Bank of Maharashtra Car Loan Review

Headquartered in Pune, the Bank of Maharashtra has a long history of extending customer-friendly banking services and products. One such product is the Vehicle Loan scheme which offers finance to individuals for purchase of new as well as second hand cars.

Amount of car loan that can be availed from Bank of Maharashtra

Under its Vehicle Loan Scheme, Bank of Maharashtra offers loans up to a maximum amount of Rs 15 lacs in case of new cars. For salaried employees, the maximum amount of loan that can be availed is eighteen times the gross monthly pay. Self-employed professionals on the other hand can avail new car loans up to 1.50 times of their average annual Income as per their last three Balance-Sheet/ Profit and Loss account or last years’ income, whichever is less.

Eligibility

Under the Vehicle Loan Scheme of Bank of Maharashtra, the following are eligible to apply for finance:

•    Individuals who are salaried employees.
•    Self-employed professionals
•    Businessmen.

In case of salaried employees, the following conditions have to be met in order to be eligible to apply for car loan:

*    They must be permanent employees
*    They must have had total of three years of service, out of which two must be in current position
*    They must draw a minimum annual salary of Rs 3.5 lacs

In case of non-salaried individuals, the minimum income of the applicant should be Rs 2 lacs. While determining the loan amount, the income of the spouse can also be clubbed together with the income of the applicant, provided the spouse agrees to become a co-applicant.

Margin to be paid by the applicant

The margin is the difference between the invoice value of the car and the loan amount. Under the vehicle scheme from Bank of Maharashtra, the loan applicant will have to pay a margin of 15% in case of purchase of new vehicle. The bank may relax the margin in certain cases of group finance. For instance if  twenty permanent employees of the same organization of repute apply for car loans from Bank of Maharashtra, then the margin of loan may be relaxed up to 10%.

The Bank of Maharashtra vehicle loan webpage does not specify the documents required to be produced along with the completed application form. However keeping in mind the eligibility conditions, applicants should be prepared to produce proof of income while applying for car loan. The bank website does not mention the length of time required to process the loans.

Maximum number of years for the loan repayment

Under the vehicle finance scheme from Bank of Maharashtra, one can avail the loan for a maximum period of seven years. During this period the borrower will have to pay 84 equated monthly installments or EMIs.

Rates of interest

Under its Vehicle finance Scheme, the Bank of Maharashtra imposes 10.75% interest on loans up to Rs 3 lacs and 11.25% on loans above that amount. The interest rate changes from time to time. Please check their website for the latest rates.

Processing and prepayment fees

Bank of Maharashtra charges Rs 2000 as loan processing fees. The bank website does not provide any details of foreclosure conditions and penalties.

Security conditions

The Bank of Maharashtra requires all vehicles purchased with its loans to be hypothecated to the bank. The borrower also needs to insure the vehicle within a stipulated time period.

Guarantors

An individual availing a car loan from the Bank of Maharashtra needs to show the presence of one guarantor who is acceptable to the bank.

Finance for the purchase of used cars

Other than offering new car loans, the Bank of Maharashtra also has finance schemes for pre-owned cars. In the latter case however the vehicle should not be more than three years old. While the maximum amount of loan that can be availed for the purchase of second-hand vehicles is the same as that of a new car, in the case of used cars, the borrower will have to pay a relatively higher margin of 50%. Moreover for used car loans, the tenure is five years which effectively means that the loan will have to be repaid within a maximum of 60 Equated Monthly Installments. Also the rate of interest for used car loan is slightly higher at 13.25% irrespective of the period for which the loan has been taken.

The webpage of Bank of Maharashtra Vehicle Loan Scheme lists a Festive Offer which has special rates and conditions for prospective borrowers. Under the Festive Offer, individuals can avail loans for purchase of four wheelers till 85% of the cost of the vehicle with a ceiling of Rs 10 lacs. This is lesser than what could be availed under the regular Vehicle Loan Scheme from Bank of Maharashtra. However the main plus point of the Festive Offer that the loan processing fees are slashed by as much as 75% to Rs 500. Besides this, the rates of interest on new car loans are also lowered to 9.50% if the loan is to be repaid within three years and to 10.75% if the loan tenure is over three years. The eligibility conditions of applying for car loan under the Festive Offer are the same as those applicable to the regular Vehicle Loan Scheme from Bank of Maharashtra. The Festive Offer is valid up to 31st March 2010.

The car loan products from Bank of Maharashtra are primarily targeted towards salaried or self-employed individuals. However information on the website is lacking in matters of documentation, prepayment conditions as well time taken to process the loan. Also it would be convenient for prospective applicants of car loans if there was a facility to download and submit an online application form.