Team-BHP - Security Cheques (For Car Loans)

I am on the verge of closing my loan with ICICI for a 3 year period , its been quite a while since i last applied for a car loan and was slightly unsure on one aspect which i thought i would seek advise on from the community

My loan agent has told me that i need to submit 4 security cheques as part of the documentation , i dont remember doing this during my previous loan ( which in all fairness was 6 years ago) , each cheque would be the emi amount.

my loan repayment is going to happen through a direct electronic debit from my account.

my questions are

1. do all banks require these cheques ,is it a standard process for loans now?
2. will icici be enchashing these cheques or will they simply keep it with them and in the event there is an EMI default use them to recover the money?

or are there other aspects of this beyond the 2 above?

Thanks!

Quote:

Originally Posted by puchoo (Post 2614258)

1. do all banks require these cheques ,is it a standard process for loans now?
2. will icici be enchashing these cheques or will they simply keep it with them and in the event there is an EMI default use them to recover the money?

Yes all banks ask for these cheque and use it only if there is a non payment of EMI and non agreement to pay. At the end of the tenure these cheques will come back to you. They should not keep this with them, do check this. Normally all banks return them once the loan is fully paid.

As such ICICI is known for doing stupid things, hence check this before proceeding.

Yes all banks require security cheques. For my 5 year loan with SBI, they took 6 cheques. And boy, they indeed came handy. My bank (HDFC) made some goof up in EMI-ECS mandate due to which first 2 installments did not get debited. Hence SBI banked 2 of my security cheques in lieu of ECS.

I am told the cheques are returned upon loan closure. But if you are skeptical, take the same in writing and/or keep xerox of the security cheques with you.

Mine was from ICICI and they took 4 checks; 3 canceled checks for EMI auto debit and the 4th would be of the total value of the loan. I guess the 4th one would be put to use in case you default.

Also FYI, for ICICI when your loan term gets over or you pre-pay, the 4th check is not returned; I was told the bank destroys them.

Quote:

Originally Posted by puchoo (Post 2615487)

They took 4 cheques , 1 was for the total amount and 3 were for 3 Emi's each

Why would they take 1 cheque for the total amount, never heard of this. AFAIK the seciruty cheques are taken at the start of the loan tenure and would be for the amount equal to the EMI's. These are normally returned back at the end of the loan tenure and are not usually taken when you want to close the loan account.

One suggestion, keep a copy of each cheque as proof with you and be sure to get a letter from the loan disbursee about the list of documents submitted along with the security cheques (with cheque nos).

Sorry , i should have written that better - the 4th cheque is for the amount which is left after deducting the amount mentioned in the other 3 cheques.

Quote:

Originally Posted by ghodlur (Post 2616074)