Team-BHP - HDFC Bank Car Loan- Is this a good finance deal ?

Hi,
I am looking around for good deals to finance my Honda City dream. So far I have tried only HDFC bank. As a preferred customer, after a lot of negotiation, they have offered the following deal

1) ROI offered - 8.5% (some doubt about this. see point 2)
2)Approx emi per lac - 3146/36 months , 2460/48months , 2049/60months - I did a quick check at carwale, and 2049/60m came to 8.75%. Can anyone confirm ?
3) Reducing balance (Not specified if daily, monthly, quarterly or yearly)
4) Documents required - Identity proof / residence proof / six months bank statement / quatation copy from dealer(with name and address) / advance receipt copy
5) Processing time - 4 - 5 working days
6) Processing fees - Rs.3650(no waiver)
7) Prepayment charges - up to 6% on outstanding principle. (this seems to be a bit steep. What are the ususal pre-payment charges?)

Can someone provide any inputs if I am getting a good deal ? Are there other banks who can provide me a better deal ?

Regards
Manumani

Quote:

Originally Posted by sam003 (Post 1727993)

Try to negotiate or 8.25% you can get that. Moreover HDFC is not for prepayment for forclosure. They charge handsome amount. Look for SBI if you want to do prepayment etc. They are good too

It might be tough to negotiate further with HDFC, but I'll try. What's SBI's turn-around time ? I plan to buy it before the budget comes out to avoid the increase in excise duty. That reminds me - Can anyone confirm if the excise hike will be effective from the next day itself, or from the start of the new fiscal year (april)?

Regards
Manumani

Well I got a similar quote from HDFC of 2049/lac for 60 months & the interest rate as per them is 8.75%. Not sure why they said 8.5% to you and still gave you the same EMI amount 2049/lac.
HDFC & ICICI both charge 5-6% as prepayment/foreclosure charges. You might want to check with SBI/Axis bank.

Dear Manu,
Another option you could explore is take a Bank O/D against any FD that you may have. Banks allow o/D upto 75 % of the FD amount. usually a nationalized bank would extend it more willingly than a private / MNC bank. the rate of interest is 1-2 % above the FD rate. the biggest asset is that you can pay at your will depending on your monthly cash flow. Also there is no fixed amount you have to pay every month and is as per your convenience. The interest calculation is on the 1st of every month, so if u deposit money before the date, interest gets calculated on the lower principal. last but not the least, no hypothecation of vehicle and no mention on RC.

Quote:

Originally Posted by Amit Taneja (Post 1728125)

I already have one o/d against my FD for a home improvement project. And I find that it is much harder to pay off the loan when there are no EMIs. Do not have the fiscal discipline to pay off such loans regularly. EMI is the better option for me.

I'll follow up with the HDFC guy to confirm the 8.5% v/s 8.75% issue

Regards
Manumani.

Quote:

Originally Posted by manumani (Post 1727940)

Hi Manumani,

Those approx EMI per lack are definitely for 8.75% ROI with one EMI in adv. as in case of any car loan. Its a monthly reducing balance.
Processing fees can be brought down to 50% of what is quoted. Need some bargaining there.

I feel 8.75% ROI is a better deal then SBI's 8% ROI for 1st 2years and then ROI depending on the market rate. The only worry is 6% pre-payment charges.

8.75% RoI with EMI in advance is exactly 2049/lac for a 5-year loan. This is a very good rate even now (some half an year since the original post).

Quote:

Originally Posted by HammerHead (Post 1728450)

The only worry is 6% pre-payment charges.

HDFC has a stepped prepayment penalty structure. So it's something like 6% on principal outstanding if you close in the first 2 years, 4% between 2 and 3 years and 3% after 3 years. The exact numbers and structure may vary a little here and there.

In contrast, Kotak and Axis have a flat 5% penalty irrespective of when the prepayment is made. Howerver, Axis allows any number of partial repayments (with penalty on each repayment), and both banks are willing to negotiate on the 5% amount at a later date once they figure out how regular you are with your payments.

Regards,
spadix

It's a good option depending on your circumstances, do keep in mind that it only makes sense to start considering a loan as an option only if you have already established the need to purchase a car and have the income to comfortably afford it.

I had financed my car (Hyundai i10) through HDFC in 2008 as a pre-approved customer got a better deal and ovrall it was a hassle free process and extrmely customer oriented. These are just my views and experience based on my dealing with them 12 years ago.

Please log in to your HDFC account look for 'offers' in the right most tab. Last year while buying our car, we were offered a similar deal as yours. Remember, this deal will make money for the dealer + bank agent.

In the 'offers' section, we were offered the following deal

1) 7.6% ROI
2) 1800 processing charges
3) for a loan of 4.85 lakhs, EMI of 9754/60M

Please haggle. The dealers are known to be notorious. Or simply go to Bank of Baroda's website and fill out the form. They have a better ROI and reaches out instantly