote:

Originally Posted by nikunj_cal

Wow thx GTO ,

!!!

Just a point to add , SBI calculates its installemnts on the basis of Daily reducing Balnce and my guess is so does the Excel Sheet . ICICI and UTI have their own funny ways of doing it .IMO Daily Reducing Method is the best as you end up paying more towards the principal and less towards the Interest !!!

Nikunj, could you throw more light on this.
For example let us say I take a loan for which the EMI is 20,000/month.
In one month I see that I have saved money, so I put in 25000 instead of 20000 towards the EMI. Does this mean that if I do this frequently my overall outflow(net) will go down?

squarecut · 24th May 2007, 15:57

EMI is fixed. Do not mix it with prepayment.

Typically, once you have a nice figure , say Rs 50 thousands or one lakh available with you, you go to your bank and make a prepayment of this amount towards your loan. That way, your principal outstanding comes down by 50 thousands or one lakh, as the case may be. With the amount of principal outstanding thus coming down, the interest component of your future EMIs comes down considerably.

The caveat is that this works only in case of PSU banks, where there are no hidden clauses and no underhand dealings. This procedure will work fine with say SBI, but ICICI will find ways to rob you, in the form of prepayment penalties etc.

tsk1979 · 24th May 2007, 16:09

So it means number of EMIs will reduce if I make a prepayment. thanks I will try to go to a PSU bank.
Do they easily give loans or you need to have jack

horsepower · 24th May 2007, 17:34

Nationalised banks give loans but they have a more documentation then the private banks. I am trying for a car loan and my dealer has told me that Sate Bank Of Patiala is offering minimum ROI. Acc to him 11% reducing.

nikunj_cal · 25th May 2007, 14:28

Quote:

Originally Posted by squarecut

EMI is fixed. Do not mix it with prepayment.

Typically, once you have a nice figure , say Rs 50 thousands or one lakh available with you, you go to your bank and make a prepayment of this amount towards your loan. That way, your principal outstanding comes down by 50 thousands or one lakh, as the case may be. With the amount of principal outstanding thus coming down, the interest component of your future EMIs comes down considerably.

The caveat is that this works only in case of PSU banks, where there are no hidden clauses and no underhand dealings. This procedure will work fine with say SBI, but ICICI will find ways to rob you, in the form of prepayment penalties etc.

The SBI has prepayment penalties , 2 % of the outstanding principal , dunnow about partial repayments but mind you it is much lower than the other banks out there !!

@tsk - as square cut said the EMI's get fixed once you take the loan , but i can suggest another way out .Go to the bank , take a loan of the original stipulated amount . Initially give out pdc for only 12 months or less .After a year or so if u have say Rs 50k or 1 lac in hand pay that amount . The bank walla will recalculate the new EMI and ask u to hand out the new pdc as per the new EMI.I have not tired this but I dont think there should be any problem regarding this . The only benefit here is that once your EMI gets changed the uncleared cheques of the previous EMI become useless and you have to go thru a formal process of getting back the uncleared cheques + You also end up wasting leaflets of your cheque book if you give out all the pdc's at one go . I hope I am clear ...

tsk1979 · 25th May 2007, 14:32

I plan to give ECS or go DD route. HDFC bank keeps on rejecting 50% of my cheques as "Signature does not match".
So I will open a saving account in that bank with 1000rs minimum balance and use our Dear RBI to transfer the EMI to that bank every month. simple

I would like it if number of EMIs lessened, rather than each EMI lessened.

nikunj_cal · 25th May 2007, 14:43

Quote:

Originally Posted by tsk1979

I plan to give ECS or go DD route. HDFC bank keeps on rejecting 50% of my cheques as "Signature does not match".
So I will open a saving account in that bank with 1000rs minimum balance and use our Dear RBI to transfer the EMI to that bank every month. simple

I would like it if number of EMIs lessened, rather than each EMI lessened.

