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-   -   Foreclosing an Auto loan - why the circus? (https://www.team-bhp.com/forum/indian-car-loans-insurance/96421-foreclosing-auto-loan-why-circus-10.html)

Have you already taken the loan? If not, try SBI or any of the nationalized banks, they normally do not have any limits or any charges for pre closure on a floating rate.

Unfortunately, I was out of India and do not have two form 16 which is mandatory for any nationalised banks (I contacted SBI first). That would have been awesome and a perfect match for my requirements, but thats a miss.

They are actually selling an even worse product in such a case. Remember, short term loans like car loans are designed in such a way that most part of the interest gets paid in the first 24 months. So with the above scheme what they do is that not only they extract most part of the interest from you in the first 2 years but thereafter also cause you to hasten up the principle payment.

Remember, you are only paying some 25% of the outstanding principle and that too twice a year. In effect you are hardly going to make much of an early closure. And even if you do manage to close a few months earlier than the initial terms you may actually want to check on whether that translates into any real savings.

If part payment is penalized more - either in terms of complex constraints such as payment schedule or percent amount, one way is to deposit the part-payment funds in a recurring deposit account (or an FD account - if surplus generation is not periodic), and just go for full pre-payment when one has the amount ready.

Hi,

I am in a fix at a moment. I have a loan for a used car which started last month and due to circumstances I have to sell this car. I have a few questions:

1. Can i get my loan foreclosed?
2. I have heard i have to use the car for atleast 6 months and will be then be able to close the loan. Does this clause hold true?
3. What are my options to get this closed?
4. The loan is from HDFC and its a used car loan which holds for 4 years.

If somebody could kindly provide me with some advice, it would be really appreciated. Thank you!

Regards,
egoB!

You can check at

http://www.team-bhp.com/forum/indian...-circus-5.html

http://www.team-bhp.com/forum/indian...-doubts-4.html

coming specific to your queries

Yes - why not ..

Don't think there are any such terms , maximum they can charge you some penalty if you want to close too early

Did you checked with Agent or Bank directly from where you got this loan processed , most of the Banks charge 1-5 % Early payment charges , if you want to buy anything else they will be happy to waive this as long as you stick with them for new one

HDFC Auto loans can be fore-closed after 6 months. That is their policy. But if you are in a tight spot you can meet with the manager and explain your situation and request them to consider your case and allow an early foreclosure.

Hi All,

As most people in this thread, I have a query regarding pre-closing of a car loan with HDFC bank.

My loan amount is 520000. I took it for a 7 year period as I was told that I could pre-close the loan but at that time I was not told about the pre-closing fees.

I called up the HDFC customer care and they are of absolutely no help. I am asking them queries on paying my loan amount in advance to which the CC guy tells me that that I can get another loan based on the current car loan. :Frustrati
From what little information he could provide, I got to know that after 6 months of 1st EMI I can pay 25% of my outstanding amount.

Next month I complete 6 months since the 1st EMI. My monthly EMI is 8768. I am planning to pay off the 25% of the outstanding amount which would be around 125000.
My question is how will my EMI be post this? Will it be reduced EMI for the remaining tenure. Sort of like 6000 for the remaining 78 months? Or will the EMI remain same as before (8768) with the tenure reduced?

These may look like silly/stupid questions, but I have no idea at all regarding this, so posted it here.

You can choose which model to go with. Talk to the bank, may be visit the branch and have a face-to-face meeting.
It will be better to go with same EMI with reduced tenure. You are able to pay extra amount means you can afford to pay the original EMI. It's better to close the loan earlier.

Thanks, will do that :)

More often than not, your tenure would get reduced, while the EMI remains the same. Keep it that way, so that the interest component gets reduced. Also, if the Loan is a floating rate, then the bank cannot charge any pre closure charges.

Unfortunately its not a floating rate that I can get the waiver. Now lets say my tenure gets reduced to 3 years since I have paid off some of the amount now. And I pay rest of the EMI as per schedule. Will it still go as a pre-payment and foreclosing?

Would not have the exact answers to your query, but this is one of my recent experience with my Auto loan.

I have a 2.6yr old loan from Bank of India, which thankfully doesn't have any early foreclosure as well as pre-payment penalties. I also had a savings account opened there when I applied for the loan. The loan account had standing instructions to debit the savings account for the EMI every month. I transfer the monthly EMIs to the savings account, from which the loan account automatically picks it up.

Now, apart from the regular EMIs, I have made 2-3 part payments directly into the loan account over the last one year. Every time I made these part payments, I noticed that the loan account would no longer pick up the EMI from my savings account. I used to transfer the EMI to the savings account, but it just kept getting accumulated there, instead of being picked up by the loan account, and I had to then manually transfer it to the loan account.

The regular staff at the bank had no clue why this was happening, till I met the Branch Manager.
He explained to me that the loan account calculates the EMI due every month, and picks it up from the savings account. But this was not being done as the loan account sensed that it already has extra money (the part payments made). So technically, my EMIs would not start getting automatically picked up unless the loan account exhausts the pre-payments that I have done so far.

This might be a software flaw for all you know in this particular bank, but I have had the convenience of skipping a few EMIs in certain months when the cashflow was a bit tight. The downside being I have to pay EMIs directly into the loan account now every month through ECS. I anyways plan to close the loan completely in the next 2-3 months, so never bothered to take it up further.

I am planning to pre close my Auto loan from HDFC.
I am located in Thane.

Can someone guide me to the nearest branch where I could do the closure?
Also, have seen some really contrasting reviews about the closure process for HDFC loans.

Any update on the HDFC process to ease out customers?

Call customer care number to know the branch for foreclosing your car loan. HDFC foreclosure charges are 6% of outstanding principal amount during first year of loan period; it is 5% of outstanding principal amount during 2 year and 3% during 3rd year. They will ask for a bank statement as proof for last EMI payment, so visit the bank after your pending EMI is cleared. It will take around 10 days to get the loan closure letter from bank along with signed Form 35. This can be used later to terminate the HP cancellation from your registration certificate.