Car Loan From Bank Through Dealer

[Myth]

Hi,
During the course of enquirying from dealers about quotations and incentives, one of the sales execs at Spring Hyundai, Kolkata asked me about the method of payment. I said I'll be taking a car loan from SBI. He said that they (dealer) can help us out in this case and detailed the below points.
1. We mention the bank name from where we wish to take the loan
2. The dealer informs that particular bank(nearest branch where they have a tie-up)
3. Someone from that bank will visit our home for loan details.
4. Bank personel confirms the loan eligibility and the max loan amount.
5. We apply for loan. Loan is approved and sanctioned.
6. Bank informs the dealer that our loan is approved ( and probably pays the dealer the loan amount as well)
7. Dealer delivers the car once our share of the payment (non loan part) is done.

He said the overall process for loan approval will be done faster.

My queries:
Does this sort of loan system channelled via the dealer happen often?
Are there any problems I might face ?

Please help.

 

[konkantrip]

Showroom guys have there tie ups(share) with the Loan Dealers which again have the same with banks. If you are getting the same Rate of interest and same other terms and conditions with the dealer as well no harm in go through this channel. In fact you can try to bargain with dealer on Rate of Interest.

 

[anshuman8]

If it is SBI, better to go via dealer as process will be hassle free. The steps you have mentioned is correct.

The current rate of SBI car loan is 10.75%. If you are self employed/business try to SBI OD (Overdraft) loan.

 

[hatchback]

Get the loan from statebanks/canara bank/bank of india/corporation bank. Canara/boi/corporn bank have zero processing charge till January.
sbi has slashed pc to 500

corporation bank had the lowest interest rate when I took the loan, last month(10.45%)

All the pvt banks will have pc ranging from 2500-5000. You can bargain with the bank guys for a discount in pc.

First Get the loan details directly from bank. Then discuss with the dealer. The dealer will get kickbacks from the bank.
You can ask for an extra discount or accessory or a reduced interest rate

 

[*SMK*]

I have recently taken a loan from SBI. processing fee is 540rs. i was stunned hearing that (spent around 40k for home loan ). No hassles, sent all documentation via email, couple of calls, office visit for physical verification, done! very co-operative dealer and bank will have a better understanding, my loan has got sanctioned already but i'm holding it until vehicle arrives.

in fact i chose the dealer based on the tie ups they had both for insurance and loan! better to avoid private craps. I've had enough with Lombard for insurance, hence i would always recommended to go for nationalized companies, loan or insurance.

 

[hatchback]

always try to get insurance quotes from govt companies directly by visiting their office before taking insurance via the dealer.
you can save 5000 bucks

 

[generalmax]

The dealer driven insurance and finance companies pays a percent to the dealer,which could have been passed on to the customer .So when a SE says he will arrange finance be careful .
They may quote lesser interest rate but it may be flat but you may get a diminishing interest rate else where.Be careful with any type of loans. Minimize the loan amount.A small percentage now and in long term there is a big difference.Even if you are a millionaire you must count the money before you throw. Talk to the Bank directly and ask them what is the lowest percentage they can offer.If you have a salary account in a bank,that bank can give a better interest rate.

 

[sambit_mech]

I would recommend you that do not take quotation for interest, rather take quotation for EMI since that will eliminate any risk of misunderstanding the product (falt/reducing rate of interest) and god knows what all hidden costs.
Most of the private banks do negotiate on Car Loan but PSU Banks don't. Check in market especially HDFC and ICICI (I found them to be quoting same as SBI when I took my Car Loan). I personally prefer to go for Private Banks due to less hassles at the time of closure of loan (I got NOC & Form 35 within 2 days of paying my last EMI - Loan was from ICICI), of course after lots of follow-ups but follow-ups do work there. However, if you want to gor for SBI loan, my recommendation would be to take through Dealer ONLY.
As Anshuman said, if you like the OD product, I think you have no other option but to go for SBI but remember that OD is grrrrreat for service man like me or self-employed/businessman!!!!
If I had been aware of this OD product or if OD product had been existing 7 yrs ago (when I took my car loan), I would have gone for that.
For ICICI, they quoted me 13% reducing through dealer, 11.5% reducing through bank directly, negotiated to get as 10.1% reducing when SBI was offerring 10% reducing. Since I don't like SBI, I went for ICICI. All these are 7 yrs old story. But I think nothing much has even changed today.
BTW: I am a service man and since there is no tax benefit on Car Loan for me, I am buying my second car (Tata MAnza) without loan. Think in this light also if you want EMI-free life.