You can get your EMi's lessened , go for a shorter duration loan , they will recalculate everything then , they might even take processing charges but not sure how much

Nimz · 27th May 2007, 01:14

hi, am planning to go in for a new car through finance. Tata motors has an offer of 8.99% but in that case no discounts and only basic accessories. The other one at 13.75% you get the discounts and some other accessories. And the discounts reduce if I get my own finance from SBI or elsewhere.. Any ideas what rates of interest are currently going around. I wouldnt mind a zero interest loan with shorter duration and higher EMIs. thanks!

nikunj_cal · 6th June 2007, 16:29

Quote:

Originally Posted by Nimz

hi, am planning to go in for a new car through finance. Tata motors has an offer of 8.99% but in that case no discounts and only basic accessories. The other one at 13.75% you get the discounts and some other accessories. And the discounts reduce if I get my own finance from SBI or elsewhere.. Any ideas what rates of interest are currently going around. I wouldnt mind a zero interest loan with shorter duration and higher EMIs. thanks!

Hi Nimz the discounts will reduce if you opt for any other bank because all dealers have started giving a discount on the upfront payment . So if u go to another bank that discount is not available !!However the dealer and the company discount will always be available irrespective of the finance scheme. The current rates vary from 11.5 % to 16 % max . Take your pick

ceebeezee · 6th June 2007, 17:14

UTI Bank has entered the Car Loan market and is quite aggressive. I have an offer from them for 11.77% interest rate for a 5 year loan for Maruti Swift VDi.
The thumb rule - everything is bargainable and one should evaluate 2-3 offers before deciding.
My piece of advise - Dont fall for the discount & finance payouts stuff - Just get the following details clear in every offer that you get:
(a) Down Payment : This is your immediate cash flow. So be very clear how much you can afford to give away!
(b) EMI - This is more important than interest rates (since these can be manipulated in all sorts of ways). The EMI amount is what will go from your pocket every month.

babureddy · 26th June 2007, 17:40

i feel its always better to ask for the emi amount and bargain on that. Normally they quote less interest rate, but sometimes it will turnout that the emi they quote is quite more. Its always better to ask them for the emi and then start bargaining.

nikunj_cal · 18th September 2007, 16:04

Quote:

Originally Posted by babureddy

i feel its always better to ask for the emi amount and bargain on that. Normally they quote less interest rate, but sometimes it will turnout that the emi they quote is quite more. Its always better to ask them for the emi and then start bargaining.

If you can bargain then one should always go for it, but for banks like SBI banks there rates are already among the lowest , no hidden costs and good efficient service ( atleast pretty decent in Kolkata) .There was no bargaining with them there .

@ceebeezee - UTI has been in the car loan market for 3 to 4 years now and yes you can bragian with these guys , One of my colleagues did so and nearly matched SBI :-) !! BUT UTI has higher forclosure rates where he could not bargain at all.

Rajiv Menon · 19th September 2007, 20:01

Does any one have any data around the step up loans and bullet payment options advertised by ICICI? I understand this generally as a concept but wanted some more data points like how much does a EMI come down if we opt for a bullet payment of say x amount at end of year etc.

I plan to call up the dealers for details later but wanted any behind the scenes data so that I could be prepared with the right questions to ask.

Sahil · 5th October 2007, 13:07

10.5% on reducing balance... is it a good rate or are they better around?

Ajaybiz · 5th October 2007, 15:38

Now no is below 12.5% i got it mine for 10.5 from PNB but waiting period of Swift DDiS screwed my rates and before getting it it shooted for another 2% but still i am getting better deal then SBI i.e. 12.75% that too after corporate discount.

24th May 2007, 15:57	#47
squarecut BHPian Join Date: Feb 2007 Location: Jabalpur Posts: 87 Thanked: Once	EMI is fixed. Do not mix it with prepayment. Typically, once you have a nice figure , say Rs 50 thousands or one lakh available with you, you go to your bank and make a prepayment of this amount towards your loan. That way, your principal outstanding comes down by 50 thousands or one lakh, as the case may be. With the amount of principal outstanding thus coming down, the interest component of your future EMIs comes down considerably. The caveat is that this works only in case of PSU banks, where there are no hidden clauses and no underhand dealings. This procedure will work fine with say SBI, but ICICI will find ways to rob you, in the form of prepayment penalties etc.
	() Thanks

