Allahabad Bank Car Loan Review

The oldest joint stock bank of the country, Allahabad Bank’s history spans almost three centuries. Today the bank offers a wide range of products among which one of the most popular is the car finance scheme.

The car finance scheme from Allahabad Bank can be availed to purchase new as well as pre-owned cars, jeeps, vans or multi-utility vehicles. Individuals can use the scheme to buy cars for personal use while business concerns can take loans under the scheme to finance cars for official purposes.

Click here to Apply for a Car Loan Online

The target group of the car finance scheme from Allahabad Bank includes:
*    Corporate customers of Allahabad Bank, their directors and employees.
*    permanent employees of Govt. / Quasi Govt. Undertakings / Public Sector Corporations / Companies of repute / Institutions / Medical & Engineering Colleges / Universities, who have been in employment for at least for three years and have still five years of service to put in before the date of their normal retirement.
*    Professionals like Doctors, Lawyers, Chartered Accountants and Engineers who meet income requirements.
*    Businessmen with proven track record.
*    Agriculturists having income to repay the loan.
*    Pensioners of Central/State Government and employee pensioners of Allahabad Bank who are drawing pension from the bank’s branches.
*    Partnership firms and other corporate entities.

Eligibility conditions

Applicants for car finance scheme from Allahabad Bank need to possess the following income requirements:

*    Salaried employees must have a minimum gross income of Rs.15, 000/- and above per month, having a net take home pay of at least 50%, after adjustment of the monthly installments of proposed loan, within the permissible repayment period.
*    Self-employed professionals and businessmen must have been assessed by the Income Tax Department. Take-home criteria after deduction of proposed installment should be 40%, after adjustment of all existing deductions (If any) and the monthly installment of proposed loan.
*    Agriculturists need to possess minimum 5 acres of irrigated land. In their case too, take home criteria after deduction of proposed installment should be 40%, after adjustment of all existing deductions (If any) and the monthly installment of proposed loan.
*    Retired individuals should draw a pension of Rs 15000 per month or above. The net take-home pension should be at least 50% of gross pension after adjustments of other deductions, if any, and the monthly installment of proposed loan.
*    Partnership firms and companies should have sufficient net profit to meet repayment of proposed car loan.

The applicant should also fulfill the following age requirements:
*    In case of salaried individual, the loan should be repaid at least three months before the age of retirement from service.
*    Individuals other than salaried employees will have to repay the loan before seventy years of age.
*    Firms and companies should have been in existence for a minimum of 2 years.

Amount of loan

The maximum amount of loan allowed under Allahabad Bank’s car finance scheme is twice the net annual income/net annual salary of the applicant. The income of a close relative like spouse, parent, unmarried son or daughter can also be clubbed to the income of the borrower in which case the relative will be considered the co-borrower/guarantor.

Margin required

In case of new car loans, the margin will be 15% of the ‘on road’ cost of vehicle which includes one time registration, first time road tax plus insurance charges.

Loan tenure
New car loans from Allahabad Bank will have to be repaid by individual borrowers within a maximum period of 84 months while for corporate borrowers the maximum loan tenure is 60 months.

Mode of repayment

Allahabad Bank offers borrowers the convenience of salary tie-up/ standing instruction in which case the bank will automatically deduct monthly installments toward repayment of loan. However the borrower will have to give an undertaking to maintain sufficient balance in the deposit account for servicing the EMIs. Additionally, three PDCs or Post-dated cheques will have to be submitted to the bank.

Where salary tie up/standing instruction is not available, the borrower will have to give 24 PDCs initially and thereafter 12 advance PDCs every year together with an undertaking to maintain sufficient balance in deposit account for servicing the EMIs.

Rate of interest

In case of Salary tie-up & full collateral security or Doctors/Medical Practitioners, the rate of interest on car loans is 10.5% whereas in other cases it is 11%. A borrower may get a 0.50% discount in rate of interest if the repayment of loan is contracted within 24 months or earlier.

Prepayment and processing charges

Under the car finance scheme from Allahabad Bank, prepayment charges are 2% of outstanding balance only in case of takeover. For salaried people, loan processing fees are Rs 1000 while for others it is 1% of loan amount with a minimum of Rs 2000. Employees of Allahabad Bank are exempt from paying processing charges when availing a car loan.

Presence of guarantor

The Allahabad Bank car finance scheme requires the guarantee of spouse or close relative if his/her income is being considered, irrespective of the loan amount.
In case of loans within ten lacs, guarantee of one person of means and standing is required by the bank. Wherever possible additional security such as LIC policy, DDP might also be requested by the bank.

In case the loan amount is above ten lacs, the bank will ask for any one of the following:

*    Pledge of FDR/NSC/KVP etc. and/or assignment of Life Insurance Policy having surrender value covering the full value of loan amount
*    Mortgage of House/Flat having a market value covering full value of loan amount.
*    Partly by immovable relative property and partly by security such as NSC/KVP/LIC Policy (Surrender value) or Bank’s own deposit etc. covering full value of loan amount.

Loans for used car

Apart from offering finance for new cars, Allahabad Bank has loans for pre-owned cars too. However the car in question should not be more than three years old. Also, valuation of the vehicle needs to be done by an Approved Automobile Valuer for example the Automobile Association of India or True Valuation Certification granted by exclusive True Value Outlets of Maruti Suzuki India Ltd. Moreover it should be ensured that the “Agreed Purchase Price” between the seller and buyer does not exceed “Valuation of the Vehicle.” The loan amount in case or used cars will be restricted to 85% of the “Agreed Purchase Price” or 60% of the Valuation of the Vehicle, whichever is lower. Also the loan will have to be repaid within a maximum period of 60 months or the residual life of the vehicle, whichever is lower.

The Allahabad Bank car finance webpage does not provide a link to an online application form. For further information, a prospective borrower may contact the nearest branch or a representative of Allahabad Bank.