[TusharK]

ICICI Bank is offering 100% finance on cars with an on-road price of up to Rs. 20 lakh. The loan amount is disbursed in just 4 working hours. This offer is available on car loans for a tenure of up to 7 years. It is only offered to customers who have an existing savings account.



The bank has developed a credit assessment algorithm for customers. It uses various parameters to assess the credit worthiness of a customer and depending on the credit score, it pre-approves the loan. Customers just need to check their eligibility with the branch before purchasing the vehicle. The new system is claimed to have reduced the processing time for loans.

To avail this facility, customers will be required to a fill an application form and submit the necessary documents. On-road price includes the ex-showroom, insurance and RTO charges. Accessories and other charges and not included in the loan amount.

Source: Live Mint

Link to Team-BHP News

[PrasannaDhana]

That is a good news. People like me can now afford a hexa/ harrier and regret the decision every month for the next 84 months

PS: Purely in financial terms, nothing related with the cars specified

[samaspire]

This is good news. Not because ICICI is offering this; I would never step into that bank again - but because this would incentivise other banks to introduce similar schemes. And that would be great news for everyone.

Personally, a 100% loan would mean that I can still hold on to my old car while buying a new one.

[The Rationalist]

I don't know about others, but my personal experience with ICICI Bank has been nothing but outstanding. I'm an ICICI customer for 7 years, while they do try to sell their products, if you are firm on your stand they are just like other banks. While buying a car on 100% loan is not a good idea for most, it is a welcome move as a savvy investor can actually gain.

[GrandTourer]

Originally Posted by samaspire

This is good news. Not because ICICI is offering this; I would never step into that bank again - but because this would incentivise other banks to introduce similar schemes. And that would be great news for everyone.

Personally, a 100% loan would mean that I can still hold on to my old car while buying a new one.

Actually this is already available with HDFC bank. I got 90% loan to car value. I had the option to avail 100% if I provided one co-applicant. But I chose to go solo and put down a payment of 10%.

[GTO]

I'm a bit apprehensive of the spending habits that such loans encourage.

1. No one should avail of 100% finance for a depreciating asset. It's a different matter if you have the liquid and prefer to invest it in your business / elsewhere, but if you don't, it's better you wait until you can accumulate a higher down payment. Personally, I hate loans and even if I take a car loan, I foreclose it very early (my last car loan was closed in 1 year and ~2 months).

2. A 7-year loan is a very, very bad idea. Those of us in our 40s have grown up in the era of 3-year car loans which eventually extended to 5. Sure. But 7 years is really pushing it. If you have to take an 84-month loan out of a need for smaller EMIs, you clearly cannot afford that car. IMHO, buy a car that's priced lower or postpone the purchase.

Not to forget, in a 7 year loan, there will inevitably be a point where you are 'upside down' on the loan (i.e. your car is worth less than the outstanding loan amount). Imagine the situation if you want to sell your car off or worse still, it gets stolen / totalled. Or you lose your job.

[SmartCat]

Note that not everybody is eligible for 100% loan. As the article says, ICICI Bank's algo looks at aspects like transaction statement and credit score. ICICI Bank algo probably has access to your investment data (since bank account is linked to demat account) too.

The idea is to give credit to people who do NOT need it. That's the model Bajaj Finance adopted to grow their consumer finance business at 40% CAGR

[Tapish]

Originally Posted by PrasannaDhana

That is a good news. People like me can now afford a hexa/ harrier and regret the decision every month for the next 84 months

PS: Purely in financial terms, nothing related with the cars specified

Even in the car terms, the car may not last the 7 years. And in EMI terms, the last two years you will still pay 20,000 a month for a 5 year old Tata car.

Originally Posted by GTO

Not to forget, in a 7 year loan, there will inevitably be a point where you are 'upside down' on the loan (i.e. your car is worth less than the outstanding loan amount). Imagine the situation if you want to sell your car off or worse still, it gets stolen / totalled. Or you lose your job.

Not to mention that you may have to really downsize if such an eventuality arises. Imagine having to move from a Hexa to a used Alto while still having to make EMI payments for Hexa.

[ksameer1234]

I guess most of the major banks are doing this now. I have long standing and active accounts with ICICI and HDFC and both keep sending me emails with such pre-approved car loans, bike loans, personal loans and what not. The email says that loan amount will be directly disbursed into the account. Honestly, I have no clue how it works.

Originally Posted by smartcat

The idea is to give credit to people who do NOT need it.

Totally agreed. There is no way these banks will offer such loans to risky customers. I remember we bought car 4 years ago taking a loan of about 50% price and walked out with car after just signing the loan application (this was in a tier-2 city). The loan actually got approved 4-5 days after delivery. All that because both mom and dad are government servants. Such lofty schemes are only for those who don't have a pressing need for same.