24th May 2007, 16:09	#48
tsk1979 Team-BHP Support Join Date: Feb 2005 Location: San Jose, CA Posts: 23,717 Thanked: 22,825 Times View My Garage	So it means number of EMIs will reduce if I make a prepayment. thanks I will try to go to a PSU bank. Do they easily give loans or you need to have jack
	() Thanks

24th May 2007, 17:34	#49
horsepower BHPian Join Date: Sep 2005 Location: Gurgaon Posts: 281 Thanked: Once View My Garage	Nationalised banks give loans but they have a more documentation then the private banks. I am trying for a car loan and my dealer has told me that Sate Bank Of Patiala is offering minimum ROI. Acc to him 11% reducing.
	() Thanks

25th May 2007, 14:32	#51
tsk1979 Team-BHP Support Join Date: Feb 2005 Location: San Jose, CA Posts: 23,717 Thanked: 22,825 Times View My Garage	I plan to give ECS or go DD route. HDFC bank keeps on rejecting 50% of my cheques as "Signature does not match". So I will open a saving account in that bank with 1000rs minimum balance and use our Dear RBI to transfer the EMI to that bank every month. simple I would like it if number of EMIs lessened, rather than each EMI lessened.
	() Thanks

27th May 2007, 01:14	#53
Nimz BHPian Join Date: May 2007 Location: Bangalore Posts: 594 Thanked: 198 Times View My Garage	hi, am planning to go in for a new car through finance. Tata motors has an offer of 8.99% but in that case no discounts and only basic accessories. The other one at 13.75% you get the discounts and some other accessories. And the discounts reduce if I get my own finance from SBI or elsewhere.. Any ideas what rates of interest are currently going around. I wouldnt mind a zero interest loan with shorter duration and higher EMIs. thanks!
	() Thanks

6th June 2007, 17:14	#55
ceebeezee BHPian Join Date: May 2007 Location: Mumbai Posts: 61 Thanked: 38 Times	UTI Bank has entered the Car Loan market and is quite aggressive. I have an offer from them for 11.77% interest rate for a 5 year loan for Maruti Swift VDi. The thumb rule - everything is bargainable and one should evaluate 2-3 offers before deciding. My piece of advise - Dont fall for the discount & finance payouts stuff - Just get the following details clear in every offer that you get: (a) Down Payment : This is your immediate cash flow. So be very clear how much you can afford to give away! (b) EMI - This is more important than interest rates (since these can be manipulated in all sorts of ways). The EMI amount is what will go from your pocket every month.
	() Thanks

26th June 2007, 17:40	#56
babureddy BHPian Join Date: Jun 2007 Location: Bangalore Posts: 191 Thanked: 8 Times View My Garage	i feel its always better to ask for the emi amount and bargain on that. Normally they quote less interest rate, but sometimes it will turnout that the emi they quote is quite more. Its always better to ask them for the emi and then start bargaining.
	() Thanks

19th September 2007, 20:01	#58
Rajiv Menon Newbie Join Date: Oct 2006 Location: Gurgaon Posts: 17 Thanked: 0 Times	Does any one have any data around the step up loans and bullet payment options advertised by ICICI? I understand this generally as a concept but wanted some more data points like how much does a EMI come down if we opt for a bullet payment of say x amount at end of year etc. I plan to call up the dealers for details later but wanted any behind the scenes data so that I could be prepared with the right questions to ask.
	() Thanks

5th October 2007, 13:07	#59
Sahil Distinguished - BHPian Join Date: May 2004 Location: Bombay Posts: 6,292 Thanked: 7,607 Times	10.5% on reducing balance... is it a good rate or are they better around?
	() Thanks

5th October 2007, 15:38	#60
Ajaybiz BANNED Join Date: Nov 2004 Location: Bangalore Posts: 1,440 Thanked: 320 Times View My Garage	Now no is below 12.5% i got it mine for 10.5 from PNB but waiting period of Swift DDiS screwed my rates and before getting it it shooted for another 2% but still i am getting better deal then SBI i.e. 12.75% that too after corporate discount.
	() Thanks