Bank of Baroda Car Loan Review

Bank of Baroda which tags itself as ‘India’s International Bank’ has several car finance options that a prospective borrower might be interested in. Apart from offering loans for new and used cars, Bank of Baroda prides itself on an add-on facility – the installation of CNG / LPG gas-kit in new or old.

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Amount of loan

The maximum amount of loan that one can avail under Bank of Baroda car finance schemes is Rs. 15 Lacs. There is no information on the minimum amount of loan than can be taken from the bank. If the borrower is a salaried employee, the amount can go up to twice his/her gross annual income. On the other hand, in case of a business, the maximum amount is thrice the person’s gross annual income, calculated as an average of last 2 years. If a loan is taken separately for the installation of a CNG-LPG cylinder in a new or used car, the borrower can get a maximum loan of 0.25 lacs. In case of a used car however, the vehicle should not be more than five years old.

Margin required

The margin is the difference between the invoice value of the car and the finance amount provided by the bank. Under Bank of Baroda’ car finance schemes, the borrower will have pay a margin of 15% for new cars and 40% in case of second-hand vehicles. In case the loan is for the installation of gas kit, the margin to be borne by the borrower is again 15%.

Eligibility Conditions

Those who wish to apply for car loans from Bank of Baroda need to be an employee or a director of a public limited company, a businessman, professional, proprietor / partner in a firm or employed in a government organization/department. In case of a salaried employee, the applicant must be at least 21 years of age but not more than the age of retirement upon maturity of the loan. For self-employed individuals, the minimum age of application is also 21 years but the outer limit of age is 65 years at the time of maturity of the loan.

The Bank of Baroda website does not list the documents required to accompany the completed application form for a car loan. However the website has an inquiry form which completed and submitted would enable a representative of the bank to get in touch with the applicant. Thereafter the applicant can be briefed and guided by the bank representative on what documents are necessary for further processing of the car loan.

The website of Bank of Baroda does not mention exactly how long it would take a car loan application to be processed.

Tenure of loan

The loan tenure of car finance schemes offered by Bank of Baroda varies according to the status of the vehicle. In case of new cars, the loan can be repayed over a period of 84 months or seven years. For pre-owned cars on the other hand, the loan will have to repaid within 36 months or three years. In case of a loan taken separately for the installation of a CNG-LPG kit, the borrower is required to repay it within 24 months or two years.

Rates of Interest

The Bank of Baroda claims to offer some of the most competitive interest rates on its car loans as compared to the rest of the industry. At present, it has special interest schemes on car loans which are valid up to 14 March 2010. According to these special rates, a customer taking a car loan for a period up to three years will have to pay 9.75% which is 2.25% lower than the 12% Benchmark Prime Lending Rate or BPLR. In cases of loan tenure above three years, a borrower will have to pay interest of 10.25% which is 1.75% below the BPLR. These rates of interest are applicable irrespective of the amount of loan availed. The Bank of Baroda also claims to offer a concession of 0.5 % in rate of interest to those who offer minimum 50% liquid security as collateral while applying for car loans. The bank website does not mention whether a loan applicant needs to produce a guarantor for surety of the loan.

Processing Fees

Bank of Baroda also claims to offer some of the lowest loan processing fees in the country. According to the Bank website, the processing charge for car loans is 0.75% of the loan amount with a maximum of Rs 15000. In case of HNIs, the fee for processing loans is slightly lower at 0.50% of the amount with a ceiling of Rs 15000.

Zero Prepayment Benefit

One of the biggest advantages of car finance products from Bank of Baroda is that there are no pre-payment charges levied in case of foreclosure of loans. On the other hand most of the banks and especially the privately owned banks impose heavy pre-payment penalty with some of them going up to 5.75% as in the case of Kotak Mahindra Bank. This zero pre-payment feature can prove to be one of the biggest benefits of going for car loans from Bank of Baroda.

Bank of Baroda offers loans for both new as well as pre-owned cars. In the latter case, the vehicle should not be more than three years old. The loan tenure for second-hand cars is a maximum of three years and the margin to be paid by the customer is 40% of the value of the car. In case of taking a loan for installation of gas kit, the car should again not be more than five years old.

There are several ways that a prospective loan applicant can know more about terms and conditions governing car finance products from Bank of Baroda. The bank website not only has an enquiry form but also a branch locator which will enable a person to seek further information from the nearest branch of Bank of Baroda. Besides one can also calculate the EMI and download the car loan application form from the Bank of Baroda website.