How can you fight car loan woes?
In an hour-long chat on rediff.com on Wednesday, personal finance expert and apnaloan.com CEO Harsh Vardhan Roongta answered many such readers' queries. Here is the transcript:
Harsh Roongta CEO Apnaloan.com says, Hello everyone. Welcome to this chat on auto loans. So let us begin.
ff asked, With interest reates going up sharply, is it the right time to buy cars?
Harsh Roongta CEO Apnaloan.com answers, at 2007-07-11 15:00:13The right time to buy a car is one you need a car. Before you buy a car you need to take into account the various savings (time saved, travel expenses saved, better productivity, etc.) and the avrious costs (car cost, running cost, resale value, interest cost, etc.) As you can see Interest rate on car loans is only one of the factors affecting the car buying desicion.
psm asked, What is the besr ibnterst rate that i can get for car now, after negotiations?
Harsh Roongta CEO Apnaloan.com answers, The "best" interest rate in the matter of cars can be very diferent from car to car and hence it is difficult to give a figure. Please read this link to see how to negotiate the best interest rate for your car. http://www.apnaloan.com/articles/car-loan-india/car_loan_best_rates.html
sp asked, hello sir I am planning to buy a Hyundai Verna. How much would be the down payment and EMI if tenure is 24/36 months
Harsh Roongta CEO Apnaloan.com answers, The Verna costs around Rs. 7 to 7.50 lacs depending on which city you are located in and the model chsoen by you. You will need to provide about 10% margin (about Rs. 75,000)and the balance can be available as a loan. You should be able to get an EMI of Rs. 3300 per lac for 36 months and Rs. 4700 per lac for 24 months plus some upfront cash discounts if available.
eskaye asked, Dear Mr Harsha, can u tell me what are interest rates for Maruti SX4?
Harsh Roongta CEO Apnaloan.com answers, It is difficult to give an answer regarding the interest rates applicable for a specific brand of car. But the best way to negotiate for a good interest rate is avialbale on thsi link. http://www.apnaloan.com/articles/car-loan-india/car_loan_best_rates.html
Daniel asked, With interest rates increasing all the time, is this the right time to go for a new car loan or will it be worth to wait for some time ?
Harsh Roongta CEO Apnaloan.com answers, already answered. see response to query 1
cnm asked, How to choose a car insurer for a new car loan
Harsh Roongta CEO Apnaloan.com answers, Great question. Firstly if you are buying a second car please remember that you will be able to claim the no cliam bonus if you have not claimed under the insurance policy of the new car. Second and more important the insurance pricing is no longer decided by a government authority but is de regulated. So ask around before you buy your insurance policy and you may get a benefit of at least a few thousand rupees. Also there is no cumpolsion for you to buy your insurance from the car dealer itself though if he is giving a comparable deal it might be worthwhile for you to actually take it from him.
ramki asked, what are the intrest rates for second hand cars in the current market
Harsh Roongta CEO Apnaloan.com answers, The inteerst rates vary between 16-19% p.a. for the used car market.
SOUGATA asked, I am planning to buy a INDICA XETA for 3.34 lacs. Planning to d/p 60 thousand and looking for the rest as loan for 7 years which bank would giveme the best deal
Harsh Roongta CEO Apnaloan.com answers, You can only find that out by exploring in the market. If there was one fixed answer for that question all other banks would have to shut down their businesses. You can also use the services of loan amrket places like www.apnaloan.com for thsi purpose.
niru asked, Do you have any idea on car leasing ?how is it to be done ?
Harsh Roongta CEO Apnaloan.com answers, Leasing in India is not popular due to a variety of taxes and duties on the leasing product. It is selcetively used for large profitable corporates who wish to write off the car for tax purposes quicker than the deprecation rate available under the IT act.
Arin asked, Hi Mr. Roongta, My question is that when any bank says that they are giving me a car loan at 14.5 % with 4% cash back, what do they really mean....does it mean that I am getting a loan at 10.5% or does it come come in actual. thanks
Harsh Roongta CEO Apnaloan.com answers, I suggest you fix the loan amount and the EMI as suggested in the links given in earlier answers. Then you look around in the amrket on the same basis before deciding whether the deal offered by yoru bank is better. Dont get taken in by clever jargon. Just stick to the basics. http://www.apnaloan.com/articles/car-loan-india/car_loan_best_rates.html
saibal asked, Mr Harsh do u think personal loan is better than to take a car loan ?
Harsh Roongta CEO Apnaloan.com answers, It is extremely unlikely that you can get a personal loan that is cheaper than a new car loan. However if you are buying a second hand car then the personal loan option can also be explored especially if you are working in a top corporate or are a slef employed professional like a doctor or chartered accountant.
Akl asked, Hi , I had taken Rs.244000 car loan for 7 yrs from PNB at 10.25 % ROI , if supposse I want to make 4 interim payment and finish my loan in 3 years , then how much and when should I mak these paymnts and also how it will effect my interest calculation. I had checked with the bank thre is no penalty in foreclosure of the loan
Harsh Roongta CEO Apnaloan.com answers, please use the loan amortisation calculator provided on the apnaloan.com website to calculate the exact principal outstanding at the end of each EMI. you will then be able to calculate the fresh tenure by using the new principal amount after deducting your prepayment. http://www.apnaloan.com/loan-advice-india/amortisation.html
roja asked, hi i want to buy a small segment car with a budget of 3
lakh ..which one is better alto,zen,tata indica diesel or spark. shoukd i go for 80% loan or what will be better..i can make the downpayment upto 1 Lkah..please advice ..roja
Harsh Roongta CEO Apnaloan.com answers, As a thumb rule you should take as little loan as your financial situatioin allows you to take. So if you can afford to make a downpaymet of Rs. 1,00,000/- without affecting your ability to face contingencies in the future you hsould definitely go ahead. I am afraid as far as choice of cars is concerned i am not technically qualified to comment.
pra asked, How much is the roi of car loans in apnaloan?
