Central Bank Car Loan Review

Founded by Sir Sorabji Pochkanwala in 1911, Central Bank of India was the first bank to be wholly owned and managed by Indians. Today the bank has a variety of services and products for its customers among which is a range of vehicle finance plans.

The primary car finance product from Central Bank of India is the Cent Vehicle scheme which allows individuals to buy new as well as pre-owned four wheelers for personal use. Other than this the bank has a special loan scheme for buyers of vehicles from Hyundai.

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Eligibility conditions

Those individuals who wish to apply for car loans under Cent Vehicle plan from Central Bank of India need to:

•    Be at least eighteen years of age.
•    Be permanent salaried employees OR
•    Self-employed professionals.

In case of salaried employees, the monthly gross pay should be Rs 15000 or more. After accounting for all deductions including present loan, net take home pay of the salaried loan applicant should be minimum 40% of the gross monthly salary.  

Cent Vehicle loan Applicants other than salaried employees like self-employed professionals and businessmen need to show an income of Rs 180000 per annum.

A prospective borrower can apply singly or jointly with spouse for car loan under Cent Vehicle plan from Central Bank of India.

Tenure of loan

Under the Cent Vehicle finance plan from Central Bank of India, the maximum amount of loan than can be availed for purchase of car is Rs 10 lacs. Salaried employees will be able to avail a maximum loan amount of 24 times their gross monthly salary on the basis of last salary drawn. In case of self-employed individuals, the maximum loan amount will be twice their average annual income as per Income Tax returns of last three years.

Margin Required for loan approval

Individuals wishing to take car loans under Cent Vehicle plan will need to pay 15% of the car invoice value from their own resources.

Documents needed for loan processing

The Cent Vehicle Plan from Central Bank of India requires loan applicants to present the following documents along with the completed application form:

•    Proof of identity which can be a copy of the Passport/PAN card/Voter’s Identity Card or any other document approved by the bank.

•    Proof of income which in case of salaried employees can be the latest salary slip or salary certificate while in case of self-employed individuals it can be the latestIncome Tax Returns or any other documents approved by the bank.

•    Proforma Invoice from Dealer

•    In case of salaried applicant, undertaking from the employer regarding repayment of loan

•    Duly Signed Blank Transfer Form.
Other than these, Post-dated cheques for the entire period of loan repayment also need to be submitted by the borrower to the bank.

Loan tenure

Under Central Bank of India’s Cent Vehicle finance plan, a borrower can repay the new car loan over a maximum period of 84 months.

Rate of interest

The Cent Vehicle loan scheme levies 2% lower rate on the Benchmark Prime Lending Rate for loans repayable within three years. In case the loan tenure is above three years, the rate of interest on its car loans is 1% below the BPLR which is subject to change of credit policies from time to time. The bank allows a 0.50% reduction in rate of interest provided liquid securities are offered at least to the extent of 50% of loan amount.

Processing and prepayment charges

The Cent Vehicle finance plan levies a processing fee of Rs 2000 on each car loan proposal irrespective of the quantum of loan. The webpage does not mention the prepayment penalty in case a borrower wishes to foreclose the loan.

Security or Guarantee clause

Central Bank of India requires any car being financed by its Cent Vehicle scheme to be hypothecated to the bank. Moreover charges need to be registered with the relevant RTO authorities. Also one set of the vehicle keys are required to be kept in the bank’s custody.

The Central Bank of India requires the borrower under the Cent Vehicle plan to produce a third party who will stand personal guarantee on the car loan. The guarantor however must be of sufficient worth and acceptable to the bank.

Loans for pre-owned cars

The Cent Vehicle finance plan from Central Bank of India also has a provision of extending loans for purchase or pre-owned cars. However in this case the vehicle must not be more than three years old and must have been valued by an approved valuer. Applicants for used car loans will need to provide the valuation certificate when seeking loans for such a car. Moreover the margin of loan in this case is 40% of the car value. Other eligibility conditions and documentation are the same as in case of loans for new cars.

However loans taken to finance pre-owned cars must be repaid within 36 months if the vehicle is less than two years old. In case the vehicle is above two years old, the loan tenure comes down to 24 months. The rate of interest on loans for used cars is identical to the Benchmark Prime Lending Rate or BPLR, irrespective of the time taken to repay the loan.

Special scheme for Hyundai cars

The Central Bank of India has a tie-up with Hyundai Motors because of which buyers of Hyundai cars can take advantage of special conditions under the bank’s finance plans. Prospective borrowers under this scheme can avail a maximum loan amount of Rs 15 lacs whereas under the regular Cent Vehicle plan the maximum limit is Rs 10 lacs. Other terms and conditions governing the loan for Hyundai cars are however identical to those under the Cent Vehicle Finance plan. In both types of car loans, the disbursement will be made directly to the dealer/sub-dealer by Postal Order or Demand Draft.

The Central Bank of India website has provision for online application for car loans under its Cent Vehicle Finance scheme. For other details, the prospective applicant needs to contact a representative or the nearest branch of the bank.