Team-BHP - The Cheap Loan or the Smart Loan

Quote:

Originally Posted by keyur (Post 3132211)

The Renault (or any car sales) agent will not be aware of this. You need to ask him to provide the details of the branch that he is affiliated with. Then you need to take the necessary papers and go to the branch, meet the officer there and ensure that he ticks on the OD option on your application form.

While opening your account, you should tell them that you already have an SBI Account and provide your customer id to them, and ensure that it is entered on the form (in the relevant section).

You should also submit the request forms for linking all these accounts and enabling internet banking over them.

You will need to do some work to get the goods man!

SBI will call me to their branch this week, to sign the loan contract.
I'll take my SB account details, get the loan account linked to my savings account internet banking.
I hope to get the OD account also attached. Lets hope the branch manager is aware of such features and will help me.

Quote:

Originally Posted by sumeshmani (Post 3139975)

The OD option is on the 3rd page of the form (atleast it was). Linking option is on the 2nd or 3rd page.

First of all many thanks to Keyur for such an informative post and then posting clarifications to all questions.

The concept is pretty simple if we can park the total amount outstanding in the OD account and hence no interest and since the principal outstanding reduces every month, the whole EMI can be transferred back.

However how to know how much can I withdraw if I have only partially toped it up ? How to see the principal outstanding every month and the interest saved as a result of the the partial top up ? So that I can calculate how much can be withdrawn without increasing the liability.

Quote:

Originally Posted by Gentle Giant (Post 3465892)

Hi Guys, I'm panning on buying a new car and came across this thread. Found it pretty interesting and wanted to know if this product is still on offer by SBI? Thank you in advance for your inputs, Regards.

Yes, it is available. However you might need to pursue it a bit as the OD option is not commonly offered for car loans.

Quote:

Originally Posted by pgupta (Post 3465638)

Once you get the account opened and get transaction rights + internet banking enabled, you can see the whole summary there.

If you have taken a loan of 5L, the overdraft account will start with -5L, i.e. overdraft of 5L.
If you add 1L to it, your current overdraft would show -4L, but your overdraft limit would be still 5L, so you can withdraw 1L.

Now, this amount will change as per your amortization schedule. You will understand better when you take a look at the summary.

Quote:

Originally Posted by Gentle Giant (Post 3465892)

It is available. Tell them firmly to link this to an Over Draft (OD) account. Also, when you fill in the form, there will be an option that asks for type of account. Do not sign unless OD is selected.

Quote:

Originally Posted by keyur (Post 2482565)

And the question changes from WHICH CAR to WHICH LOAN?

Dear Keyur,

First of all a million thanks for starting this excellent thread.

Iam planning to buy a car early next year and thankfully I have the required cash and hence I see that I can use the OD facility to have the luxury of liquidity & also since I plan to deposit the entire amount from day 1 the interest is expected to be 0%.

Now my concern is say I buy a 10 L rupee car and since I can avail the loan upto 80% , say I take a loan for 8L for 5 years.

Since I would be depositing 8L on day 1 into OD account which will not fetch me any additional interest like the usual 9% on savings account , hence my calculation below

9% PA Interest if I deposit 8L in a savings account = Rs 72000 PA.

Rs 72000 X 5 Years ( My loan term ) = Rs 3,60,000.

So does this not mean Iam anyways paying 3.6L in years to the bank to enjoy the option of liquidity (which I may or may not require) which translates to 9% ROI.

I agree that this is far less than availing a car loan however in my opinion the interest is never 0% even If I top up the OD account from day 1 as Iam still loosing 9%.

Kindly let me know if my understanding is correct. I will be the happiest to be proven wrong in this case as I can save more :).

Is there anyway we can save this 9% or 3.6L.

Looking forward for your inputs.

Cheers,
pdma.

Quote:

Originally Posted by pdma (Post 3542199)

my calculation below

9% PA Interest if I deposit 8L in a savings account = Rs 72000 PA.

Rs 72000 X 5 Years ( My loan term ) = Rs 3,60,000.

So does this not mean Iam anyways paying 3.6L in years to the bank to enjoy the option of liquidity (which I may or may not require) which translates to 9% ROI.

I agree that this is far less than availing a car loan however in my opinion the interest is never 0% even If I top up the OD account from day 1 as Iam still loosing 9%.

Cheers,
pdma.

Quoting my own post as I just realized something quite simple.

If I pay 8 L upfront to the dealer then there is no 9% interest anyways as I have nothing in my hand to deposit in any bank ,so why in this world was I under the impression that Iam loosing 9%.No guys iam not smoking weed :p .

Another correction from my earlier post the 9% is on FD and not from savings account.

Cheers ,
pdma.

Quote:

Originally Posted by pdma (Post 3542199)

First of all a million thanks for starting this excellent thread.

You are welcome!

Quote:

Originally Posted by pdma (Post 3542199)

Since I would be depositing 8L on day 1 into OD account which will not fetch me any additional interest like the usual 9% on savings account , hence my calculation below

9% PA Interest if I deposit 8L in a savings account = Rs 72000 PA.

Rs 72000 X 5 Years ( My loan term ) = Rs 3,60,000.

For 9%, it needs to be a FD, not a simple savings account

Also, you are calculating simple interest, whereas you should calculate compound interest - which means that you will earn more than 3.6L in 5 years!

BUT - you are forgetting that all that income from interest is taxed, and will probably hit the 30% bracket. So, to put it simply, you are getting 6.3% and not 9%.

As against that, you are saving the 10-12% that you would pay as interest.
The way to save that extra money is by simply paying of the entire amount from your pocket. But, then you don't have any liquidity.

This is just a matter of getting a loan at 0 interest, with liquidity, at the cost of loss of interest earnings on the said amount.

Quote:

Originally Posted by keyur (Post 3547546)

This is just a matter of getting a loan at 0 interest, with liquidity, at the cost of loss of interest earnings on the said amount.

Hi Keyur. First of all a hearty thanks for this thread and helping so many BHP'ians get their dream wheels. I will be approaching SBI tomorrow/Monday.

I would go ahead and get an approval on loan first and then book the car. I had some issues with a CC earlier, which is now sorted, but want to be doubly sure that the loan will be processed before i pay the booking amount. My current CIBIL score is just a shy below 800.

My salary account for last 5 years is with SBI bangalore branch, but currently i work for the same company in Chennai for last 2+ years. Will that be an issue?

Also in the attached screen shot (excuse the poor quality), which of the option should i tick while submitting the application? SBI Advantage Car Loan OR Car Loan - Overdraft? I have circled these options in red.

Hello All ,

Kindly let me know if anybody from Hyderabad has availed this facility, if yes please let me know the branch details.

I would be applying for a loan end of Jan or early Feb next year and to be on the safe end have started doing my homework from now on.

The SBI website definitely mentions about this facility , however as quoted by many members here the staff seems to be ignorant on the same.

Also I see a mention of overdraft car loan option on the website of Axis Bank as well , please let me know if anyone checked other options apart from SBI.

Kindly help.

Cheers,
pdma.