Harsh Roongta CEO Apnaloan.com answers, Apnaloan is not a lender. Apnaloan helps consumers in obtaining the best deal for their loans by making the relevant banks compete for your loan. We help consumers reach the right banks so that they can obtain the best deal for themselves.
firstname.lastname@example.org asked, I would like to buy Zen Estillo with Rs. 1,00,000 downpayment, and the rest on loan for a period of 3 years, what would be the EMI for that?
Harsh Roongta CEO Apnaloan.com answers, The answer to this and many similiar questions is that generally the downpayment will be around 10-15% of the on raod cost of the car. Secondly you can calculate the EMI based on an interst arte of around 12% p.a. using the EMI calculator on www.apnaloan.com. In addition depending on teh car you should be able to get cash discounts, af available for that model of the car in that city.
Kavita asked, What rate should be considered as a good rate for new cars ?
Harsh Roongta CEO Apnaloan.com answers, Again this question has already been answered earlier. For new car loans due to availability of cash discounts there may not be a benchmark interest rate available. For used car loan 16% p.a. on reducing basis would be a good rate.
sayiram asked, hi Hi i have taken car loan for 3 years. out of 36 EMIs i have paid 18. now i need to reduce the EMIs to 11 to avail the Home loan.so whats the best practice to do so. i am planning to pay the remaing amount and reduce it as 11 EMIs.but bank is saying increase the EMI amount and reduce the EMIs .whats is your opinion on it
Harsh Roongta CEO Apnaloan.com answers, Both are effectively the same. If you have the cash payoff the lump sum else opt for increase in EMI. Hwoever given the reason mentioned by you for thsi early payment it might be a better idea to pre-pay in a lump sum if you have the cash since it will put a lower starin on your monthly budget in the next one year.
Shantanu asked, Dear Mr Roongta, I have the final 8 EMIs remaining to complete the payment of my car loan. Do you think it is advisable to pay off the entire remaining amount at one go and be debt free, or should I pay the EMIs till the end of the loan period?
Harsh Roongta CEO Apnaloan.com answers, You have not mentioned at what rate you have borrowed. If the arte is low and the prepayment charges are high the pre-paymet may not make sense. However as a general rule of the thumb pre-pay whenever you can.
jawahar asked, Hello sir, My cousin is NRI he would like to buy a car. Plz suggest me what are the steps tobe followed to get a loan being NRI.
Harsh Roongta CEO Apnaloan.com answers, He will need to apply for a loan like any one else though not all banks lend to NRIs for car loans. He will also need to authorise somebody in India to sign papers on his behalf. He can us ethe services of market places like www.apnaloan.com also.
anand asked, Is it wisdom to go for loan when you have funds to make down payment to the full ?
Harsh Roongta CEO Apnaloan.com answers, If you can afford full cash payment you should not take a car loan.
jimmy_cal asked, Is it mandatory for banks to deduct charges on sanctioning a loan for second hand cars? I availed of a loan from ICICI Bank for Rs.240,000 and the bank deducted Rs.8000 as charges. Please advise if this is correct and if there is any basis of calculation of the amount.
Harsh Roongta CEO Apnaloan.com answers, This depends on your agreement with them. If you feel that charges have not been fully disclosed to you you should file a complaint on the abnk's website. see this link below. http://www.icicibank.com/Pfsuser/customer/html/customer_carenew_v3.html If you are not satisfied with the response you can also file a complaint with the banking ombudsman appointed by RBI. http://www.rbi.org.in/commonman/English/Scripts/AgainstBankABO.aspx
raghvi asked, Hello Sir whats better option? to do full downpayment or to do partial downpayment and invest the rest in mutual funds??
Harsh Roongta CEO Apnaloan.com answers, already answered earlier. if you can afford it do not take a car loan.
hasli asked, what happens if one buys a second hand car from a person who himself had brought the car on loan? i mean is there any financial problem in that?
Harsh Roongta CEO Apnaloan.com answers, Not really except that the seller will first have to pay off his entire loan amount before he can get an NOC and get the bank's name removed from the car's registration certificate and the insurance policy. If he is expecting you to pay in advance because of this you will have a problem as your lender will not give a loan against a car which is already hypothecated with another lender.
raghvi asked, Hello Sir, do loan providers have a thumb rule when giving interest rate discounts on varyign downpayments?...suppose I am doign 50% downpayment how will the interest rate on the remaining 50% differ than when I am doing only 15% down payment?? Somethign like 0.25% for each 10% extra downpayment??
Harsh Roongta CEO Apnaloan.com answers, good question. again assuming you follow the model where you take cash discounts upofront then the interst rates will not drop just because you make more downpayment.
Harsh Roongta CEO Apnaloan.com says, Thanks a lot for this very interactive chat. i hope you found teh answers useful and i look forward to interacting with you again soon. Please do read the transcript of the chat and if you still have some queries please logon to www.apnaloan.com. Bye and take care.