[keyur]

Originally Posted by hsprabhu

I sent an email to my local SBI branch. Here is the manager's response within 2 hrs. I had a good experience with this branch. I have taken the home loan with OD facility SBI through this branch.

One can also get a group SBI Life policy while availing these loans. These are single premium pure term policies. Premium is very low. Makes a lot of sense to take this. Whats more, they can include the premium in the loan.

Good to see that SBI is providing such level of details!

[nkapoor777]

Originally Posted by keyur

There are many questions which come up when you are planning on buying a car. You test drive many cars, ask for a lot of opinions and decide the car which you find to be most suitable for your needs and your budget.
And when you are just about to go ahead with the well managed purchase, you see another car passing by, and all of a sudden, all the preparations go for a toss. Your heart skips a beat, you go and have a test drive of that car, you love it, your heart craves for it - and then you see the price!
You want it badly, but it is just beyond your current budget. You can no longer do a cash down purchase and start thinking about a loan!

And the question changes from WHICH CAR to WHICH LOAN?

Fantastic bit of info keyur. Appreciate the level of detail and your efforts in answering everyone's queries. Which means I'm going to trouble you with my bit.

Here is what I am thinking of doing:

1. Take a 5 lakhs SBI Advantage Loan @ 11.75% and get the EMI's calculated.

2. Get a salary advance from employer for the same amount and deposit it in the OD account. This does not incur any tax liability if it is repaid with in the same financial year.

3. Since only 9 months are left in this financial year 2012-2013, I will request my employer to deduct 1/9th of this amount every month from my salary (to avoid advance taxation due to salary drawn in advance for the next financial year 2013-2014).

4. Make up the loss of income from monthly deduction of salary by withdrawing an equitable sum from this OD account (or even lesser amount as needed to increase interest savings).

Now this is what I need to confirm. As I understand from previous posts, for the first month, my interest outgo would be NIL since I would have 5 lakhs in the OD account and the EMI would be applied 100% towards reducing the O/S principal. Similarly, interest outgo would be reduced substantially at least for the remaining 9 months of this financial year. And I always have the option of repeating this arrangement by taking a fresh salary advance at the start of the next financial year (2013-2014) and putting it in the OD account.

What say?

[keyur]

Originally Posted by nkapoor777

Fantastic bit of info keyur. Appreciate the level of detail and your efforts in answering everyone's queries. Which means I'm going to trouble you with my bit.

Here is what I am thinking of doing:

1. Take a 5 lakhs SBI Advantage Loan @ 11.75% and get the EMI's calculated.

2. Get a salary advance from employer for the same amount and deposit it in the OD account. This does not incur any tax liability if it is repaid with in the same financial year.

3. Since only 9 months are left in this financial year 2012-2013, I will request my employer to deduct 1/9th of this amount every month from my salary (to avoid advance taxation due to salary drawn in advance for the next financial year 2013-2014).

4. Make up the loss of income from monthly deduction of salary by withdrawing an equitable sum from this OD account (or even lesser amount as needed to increase interest savings).

Now this is what I need to confirm. As I understand from previous posts, for the first month, my interest outgo would be NIL since I would have 5 lakhs in the OD account and the EMI would be applied 100% towards reducing the O/S principal. Similarly, interest outgo would be reduced substantially at least for the remaining 9 months of this financial year. And I always have the option of repeating this arrangement by taking a fresh salary advance at the start of the next financial year (2013-2014) and putting it in the OD account.

What say?

Perfect - go ahead!
Just remember that as per your amortization schedule (principal component), the amount that you can withdraw will reduce over time (till it finally becomes 0 at the end of the term)

[nkapoor777]

Originally Posted by keyur

Perfect - go ahead!
Just remember that as per your amortization schedule (principal component), the amount that you can withdraw will reduce over time (till it finally becomes 0 at the end of the term)

Yes understood that. This is going to save me a neat packet on interest costs. Thanks once again man. I had gone to the SBI branch where I have an account and the lady said processing time would be 3-4 days from the date all the required documents are submitted. Not bad eh!!

