[rohittk]

Originally Posted by mints21

Dear rohittk, you will not be able to transfer the entire fund online. Therefore you cannot bring the account to zero online. For example, if your outstanding is ₹10000/- you can transfer a maximum of ₹9999/- to your loan account. For that one ₹ you will have to visit the branch. Moreover to close the loan account you will have to visit the branch only. These days are loans are closed from the branch and not RASSMEC centres.

The branch manager will check your account, see the balance interest, transfer money to your loan account and give you an NOC along with the signed form-34. The entire process will take not more than ten minutes and is hassle free.

Thanks Mints21. What are RASSMEC centers?

Also, as one another BHPian mentioned that for SBI to stop the EMI's I will have to visit the branch. Now I have an hypothetical scenario (maybe people have experienced it already). Say I transfer everything except that one rupee. Now next month as per status quo SBI is supposed to debit my bank account for Rs. 10,000 (my per month EMI). Since the outstanding is only 1, would SBI still debit Rs. 10,000. This question is important to me because what if I travel abroad for a year or two. Then would I have to come back to India just so that SBI stops debiting my account? I hope you get my point.

[mints21]

What are RASSMEC centers?

Also, as one another BHPian mentioned that for SBI to stop the EMI's I will have to visit the branch. Now I have an hypothetical scenario (maybe people have experienced it already). Say I transfer everything except that one rupee. Now next month as per status quo SBI is supposed to debit my bank account for Rs. 10,000 (my per month EMI). Since the outstanding is only 1, would SBI still debit Rs. 10,000. This question is important to me because what if I travel abroad for a year or two. Then would I have to come back to India just so that SBI stops debiting my account? I hope you get my point.

rohittk is offline Report Post

Dear rohittk, RASSMEC centers are the centers which were constituted by SBI to ensure speedy approvals and disbursal of loans. These centers are not dealing with the day to day banking activities. These centers were set up to reduce the burden from branches and focus specially on all kinds of loans. The application of home loans these days are submitted at the branch but the field verification, approval of loans, disbursement, the mortgage of property, EMI's are all handled by these centers.

During the initial days, they were also involved in the car loan related activities. However, now most branches have been given permission to approve and disburse loans up to 10 lakhs from within the branch.

As far as that one rupee issue is concerned, say if you have one rupee left in your loan account and you do not approach the bank, then as a routine the bank will debit the entire EMI amount from your account. The system is such that this will come to the notice of the bank immediately and they will contact you within a day or two and inform you that they have received excess amount from you. They will give you two options, if you have an account with any SBI branch they will transfer the excess amount to that account within no time. If you do not have an account with SBI they will issue you a refund cheque in a day or two at the max.

The system is completely transparent and hassle free. They ensure that you do not have to do running around here and there. Everything is available at the branch level only. Hope I have been able to address your query.

[rohittk]

Originally Posted by mints21

Dear rohittk, RASSMEC centers are the centers which were constituted by SBI to ensure speedy approvals and disbursal of loans. These centers are not dealing with the day to day banking activities. These centers were set up to reduce the burden from branches and focus specially on all kinds of loans. The application of home loans these days are submitted at the branch but the field verification, approval of loans, disbursement, the mortgage of property, EMI's are all handled by these centers.

During the initial days, they were also involved in the car loan related activities. However, now most branches have been given permission to approve and disburse loans up to 10 lakhs from within the branch.

As far as that one rupee issue is concerned, say if you have one rupee left in your loan account and you do not approach the bank, then as a routine the bank will debit the entire EMI amount from your account. The system is such that this will come to the notice of the bank immediately and they will contact you within a day or two and inform you that they have received excess amount from you. They will give you two options, if you have an account with any SBI branch they will transfer the excess amount to that account within no time. If you do not have an account with SBI they will issue you a refund cheque in a day or two at the max.

The system is completely transparent and hassle free. They ensure that you do not have to do running around here and there. Everything is available at the branch level only. Hope I have been able to address your query.

