State Bank of India Car Loan Review

State Bank of India, the country’s oldest bank and one of the largest today, offers a wide number of finance options for car buyers. Anyone wishing to buy a new or used car, jeep, multi-utility or sports utility vehicle can apply for car loans from State Bank of India. The financing also includes vehicle registration cost, insurance cost as well as one-time road tax. The minimum amount for new car loan from State Bank of India is Rs 300000. While there is no upper limit for loan amount for new cars, an applicant can borrow up to 2.5 times his or her net annual income. Besides this, the net annual income of the applicant’s spouse can also be considered in case of large amounts provided the spouse becomes a co-applicant of the car loan.

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There are two basic types of car loans offered by State Bank of India. First is the term loan and second, overdraft which is applicable only to new cars and with a minimum loan amount of Rs 3 lacs. The margin required for both new and used car loans is 15 percent of the road priced. Other than for buying new or used cars, State Bank of India also offers finance options for takeover of existing car loan from other Bank/Financial institution, subject to certain conditions.

Eligibility conditions

A person wishing to avail of a car loan from State Bank of India should fulfill the following conditions:

• He/she should be between 21 and 60 years of age.
• The applicant should be an employee of Central or State Government/ a Public Sector Undertaking/Private company/ reputed establishment.
• If self-employed, the loan applicant should be an assesee of Income Tax Department
• The applicant can be engaged in agricultural or allied activities.
• Finally, the net annual income of the applicant should be Rs 100000 or above.
  

Documents Required

To apply for a car loan from State Bank of India, a person needs to submit the completed application form together with the following documents:

• The borrower’s bank account statement for the last 12 months.
• 2 passport size photographs of the borrower(s).
• Signature identification from bankers of borrower(s).
• A copy of the borrower’s Passport/PAN card/Voter’s Identity Card.
• A copy of document giving proof of borrower’s residence.
• Latest salary slip of the borrower together with all deductions from gross salary
• Income Tax Returns/Form 16. For salaried employees the returns should be of the last two years while for self-employed professionals/businessmen they should cover the last three years. The IT Returns or Form 16 should be duly signed by the ITO wherever applicable to be submitted.
  

In case of non-salaried applicants, proof of official address has to be given together with the application form.

For applicants who do not have an account with State Bank of India, a copy of any of the valid documents giving proof of identity and address also need to be submitted.

The State Bank of India website does not mention how long an application for car loan will take to be processed or approved. The loan tenure for salaried borrowers is a maximum of 84 months while in the case of self-employed professionals it is a maximum of 60 months.

State Bank of India claims to offer some of the most competitive interest rates for its car loans. For term loans the bank will charge borrowers 8% fixed rate in the first year while for the second and third year, it will charge 10% fixed rate. In case of overdraft loans, the fixed rate for the first year is 8.5% and for the next two years it is fixed rate of 10.5%. After the third year, the bank states that the interest rate will be reset to applicable card rate contracted on the date of loan sanction. However the bank holds the right to impose a fee in case of prepayment of the loan amount. The rate of this fee is usually 2% of the amount of loan prepaid but the final terms are again subject to certain conditions of the bank. State Bank of India also claims to levy interest on daily reducing balance where the interest is calculated on the reduced balance after one installment. This is easier on the borrower as compared to annual reducing balance in which case the amount of interest for the coming year is determined on the amount of loan outstanding at the beginning of the year.

The processing fee for State Bank of India car loans can range from a minimum amount of Rs 500 to a maximum of Rs 10000. For calculation purposes it is 0.50% of the loan amount and requires to be paid upfront by the borrower. However 25% of the processing fee will be retained by the bank if the loan application of the prospective borrower is rejected after pre-sanction survey.

Car loans from State Bank of India are available for both new cars as well as used cars which are not more than five years old. In case of both, the eligibility conditions and documentation required are the same. However while there is not upper limit on the amount of loan available for new cars, the maximum amount of loan for used cars is Rs 15 lacs. Again repayment period for used vehicles is up to 84 months from the date of original purchase of the vehicle. Finally overdraft car loan is not available for used cars.

If the applicant’s net annual income meets eligibility conditions, usually a guarantor is not required. However if the spouse’s income has been considered while determining amount of loan, then the spouse’s guarantee would be required. Also a charge on the vehicle financed is noted with local transport authorities.

The State Bank of India website has provision for online application for car loans following which a bank representative is supposed to get in touch with the applicant. Alternatively a prospective borrower can also contact any of the 6000 plus branches of the bank that offers car loans or any the SBI Personal Banking Branches.