Originally Posted by keyur

Glad to be of help! And if you don't mind, which car are you looking at?

Ahem its the Linea T-Jet plus. 7.8 lakhs on road in Delhi and I simply couldn't resist it. Brought forward my fun-to-drive sedan buying decision by a full year.

[keyur]

Originally Posted by nkapoor777

Yes understood that. This is going to save me a neat packet on interest costs. Thanks once again man. I had gone to the SBI branch where I have an account and the lady said processing time would be 3-4 days from the date all the required documents are submitted. Not bad eh!!

Glad to be of help! And if you don't mind, which car are you looking at?

[sara.ramli]

Originally Posted by keyur

The details about this are only in the internal circulars. You have to insist on the overdraft option, that's it!
......

Thanks keyur. With your immense help and explanation I was able to secure this loan.

Now that I have been with this scheme for a month or so, and having secured online rights for transacting with it, I see a list of terms in the account homepage. Would you mind throwing some light on what each one of them mean? Guess you would be the best person to do that.

1. Book Balance
2. Available Balance
3. Limit
4. Uncleared balance
5. Drawing Power
6. Lien Amount

TIA

[nkapoor777]

^^ I am watching this space too. Got a call from my branch today that my loan is approved and I can collect the draft anytime tomorrow or later. Answers please keyur! Thanks in advance.

PS: The staff at the bank said this is the first such loan they have processed. They will be wiser from this experience ;-)

[S_U_N]

@nkapoor777: So finally you took the plunge and got the T-Jet. Congratulations!

@keyur: Very interesting thread. Though I am not looking for a car loan with OD, I would be interested in home loan with OD (which seems to be more common).
Is there a similar thread somewhere?

[keyur]

Originally Posted by sara.ramli

Thanks keyur. With your immense help and explanation I was able to secure this loan.

Congrats! Glad to be of help!

Originally Posted by sara.ramli

Now that I have been with this scheme for a month or so, and having secured online rights for transacting with it, I see a list of terms in the account homepage. Would you mind throwing some light on what each one of them mean? Guess you would be the best person to do that.

1. Book Balance
2. Available Balance
3. Limit
4. Uncleared balance
5. Drawing Power
6. Lien Amount

I am going to explain this a bit out of order :

Limit : This is the maximum amount that you can draw from the account at a given time. Initially, this is equal to the loan amount. This goes on reducing as per the amortization schedule.

Drawing Power : This is the amount that you can draw from the account, and is less than or equal to the Limit. Initially this is set to the Limit, but you (or the bank for whatever reason) can reduce this value so that you cannot draw any more than that. (write a letter to the bank to reduce this to control your spending)

Uncleared Balance : The money that you owe to the bank. This is what we aim at reducing or nullifying!

Available Balance : The total amount (including the overdraft limit) that you can withdraw.

Book Balance : Available Balance - Limit (this is what you try to increase)

Lien Amount : If you take a loan against a fixed deposit, then the Loan is said to be in lieu of the FD and a lien is marked on the FD. So, you cannot get the F amount back till the loan is repaid. In the case of a home or car loan, there is no Lien amount as such because the house is mortgaged and the car is hypothecated to the bank!

Hope this explains stuff!

Originally Posted by nkapoor777

^^ I am watching this space too.

Originally Posted by nkapoor777

PS: The staff at the bank said this is the first such loan they have processed. They will be wiser from this experience ;-)

Ahem its the Linea T-Jet plus. 7.8 lakhs on road in Delhi and I simply couldn't resist it. Brought forward my fun-to-drive sedan buying decision by a full year.

So, my thread has educated atleast 1 more SBI branch, eh.. (funny isn't it...)!

Congrats on the T-jet!

Originally Posted by S_U_N

@keyur: Very interesting thread. Though I am not looking for a car loan with OD, I would be interested in home loan with OD (which seems to be more common).
Is there a similar thread somewhere?

