Presentation on Auto loan

Presented by,

NAMITA DHINGRA

SANDEEP KAUSHIK

VIPIN MITTAL

BANKING PRODUCT

AND SERVICE

Quiz on auto loan

what(%) tax rebate one gets on an auto loan.

ANSWER: NO REBATE What is used as collateral security in auto-

loan?

Answer: VEHICLE ITSELF Can u tell us the approx. range of present

car loan interest rate.

ANSWER:9%-13%

Quiz continue…….

Is there a way to trade in your car if you are upside-down on the car loan?

ANSWER: YOU CAN BUT I WOULD NOT.

What do you do if the insurance(Which is given free with car) for a totaled car does not pay off the car loan?

Quiz continue……..

Do you still have to make payments after returning a car to your financier?

Answer: No, you do not have to make payments HOWEVER.....once they sell the car you still owe the left over balance. Just because you don't have the car anymore DOSEN'T mean you didn't borrow the money

Auto loan To purchase a new car or a used car. Loan period: 3-7 years(new cars),shorter(used cars). Car used as collateral security Risk: minimal Upto 90% can be financed. Early settlement of the pending amount is available. Interest is calculated on the basis of compound interest. Equated Monthly Instalment (EMI) is worked out for

repayment.

TYPES OF AUTO LOANS

NEW CAR LOAN USED CAR LOAN

NEW CAR VS USED CAR

NEW CAR USED CAR

INTEREST RATES LESS(14%) HIGH(20%)

AMOUNT OF LOAN SANCTIONED

90%-100% 80-%85%

REPAYMENT TENURE

LONGER SHORTER

ADDITIONAL COST LESS HIGH COST(INSURANCE,ROAD TAX ETC)

SCOPE FOR USED CAR LOANS

IMPROVED LIVING STANDARDS. INCREASING DISPOSABLE INCOME. IMPULSE TO OWN A PVT CAR.

Different types of Auto Loan

Margin Money Scheme Advance Equated Monthly Scheme Security Deposit Scheme Hire Purchase Scheme Lease Financing Purchase

Margin Money Scheme

Is a payment made by the borrower Usually 10% of the total loan

amount,along with EMI The balance amount is paid through

post-dated cheques. Preferred if repayment term is 1-5yrs Advantage: it has lowest EMI to be paid,

compared to other schemes for the same amount of loan

Advance Equated Monthly Instalment Scheme Offers 100% loan. 5 EMIs have to be paid in advance and the rest

is paid through post dated cheques. No of EMIs depend on the tenure of the loan. Disadvantage: need to pay five to nine

installments up front. Besides, you go on to pay a higher EMI amount because the interest is charged on the entire loan amount

Security Deposit Scheme

Certain amt must be deposited as a security against the loan.

Security deposit refundable. Interest received on deposit,but amount is less

than the rate charged on loan. The EMI under this scheme is higher than the

EMIs under the above two schemes. Security deposit is 10-30% of the loan amt

Hire Purchase Scheme

Agreement under which the car is let on hire and under which the hirer has an option to purchase the car in accordance with the terms of the agreement.

mostly offered by Non Banking Finance Companies this option works similar to the loan option. NBFCs usually charge an amount as low as One Rupee,

called Option money, on payment of which the car passes on to the hirer

The NBFC's have taken to this option, as they are not encouraged to give loans, which is a Banks privilege.

Lease Financing Purchase

Lease is a contract between the owner of an asset (the Lessor) and its user (the Lessee) for the hire of that asset

The ownership rests with the lessor while the right to use the asset (car) is given to the lessee for an agreed period of time in return for periodic rental payments by the lessee to the lessor.

Lease agreements are offered by NBFC's and are mostly availed by Corporates looking at it mainly from tax saving angle

Important Issues of L-Application Pre-payment penalty Grace period Interest rates consistency Documents signature Cheque payment Loan installment including all charges Loan statement Issue of lien in the end & Loan Clearance

Certificate

Eligibility Parameters

Age of the borrower Time period of Loan Employment period of borrower Collateral securities Deviation if any

Points to be taken care….

Get your own credit report  http://www.cibil.com/accesscredit.htm  Negotiate smartly to get the best car loan rates.  Opt for fixed rates of interest  Be aware about the Processing fees and Pre-payment

Charges .  You do not have to necessarily buy car insurance from the

Car dealer.  Do not sign blank application forms or

documents and keep a copy of all documents submitted to the lender for your future reference. Any promise made by the DSA or even an official of the lender has no value unless it is in writing or at least on email.

Documentation RequirementSalaried Sector

While applying for car loans in India, you need to furnish the following documents:

Identification Proof Income Proof Residence Proof Office Address Proof Signature Proof Credit History Photographs

Documentation RequirementSelf-employed Sector & Firms

Income Proof Existence Proof Acknowledgement of IT returns Signature Verification Proof Credit History Declaration on Letterhead of Company Photographs Others

Tax benefit

Salaries employees can not get tax benefit on loan taken for purchasing a car.

Self employed person can take the tax benefit on depreciation as well as on the paid on the amount borrowed for the purchase.

Banks offering auto loans….

ICICI auto loans Loan on the Strength of Your Income: Submit income proofs as

required and avail finance up to 90% of the ex-showroom price of the car.*

Car Loans with Fixed Interest Rates: ICICI Bank offers new car loans with fixed rate option only.

PRIVILLEGES: Credit cards holders who have been using the card for more than a year and have a good repayment track record can get instant funding. One can also avail of a loan against Fixed Deposit to buy the car.

HDFC AUTO LOANS

Avail 100% finance on your favorite car.** SALARIED PROFESSIONALS: BORROW up

to 3 times your annual salary   Self Employed Professionals: 6 times your

annual income. CORPORATE ACCOUNT:FASTER

APPROVALS WITH MIN DOCUMENTATION. existing HDFC Bank Car Loan customer with a

clear repayment of 12 months or more they can Top-Up your car loan to the extent of the original loan value.

Contents ICICI HDFC

Processing fee 2500-5000 2150-3650

Prepayment charges 5% 5%

Downpayment 10% 10%

Interest rates 10-13% 9.75-11.75%

Maximum tenure 5 year and more 5 year and more

Banks offering Auto Loans

you can not do all good things with

a car loan …….

But yes! you can possess a car of your

dreams.