Yup you have addressed each and every query I had

[vsrivatsa]

I went in for an SBI Auto Loan for 4 years this month and had the following questions:

1. Apart from the EMI, Can I make some additional part-payments on an adhoc basis?

2. Is there a minimum period that I need to wait before I start to make these part payments? Is there a limit on these?

3. Can I just make these online from my SB Account or do I need to inform the SBI official about it?

Originally Posted by vsrivatsa

I went in for an SBI Auto Loan for 4 years this month and had the following questions:

1. Apart from the EMI, Can I make some additional part-payments on an adhoc basis?

2. Is there a minimum period that I need to wait before I start to make these part payments? Is there a limit on these?

3. Can I just make these online from my SB Account or do I need to inform the SBI official about it?

Often, prepayments can be done, only after you are done with half of your term. In your case, Loan is for 4 years. So you should be able to prepay after 2 years. This is a Dependent clause. Some loan accounts have this. And some dont. Your banker is the right person to answer all these. Also, one must understand these prior taking a loan from a banker.

You can go to any SB group branch and deposit money in your loan account. Just say that the destination is SB group account. Branch account. That should be fine. And you can pay online too.

[Sanjubose]

I had a very bad experience with SBI local branch in Bangalore. I ran around for 1 week for collecting information and documents. I was told that ROI will be 10.45%. I double checked with another officer in same bank and was told its 10.45%. I was then asked to but e-stamp paper worth Rs. 1600/- towards the loan agreement.
When I went with all documents needed and applied for loan, the guy told me that ROI has changed to 10.95%. When I checked their website and zonal office, the ROI actually has changed since 1st feb.
So I was taken for a ride. Besides my time and so many visits wasted, I had to spend Rs 1600/- for e-stamp which is non refundable.
Have gone to HDFC now.

[vsrivatsa]

Originally Posted by gemi_kk

Often, prepayments can be done, only after you are done with half of your term. In your case, Loan is for 4 years. So you should be able to prepay after 2 years. This is a Dependent clause. Some loan accounts have this. And some dont. Your banker is the right person to answer all these. Also, one must understand these prior taking a loan from a banker.

You can go to any SB group branch and deposit money in your loan account. Just say that the destination is SB group account. Branch account. That should be fine. And you can pay online too.

Thanks - I checked with a contact person from my home branch and he confirmed that I can make part-payments anytime and there would not be any penalty. The EMI would not change but my overall tenure would decrease based on part payments.

Originally Posted by Sanjubose

I had a very bad experience with SBI local branch in Bangalore. I ran around for 1 week for collecting information and documents. I was told that ROI will be 10.45%. I double checked with another officer in same bank and was told its 10.45%. I was then asked to but e-stamp paper worth Rs. 1600/- towards the loan agreement.
When I went with all documents needed and applied for loan, the guy told me that ROI has changed to 10.95%. When I checked their website and zonal office, the ROI actually has changed since 1st feb.
So I was taken for a ride. Besides my time and so many visits wasted, I had to spend Rs 1600/- for e-stamp which is non refundable.
Have gone to HDFC now.

I got my loan sanctioned in the last week of January and got it at a ROI of 10.75%

[Kanasu]

Had an query regarding SBI Car Loan which I took for my Polo GT TDi. The monthly EMI is 15,133 which I'm paying (green) on a monthly basis before the 31st of each month. Now, what I don't understand is the Interest debit happening each month

Rs. 15,133 x 60 months comes at Rs. 9,07,980. Can anyone explain the reason for these debits and how is it calculated.

[Sanjubose]

Originally Posted by Kanasu

Had an query regarding SBI Car Loan which I took for my Polo GT TDi. The monthly EMI is 15,133 which I'm paying (green) on a monthly basis before the 31st of each month. Now, what I don't understand is the Interest debit happening each month

Rs. 15,133 x 60 months comes at Rs. 9,07,980. Can anyone explain the reason for these debits and how is it calculated.

Kanasu,
Its just the accounting process for the Loan account. Out of your EMI of 15K, every month the interest component is deducted and moved to another bank account. At the end of the tenure, your LOAN account should have exactly the principal (7L) in CR.
You can check google for the details of EMI calculation. Every EMI has a principal and interest portion where interest portion tends to get zero towards the end of the loan period.

[Kanasu]

Originally Posted by Sanjubose

Kanasu,
Its just the accounting process for the Loan account. Out of your EMI of 15K, every month the interest component is deducted and moved to another bank account. At the end of the tenure, your LOAN account should have exactly the principal (7L) in CR.
You can check google for the details of EMI calculation. Every EMI has a principal and interest portion where interest portion tends to get zero towards the end of the loan period.

Yes, I got it clarified now. Thanks. Have one more query. My loan tenure is 5 years. So, even If I prepay, the EMI would not get reduced, but the number of installments would. So, isn't it better to save up and prepay at a go say after 3-4 years ? Not sure if prepaying as and when I get some cash will be better.

