loan from hdfc...?loan suraksha.

Dear Members,

                       I want a clarification from members. I have applied the loan from hdfc bank for buying ANHC. They are giving 80% on the ex showroom price and not on on road price.   After finalising the EMI and approval, they have told me that they will charga Rs.6850/- as loan suraksha as compulsory charges.( In addition to processing charges of 3615/-). Is this the norm with other banks also? Whey do they have to charge loan suraksha when the car is hypothecated and they can take away the car in case the customer is not able to pay the EMI in case of any evantuality? and why should the customer pay for their insecurity?

Waiting for the response........                          

Still waiting for response...........!

Actually it’s insurance cover - a tie-up majority of the banks have with insurance companies. 

In case of death (only) of the borrower (car loan), the bank will neither recover the loan from the family members / legal heirs neither would it take possession of the car/security (the car will remain to be the property of the legal heir/s).  The loss / loan outstanding will be borne by the insurance company. 

It is, however, not mandatory – though banks may insist upon it.  I personally feel one should go for it.  Such ‘Surakshas’ are available on Housing Loan & other major loans as well.

yes, this is the point. This should be optional and not compulsory. The consumer should decide his risks and benefits. By the way to inform you , on my threat to shift the loan to other bank they have waived off the so called "compulsory" loan suraksha. The point is we as consumers should be aware and take the stand accordingly. 

For bank it's a good proposition - coverage of security.  Besides, they do earn commission from Insurance provider for selling the product on their behalf.  It's business under 'cross selling'.

Therefore, the banks insist.  As discussed before, it isn't or it cannot be made mandatory - and therefore waived in your case. 

But I personally feel we all should go for such Surakshas for the benefit of our family in case of some untoward incident (God forbid).  The premium isn’t substantial – looking to the risk & tenure covered.

I'm not advocating for bank.

Pankaj is right here... one must put Saftey ahead of all considerations for a car ... hence if you can go for it and your budget is not tight ...it can be great option

Guys, please guide me.

The car loan broker is saying that he has paid out from his own incentives to get me loan suraksha cover waiver that is worth 6800 for free i(really not sure what they mean by that). They are telling me after I already have the loan approval. So even after the loan suraksha ad on my EMI and tenure remains the same.

Now they are asking me for some monetory reward for the favor they have done to me by getting me a this suraksha cover for free. I never asked them for this favor and now I am not sure whether is it something they have done for me or bank's offer. Should I give something to this loan guy?

Please advise.

As told by Pankaj, it is optional.

If you are really not willing to take that, then it should not be charged. But you should have been more causious while signing your loan agreement. They would have got it signed during that time.

we as costomers never know which page has what section and have to sign more than 30+ signatures. Tell the loan guy that you are not interested in such plkans and no need to give single rupee to that guy for getting loan sanctioned. They earn hefty commision for this.

This is for general information.

For any loan, including auto loans, make sure you are very clear on the following points before signing on the dotted line.

1. Before applying be thorough about the (a)rate of interest (b) tenor of loan (c)prepayment terms and (d) processing / other charges.
2. Once the sanction is through, ask for your copy of the sanction letter and go through it very carefully to ensure all terms are acceptable to you. Most banks dont bother to give you the sanction letter beforehand, but make sure you ask and get yours. Only when you accept the sanction it is binding on you.
3. There is no mandatory requirement that the loan has to be insured. Banks may say so in order to cover their risk and for cross-sell of insurance.

Also even though private banks are fast and all that, my recommendation would be that if you have a good relationship (like savings, salary a/c etc.) in any of the nationalised banks, try approaching them first. The terms are always much more friendlier in nationalised banks.