[Warwithwheels]

Am not an expert but lemme try to pass on the info whatever I have.

Your friend can approach his banker with any of the documents of the assets mentioned above.

The bank will evaluate the property/ asset value, borrowing ability of the applicant, other factors etc., and fix the maximum amount that can be lent against the property.

Then you must choose the right loan product like overdraft or morgage loan etc.

The repayment tenor can even go upto 10 years in certain cases as per the prevelant banking norms.

The payments are also flexible. You can choose to just service the interest or pay a higher amount in case you have a surplus.

These are the general points I have. The loan products differ from bank to bank. So you should get in touch with a bank to know the exact details.

[AdiSinghV12]

Thanks for the info! I'll ask him to get in touch with the bank and inquire about the loan on FD. Meanwhile, any more information from the fellow BHPians about the same would be great. Cheers!

[Warwithwheels]

Originally Posted by AdiSinghV12

Thanks for the info! I'll ask him to get in touch with the bank and inquire about the loan on FD. Meanwhile, any more information from the fellow BHPians about the same would be great. Cheers!

If he has got a FD, there is nothing like it. The interest rate would be just 1% to 3% more than what the deposit earns. The processing is almost instantaneous.

Suggest you to go thru' the following links to have a brief idea about the various loan products.

http://www.hdfcbank.com/personal/pro...perty/gts8mipk

http://www.hdfcbank.com/personal/pro...ities/gts8mipj

[AdiSinghV12]

Originally Posted by Warwithwheels

If he has got a FD, there is nothing like it. The interest rate would be just 1% to 3% more than what the deposit earns. The processing is almost instantaneous.

Suggest you to go thru' the following links to have a brief idea about the various loan products.

http://www.hdfcbank.com/personal/pro...perty/gts8mipk

http://www.hdfcbank.com/personal/pro...ities/gts8mipj

Thanks once again bro! Since he has a family business, loan against property should be the best option for him IMO. Don't know whether he has a FD or not. After going through the links that you sent me and doing a bit more research on the net, I've kinda figured that the loan against property should be the best option for him as its quite hassle free and has really flexible payback period (Upto 15 yrs) and even the interest rate (11-12%) is as low as that of a new-car loan and on top of that he get's extra time which means = Lower emi (though the overall interest amount would be higher it shouldn't be a problem as he just want's the lowest emi/month). So, if he opts for a 10yr payback period, his emi per lac should be around Rs.1460 per month if I'm not wrong.

[Warwithwheels]

Originally Posted by AdiSinghV12

So, if he opts for a 10yr payback period, his emi per lac should be around Rs.1460 per month if I'm not wrong.

Spot on! Should be in that region only. Keep us posted once the deal clicks. Good Luck to your friend!

[AdiSinghV12]

Sure thing... Thanks for all the contribution! I too will be visiting the bank with him so I'll keep everyone updated about the proceedings. Cheers!

PS: Can anyone shed some light on how to check if the car is crime-free?

[shabash]

I am not sure whether this is the right place to ask this question. Did not find anything related in other thread. Also starting a new thread seemed like an overkill. So here it comes.

I work for a company where there is an option for a company leased vehicle. You save on income tax on the EMI, Fuel and Maintenance and also no down payment. So it is usually a no-brainer that it is best to keep changing your car as long as you are comfortable in the job. The EMI periods allowed are 3, 4 and 5 years. I have an eligibility for cars ranging from 12 lakhs to 22 lakhs depending on the EMI period I choose. What would T-BHPians say, Should I go for a shorter duration EMI and stay with a C Segment sedan or go for a longer duration and buy a D Segment one?

[Aroy]

Originally Posted by shabash

I am not sure whether this is the right place to ask this question. Did not find anything related in other thread. Also starting a new thread seemed like an overkill. So here it comes.

I work for a company where there is an option for a company leased vehicle. You save on income tax on the EMI, Fuel and Maintenance and also no down payment. So it is usually a no-brainer that it is best to keep changing your car as long as you are comfortable in the job. The EMI periods allowed are 3, 4 and 5 years. I have an eligibility for cars ranging from 12 lakhs to 22 lakhs depending on the EMI period I choose. What would T-BHPians say, Should I go for a shorter duration EMI and stay with a C Segment sedan or go for a longer duration and buy a D Segment one?

In my opinion, a shorter EMI period is a better option. That way
. You get a newer car every 3 years
. In case you shift the job you are not saddled with long tern commitments
. You can always go for a D segment car once yuor career takes off and you can afford heftier EMI.

[apachelongbow]

Originally Posted by shabash

I am not sure whether this is the right place to ask this question. Did not find anything related in other thread. Also starting a new thread seemed like an overkill. So here it comes.

I work for a company where there is an option for a company leased vehicle. You save on income tax on the EMI, Fuel and Maintenance and also no down payment. So it is usually a no-brainer that it is best to keep changing your car as long as you are comfortable in the job. The EMI periods allowed are 3, 4 and 5 years. I have an eligibility for cars ranging from 12 lakhs to 22 lakhs depending on the EMI period I choose. What would T-BHPians say, Should I go for a shorter duration EMI and stay with a C Segment sedan or go for a longer duration and buy a D Segment one?