[rohan_iitr]

Originally Posted by Kanasu

Yes, I got it clarified now. Thanks. Have one more query. My loan tenure is 5 years. So, even If I prepay, the EMI would not get reduced, but the number of installments would. So, isn't it better to save up and prepay at a go say after 3-4 years ? Not sure if prepaying as and when I get some cash will be better.

The interest is calculated on the outstanding balance. If you make a pre-payment, your outstanding balance would reduce, hence reducing the interest component. Your EMI would still remain the same, but loan would get finished before the actual 5 year duration.

First enquire with your bank whether they charge anything extra for partial pre-payment (not pre-closure). Most probably, SBI would not charge for partial pre-payment. If that is the case, it would be beneficial for you to make partial pre-payments in addition to your EMIs.

I would advice you to save up for a few months and make a lump pre-payment of say 50k-75k every year, over and above your EMIs.

Rohan

[Kanasu]

Originally Posted by rohan_iitr

The interest is calculated on the outstanding balance. If you make a pre-payment, your outstanding balance would reduce, hence reducing the interest component. Your EMI would still remain the same, but loan would get finished before the actual 5 year duration.

First enquire with your bank whether they charge anything extra for partial pre-payment (not pre-closure). Most probably, SBI would not charge for partial pre-payment. If that is the case, it would be beneficial for you to make partial pre-payments in addition to your EMIs.

I would advice you to save up for a few months and make a lump pre-payment of say 50k-75k every year, over and above your EMIs.

Rohan

Yes, SBI does not charge for pre-payment. So, is pre-paying 50k extra every 6 months is good or 2-3 lac after 2 years ? In the latter case, I could keep the money in a fixed deposit or put in a RD which gives 9% p.a.

I should have really paid attention to my statistics & accounts class during college

[rejeen]

Originally Posted by Kanasu

Yes, SBI does not charge for pre-payment. So, is pre-paying 50k extra every 6 months is good or 2-3 lac after 2 years ? In the latter case, I could keep the money in a fixed deposit or put in a RD which gives 9% p.a.

Loan: You borrowed money from bank at X rate of interest.
FD: Bank borrows money from you for a Y rate on interest. Almost always Y is lower than X and the difference is bank's profit.

Since interest on loan is calculated on the outstanding amount, it would good to prepay whatever amount you can as early as possible UNLESS your FD interest is higher than loan interest rate

[rohan_iitr]

Originally Posted by Kanasu

Yes, SBI does not charge for pre-payment. So, is pre-paying 50k extra every 6 months is good or 2-3 lac after 2 years ? In the latter case, I could keep the money in a fixed deposit or put in a RD which gives 9% p.a.

Originally Posted by rejeen

Since interest on loan is calculated on the outstanding amount, it would good to prepay whatever amount you can as early as possible UNLESS your FD interest is higher than loan interest rate

Loan interest will generally be higher that FD interest. So it would technically be better to reduce your loan burden, rather than investing in FD.

But at the same time, you should always have some funds available in your SB account and some savings in addition to it. Practical advice would be to strike a balance between loan pre-payments and savings.

Pre-paying 50k every 6 months would be better than paying 2 lakhs after 2 years since your interest component would keep reducing with every pre-payment made.

Rohan

[driving_smartly]

Originally Posted by Kanasu

Yes, I got it clarified now. Thanks. Have one more query. My loan tenure is 5 years. So, even If I prepay, the EMI would not get reduced, but the number of installments would. So, isn't it better to save up and prepay at a go say after 3-4 years ? Not sure if prepaying as and when I get some cash will be better.

Just worked out some figures in excel

• Total loan tenure 60 months
• Rate of Interest @ 10.75%
• Principal loan amount Rs 7,00,000/-
• EMI is calculated accordingly.

Also attaching the above excel sheet for reference EMI Calculation.xls

This working will help you to ascertain following things

• Principal outstanding after every 12 months
• Principal amount repaid for every 12 months
• Actual interest paid for every 12 months
• If you repay say 50k in 6 months over and above your existing EMI, just minus that amount from the closing balance amount and keep an eye on closing balance & no of month column.
• The point where closing balance goes negative the EMI would be adjusted accordingly and it would be your Last EMI

So based on the above you can take decision as per your convenience


NiNaD