I don't know about a separate thread for Home Loans, but the concept is exactly the same.
The scheme is called as MaxGain and the SBI people would be well aware of this. You just need to insist for this. And dude, if you have doubts, gimme a call (you have my number anyways )

[saketa]

Excellent thread!
But does the SBI Advantage Car Loan strictly apply only to new cars?

[keyur]

Originally Posted by saketa

Excellent thread!
But does the SBI Advantage Car Loan strictly apply only to new cars?

As far as I know, Yes - it's only for new cars. But you may still enquire!

[saketa]

Originally Posted by keyur

As far as I know, Yes - it's only for new cars. But you may still enquire!

I did find out and it is applicable only for new cars. I got the gist of what you are saying but i would be really grateful if you could recommend the ideal downpayment in my case. Assuming the following variables:
Car OTR : 34L
Money in hand: 18L
Loan required: 16L
Approximate/Expected Monthly Income minus basic expenditures (rent etc): 0.9L

Sounds suicidal. But I have no liabilities/commitments so sort of contemplating it.

Would the advantage car loan makes sense in my case or do you think i should just go the old fashioned SBI Car loan and take 16L loan! Really appreciate your help!

[keyur]

Originally Posted by saketa

I did find out and it is applicable only for new cars. I got the gist of what you are saying but i would be really grateful if you could recommend the ideal downpayment in my case. Assuming the following variables:
Car OTR : 34L
Money in hand: 18L
Loan required: 16L
Approximate/Expected Monthly Income minus basic expenditures (rent etc): 0.9L

Sounds suicidal. But I have no liabilities/commitments so sort of contemplating it.

Would the advantage car loan makes sense in my case or do you think i should just go the old fashioned SBI Car loan and take 16L loan! Really appreciate your help!

Firstly, I am assuming that you have taken a look at your financials, have done the necessary planning and then are going for this.

It does sound suicidal, but if you have thought over it, well it's your party (or funeral )

So keeping all other logic aside, lets come down to just your question..

In hand : 18L
Car OTR : 34L
Diff : 16L

Well, the first thing that you need to look at is your eligibility for a car loan. Talk to the bank and based on your financial standing, ask for maximum eligibility.

Let's say that your eligibility is 25L. (just for calculation)
So, you take the entire loan (for 25L) and pay the remaining amount of 9L
Now,
Loan = 25L
Down payment = 9L
Left in hand = 9L (18 - 9)

Deposit this 9L into your Loan OD account on day 1, and then keep depositing money regularly (over and above the EMI) and look at zeroing the loan ASAP. This will turn out to be better than taking the 16L loan directly.

Again, check your eligibility - and take the maximum possible.
Then ensure that you deposit all the money you have in hand directly to the account! Only then will you get any advantage!

[smartindboy]

Thanks to your wonderful thread, I just took my car availing this facility.
Please explain if the below are correct, considering that the loan amount is 4L.
Assume that I made a test transfer of 1000.

Book Balance -3,99,000.00
Available Balance 1,000.00
Limit 4,00,000.00
Uncleared balance 0.00
Drawing Power 4,00,000.00
Lien Amount 0.00

Also, I am planning to do this:
1. Transfer the rest, so that Available balance is 4,00,000.
2. My EMI gets deducted on 5th of every month.
3. I am planning to set an auto transfer, for 7th or 8th, of the same amount as EMI to another account (say a savings account or current account)
4. This way, I am not paying interest, but will have liquidity to the amount of the Available balance, in time of need.

Please let me know if my understanding is correct, and also this would help others.
Thanks

[keyur]

Originally Posted by smartindboy

Thanks to your wonderful thread, I just took my car availing this facility.
Please explain if the below are correct, considering that the loan amount is 4L.

That's correct.
You will have a liquidity of 4L, will be earning an interest of atleast 10-11% on it (as you are not paying that interest) and that too without any tax cuts! (which is 30% on any interest that you would have got from FDs etc)
Congrats!

Glad to see that this thread is helping quite a few!