I have recently taken a loan from SBI. processing fee is 540rs. i was stunned hearing that (spent around 40k for home loan ). No hassles, sent all documentation via email, couple of calls, office visit for physical verification, done! very co-operative dealer and bank will have a better understanding, my loan has got sanctioned already but i'm holding it until vehicle arrives.

in fact i chose the dealer based on the tie ups they had both for insurance and loan! better to avoid private craps. I've had enough with Lombard for insurance, hence i would always recommended to go for nationalized companies, loan or insurance.

Dear SMK,
It gives me a pleasant surprise to know that you liked SBI.
No offense meant. But couldn't resist to pour my frustration against SBI/PSU Insurers. Sorry!
I personally don't like SBI/PSU Insurers. I love ICICI and have ICICI Lombard Insurance as well. May be, because of my relationship manager (I'm ICICI Privilege Banking Customer), I always prefer ICICI brand since she takes care of all the work for me as long has the work is having a ICICI logo on it. On the other hand, all (not most of them) my friends/colleagues badmouth ICICI!
I would like to comment here that bank/insurance experience do differ from person to person and think about your own contacts which may work when you are in problem.
I have many bad experices with SBI as well as Mediclaim product of National Insurance. Though none of them are related to car, I didn't want my car to be tied up with any of them. Also, few months ago I got pissed off by BSNL broadband and currently using Airtel braodband which works for me much better. At least in India, I don't like any of the PSU products. Please do not open a discussion why I should like it or ethical values regarding this, but again my personal preference and won't be the same for all. Otherwise, no PSU company would have been surviving in the market.

 

[hatchback]

Before finalizing the financier, ask them about any fees or penalty if you are paying some additional amt to the loan account or in case you are closing the loan before the tenure of the loan

 

[*SMK*]

because of my relationship manager (I'm ICICI Privilege Banking Customer)

i don't badmouth icici for the sake of it. i was told i cannot endorse my policy during the policy period and i can do it only during renewal. i've never seen an insurance application which works like this, its absurd!

I would like to comment here that bank/insurance experience do differ from person to person and think about your own contacts which may work when you are in problem.

it is not like you need to know your MLA/Councillor to get good roads for your area. whichever product it is, i pay money they provide service. if i find it's bad i move on to other providers

I personally don't like SBI/PSU Insurers. I love ICICI and have ICICI Lombard Insurance as well. May be, because of my relationship manager (I'm ICICI Privilege Banking Customer), I always prefer ICICI brand since she takes care of all the work for me as long has the work is having a ICICI logo on it.

To each his own! it was my personal opinion/suggestion. it doesn't matter what you/me like, at the end it is 'Myth' who needs to decide on this.

 

[Myth]

Thanks for your suggestions guys. All this is very informative.
Regarding loans, I am have been a little inclined towards SBI. Additionally, I dont know anybody personally in any bank, so I am sticking with sbi as of now.

Thanks for the tipoff regarding the probable tie-up between the dealer and bank. I might stick to doing everything myself for the sake of saving some money.

Please keep this thread running if you have any more information/suggestions regarding the thread topic.

 

[VinSap]

Showroom guys have there tie ups(share) with the Loan Dealers which again have the same with banks. If you are getting the same Rate of interest and same other terms and conditions with the dealer as well no harm in go through this channel. In fact you can try to bargain with dealer on Rate of Interest.

I completely agree to the same. i infact tried going through SBI in a near by branch of Bangalore & got pathetic customer service which made to reconsider my plans to buy a car . However, i told the dealer the same & they got it done in 1/2 hrs time with spot approval & processing charge WAIVED OFF. through SBI. .

 

[elisagrace]

This is a common thing that from wherever you are buying your vehicle that officials have a link with a particular bank and from their, you can easily get loan usually at normal interest rates and those officials has also a share in the form of their commission. Last year when I was to purchase the bike, I visited one bank and they told me its EMI @ 10% of the total amount. I have already calculated its EMI on the basis of below mentioned mathematical formula:
[P x R x (1+R)^N]/[(1+R)^N-1
where P stands for the loan amount or principal,
R is the interest rate per month [if the interest rate per annum is 11%, then the rate of interest will be 11/(12 x 100)],
and N is the number of monthly installments (Source:EMI Calculator India - Home Loan, Personal & Car Loan Calculator)

But this bank's EMI was more as comparison to SBI. SBI rate of interest was only 9.5% of the total amount. I brought this fact before the senior officials of the bank, but they told me that their EMI is at that ROI only. Thereafter I undertook the services of SBI and the whole process was completed smoothly.