How to get the best rate on auto loans

In an online chat with Get Ahead readers, Harshala Chandorkar, senior vice president, CIBIL, answered their queries on auto loans.

Unedited transcript:

Zeel Kappor: How is the final amount payoff determined?

Harshala C: The 'payoff amount' is generally the current loan balance, plus interest due from the last received payment/EMI from you

zubeda-pawaskar: How will I be charged to any damages to my vehicle?

Harshala C: The bank will not charge you for any damages to the vehicle. You would have taken insurance and if the damanges are covered you may get them recovered from the insurance company.

jinny: Can I return the vehicle prior to its scheduled termination date?

Harshala C: Can you please elaborate on what do you mean by the scheduled termination date and to whom would you return the vehicle

sumeet salgaonkar: What is the cumulative interest payout?

Harshala C: The sum of all interest payments made on a loan over a certain time period is the cummulative interest.

ulfat: I have home equity line of credit and interest rates are currently low should I consider this to buy my next car?

Harshala C: Yes, if the terms and conditions of the home quity line of credit permit you to do so, you may use this to buy your car. Do have a word with the bank and check with them as well.

sheetal: How do I access my auto loan account online?

Harshala C: Your bank would have given you a User login and password. You may use that to access your account online

Venkatesh: Why is it that I got offered a different rate than my neighbor did for the exact same car from the exact same dealership?

Harshala C: There could be various reasons why your neighbour got offered a different rate of interest than you. - Your neighbour may have had an existing relation with that bank. - Banks check borrowers CIBIL Report and Score before sanctioning a loan. It is possible that your neighbour had a higher score and was hence offered a better rate.

Amit srivastav: Is there a balloon payment required at the end of this loan?

Harshala C: There are varied repayment options that banks offer - step up scheme - increase in EMI after 3.6. we months, low EMI and Balloon scheme - low EMI and balloon payment at the end, Advance EMI, etc. So it depends on what time of repayment option you choose for your loan.

debajyoti roychoudhury: Should one go for fixed rate or floating rate of interest. SBI charges floating rate of interest unlike private sector banks which charge on fixed rate of interest

Harshala C: Yes, most of the private sector banks charge fixed rate of interest for auto loans. If in your judgement the rate of interest is likely to go down during the tenure of the loan you should opt for a floating rate of interest else go for a fixed rate. But also keep in mind that the car loan is typically a 3 year loan and you should consider interest fluctuations for a period of 3 years

chandekar muley: Can I get 100% financing for my car?

Harshala C: Generally banks sanction upto 90% of the value. Howvere there could be banks who may offer 100% financing and it depends on the car that you plan to buy. Do your own research before finalising which bank you should approach for a loan.

Amol Dhurve: What are the charges I have to pay to change the mode of repayment/ account for my loan?

Harshala C: There are no charges for chaning the mode of repayment for your loan. However please confirm the same with your bank as each bank has differents terms and conditions for the loans sanctioned

Jaykar Kajale: What is the minimum and maximum tenure of car/auto loan?

Harshala C: Typically car loans are for 3-5 years

Firoz Khan: I have a home equity line of credit, and the interest rates are currently low. Should I consider using this to buy my next car? It would mean a lot less money on a monthly basis out of my budget

Harshala C: Yes, if the terams and conditions of the home quity line of credit permit you to do so, you may use this to buy your car. Do have a word with the bank and check with them as well.

umar khan: Do I need to pledge anything or give collateral to get a car loan?

Harshala C: Yes, the car will need to hypotheticated to the bank as a security.

Rajan sha: What will be done with the post-dated cheques if I request to change the mode of repayment/ account for my loan?

Harshala C: The bank will return the Post Dated Cheques back to you of you change the mode of repayment.

Satish Pulli: What documents do I need to submit after the loan amount is disbursed?

Harshala C: Typically the documents that you will need to submit are:• Proof of Identity: Passport copy, PAN Card, Voters Id card, driving licence• Income Proof: Latest salary slip with form 16.• Address Proof: Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card.• Bank Statement: Last 6 months

Harshala C: Post the loan is disbursed the RC book would need to be submitted to the bank.