It totally depends on your Tax Saving ability. For example if you have a EMI of 20k for 3 years or 10k for 7 years, and for your current year Income you can possibly save only 12k/month on EMI (on taxes), then why pay 20k for 3 years?
That additional 10k/month you save when opting for a 7 year loan, you can re invest and earn more interest.

Regarding the idea that if you choose shorter duration EMI, you can change your cars earlier, you also lose on depreciation because a 3 year car depreciates fast compared to slower rate of depreciation post 5 years. Also you would be giving away a relatively new car to a buyer at a cheap price. This philosophy works only if you log really high miles in the 3 years you own the car.

[Warwithwheels]

Originally Posted by shabash

....I work for a company where there is an option for a company leased vehicle. You save on income tax on the EMI, Fuel and Maintenance and also no down payment.

Are you sure about the tax saving part?

If your remuneration from the company falls under the "Income from Salaries" head you may not be eligible to avail tax benefits on the EMI.

On the other hand, if your remuneration falls under head "Income from Business or profession" then you may be eligible for the benefit.

Please check that provision if tax saving is a key objective of getting a leased car.

[avikamail]

Great question, Car is a depreciating asset and not an appreciating one which is to say that its monetary value (on re-sale) diminishes rather than increases. Hence, if you do have the luxury, cash down would be suggested by me.

That takes us to the next set of options - break the FDs or take OD against FDs. Your option depends on how your financial maturity chart has been created. OD is also costly since they charge you +2% interest but breaking FDs may also not be the most optimum choice.

OD should be availed when you do not have immediate cash (liquid cash) but expect cash in the short term or in multiple short term cash payouts (e.g. 20k in Dec, 50k in Jan, etc.) OD should not be availed if you wish to payback the OD over a period that is longer than the FD maturity period. If you have a very long payback plan, OD may be expensive.

Typically, plan to clear-off the OD in 6 months or so. Advantages of OD are multiple and I will add to the many that are already listed above:

1) You have total independence to use the OD a/c. You don't need to tell your banker on what you want to do. Bank issues a cheque book which you can use as you do with your S/B a/c.
2) You can use the a/c for any kind of purchases - auto, electronics, credit card, etc.
3) You can pay back into the OD a/c through online banking. I believe daily reducing balance is used to calculate the interest based on the no. of days that the OD has been availed. So as and when any idle cash gets created in your S/B a/c, you can move it to the OD a/c to repay the availed OD
4) You are never under pressure to use the entire amount. Banks typicall give you an OD facility to the tune of 90% of the FD value. You can use any amount of the 90% or not avail any OD at all if you don't want to.

Points to note on OD:
a) You would need discipline to maintain the OD a/c. YOU CANNOT FORGET OR IGNORE IT IF YOU TAKE AN OD
b) Don't keep cash idle in any a/c. Use it to repay the OD a/c asap. That way you will minimise the OD interest payout.

Hope this helps.

[kaizanfan]

I was told by a banker friend that one who opens an OD account on his/her FD, and withdraws money from that OD account, he would've to pay 2% interest on top of the FD interest rate + pay tax on the FD income earned. That means: if you've an FD of 10L locked at 10% interest, when you OD on that FD you would pay 2% interest + 30% on the 10% FD interest rate.

Please correct me if this does not seem to be correct.

[rowhun]

Originally Posted by kaizanfan

I was told by a banker friend that one who opens an OD account on his/her FD, and withdraws money from that OD account, he would've to pay 2% interest on top of the FD interest rate + pay tax on the FD income earned. That means: if you've an FD of 10L locked at 10% interest, when you OD on that FD you would pay 2% interest + 30% on the 10% FD interest rate.

Please correct me if this does not seem to be correct.

Does sound like a very valid question, and after going through the entire thread, found it surprising no one noticed this factor before.

Logically, yes, I do think that, one would need to pay tax on the interest earned on the FD, since you are taking an OD on the FD, and it is just a security for the bank, but is, in actuality, an independent instrument earning money.

So, I do think that yes, if you take an OD on the FD, you would need to pay the 2%, and when your OD matures, also pay the tax on it.

I could be wrong, but if someone here could clarify it, it would be great.

[carboy]

Originally Posted by rowhun

Does sound like a very valid question, and after going through the entire thread, found it surprising no one noticed this factor before.

http://www.team-bhp.com/forum/indian...ml#post2185574

I have ignored tax in both cases for ease of calculation.

The option of taking loan on FD doesn't make financial sense even if you ignore the tax you *HAVE* to pay on the FD interest. If you consider that the tax you *HAVE* to pay, it makes it even worse.

[Warwithwheels]

Originally Posted by kaizanfan

if you've an FD of 10L locked at 10% interest, when you OD on that FD you would pay 2% interest + 30% on the 10% FD interest rate

Originally Posted by rowhun

Does sound like a very valid question, and after going through the entire thread, found it surprising no one noticed this factor before.

The 30% Tax rate is not a flat rate. It depends on which tax slab you belong to. It could be as low as 0% or 10/20% as well.

IF the whole discussion is made on a presumption that an EXISTING FD does exists and you do not wanna break it, then taxation would assume no significance at all. The 30% or whatever% Tax you pay is irrespective of whether you take a OD against it or not!