Can auto loans be paid off before time without any penalty?

Dear All,

A few Qs:

1. If I have taken an auto loan for a tenure of 23 months (which I guess is the minimum tenure period), whose EMI works out to about Rs. 13K, do banks give the buyer the liberty to pay more than double/triple the EMI amount, the coming months to pay off the loan sooner?

2. If so, is there any penalty and what is it?

3. What is/are some good banks to go with?

Thanks

Read the "golden document" - the loan agreement you have for the loan. (Remember that one you signed painfully on three sides of the page?). It contains all details.

Generally there IS a pre-payment penalty, renging from 3 to 6 percent, depending on the loan tenure and principal. The loans being short term loans as compared to housing loans, I don't think there is a way to bypass prepayment penalty.

SBI is the best for lending terms, but may be a bit painful for approval and disbursal, but in the long run, SBI or any public sector bank will be the best for loans.

Private banks are very good at marketing the loans, but their terms are usually worse than public sector, and I found that there were many hidden charges not made clear during the negotiation of the loan.

I guess SBI has some offers with minimal interest for partial / pre closure. Other banks also have the option of partial and pre closure but the interest rate is high. For example, HDFC has the following offer.

Partial closure before 6 months:

No change in the interest you are paying already.

Between 6 - 12 months:

6% interest.

Between 12-24 months:

5% interest.

More than 24 months:

4% interest.