Car Loan- Fixed or Floating ??

Hello

What is the difference between a fixed interest and floating interest rate. I inquired about car loan and was given an option to go for 11% floating interest rate from HDFC. How will you compare this with fixed interest rate offered by SBI (8% for first year and 10% for next 2 Years)?
I need a car loan for 36 months. Please educate some things on how to decide the interest rates (including fixed and floating) and some hidden facts about car loan that one should confirm before choosing a car loan provider.

Thanks
Deep

You need to know following key terminology while taking any loan

• Processing Fee + stamp duty
• Preclosure charges
• Fixed or floating interest rate
• EMI date – advance EMI
• No liability insurance

SBI with 8% for first year and 10% for next 2 years is the best offer available as of now. SBI terms for above key points mentioned are also the better one can get. Only problem with SBI is slow processing time and high on document requirement. However we also have quite a few car owners who got SBI loan in less than 2 weeks time – so this factor is variable.

If you are looking for private bank (only for speedy processing and better customer service), then ensure that you get the interest rate close to 10%. Few private banks are offering 9% fixed rates. You need to negotiate. 11% from HDFC is on higher side.

Thanks a lot for the reply. Another bank offered to me was SBP (State Bank of Patiala). I am told that the terms of this bank are similar to SBI and the loan processing is fast.

What should be the ideal rate of interest and which private bank will you suggest? Personally I don’t like ICICI … I don’t know why…

And it is true that the bank who will finance the car will keep 1 key set of the car till the loan is paid?

Public sector bank is a bit slow in disbursing the loan, but they are more transparent. Personnally, I too do not like ICICI. Never go to ICICI. They do not have ethics.

No way ! No bank will keep one key set with them. Your car will be hypothicated with bank and you will do this by signing few paper.

State bank of Patiala would be good option. SBP rates will be same as SBI but processing speed will be better than SBI.

In my knowledge ICICI bank no longer offer car loans. Among the private banks presently AXIS bank is offering competative interest rates.

My humble suggestion, go with SBI, SB Patiala or SB Maysore. It may take 10 extra days as compared to AXIS or HDFC but you will definitely save 7-8k processing fee. Moreover you can even take loan for your accessories, only State Banks are providing this facility (I guess!).

You can use that 7-8k in setting up your ICE configs!

Rest of the things are at your disposal, if you can spend more!

Cheers

Gaurav

You may want to check this site:

http://www.policybazaar.com/

It will help you out with various options.

No bank will ever keep the car's key with them. The car will remain hypothecated to that Bank/FI and this will also go into the RTO records.

Avoid the loan sharks, i would recommend SBI. The general consensus is that the regional SBI branch will sanction your loan earlier

Guys - SBI was super quick in approving my loan. I submitted my documents on Thursday and by Monday the loan was approved! Over the weekend, I got SMS from Axis too about loan approval. Now I'm slightly confused. For want of transparency and lower costs, I would prefer to go with SBI. But looking at the rate hikes, I'm in two minds. SBI is based on daily reducing FLOATING rate, while Axis is Monthly reducing FIXED rate. Please advise!

1. Loan amount - Rs 700,000

2. Tenure - 60 months

3. Rate of interest

- SBI 11.25% (Floating) 

- Axis 11.5% (Fixed)

4. EMI

- SBI Rs 15,305 (arrear) 

- Axis Rs 15,408 (arrear)

5. Charges

- SBI: No processing fees, 0.3%+Rs 250 as Stamp duty - Total Rs 2350

- Axis: Rs 2250 as processing fees, 0.3%+Rs 250 as Stamp Duty - Total Rs 4600

6. Foreclosure and part prepayment

- SBI: No charge

- Axis: 3% of the outstanding / paid amount

So numbers are in favour of SBI. 

People please be careful of the telephonic confirmation of interest rate and the agents  who visits your house with a different interest rate. its all about commission and dont just give in a filled form and wait for a few days for confirmation. they even bargain for just .25% as if they are doing a big favour. Clients in hurry just agree and end up paying a lot depending on the principle amount.

I almost got cheated by a very reputed private bank today.

And imagine the number of car keys in a bank if they kept one with them, it will be like matrix