Corporation Bank Car Loan Products Review

Corporation Bank offers a range of car finance plans which in the words of the bank are designed to give the customer “greater value, flexibility, convenience and affordability”. The primary car finance scheme from the bank is Corp Vehicle which offers individuals and businesses car loans for personal, transport as well as commercial purposes. Yet another scheme titled Corp Vehicle Plus extends car loans for personal use only.

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Eligibility Conditions

Under the Corp Vehicle as well as Corp Vehicle Plus schemes from Corporation Bank individual applicants can be any of the following:

•    Salaried employees
•    Businessmen
•    Self-employed professionals
•    Non-resident Indians

Corporate entities can be:

•    Sole Proprietorships, or
•    Partnership Firms or
•    Limited Companies.

Other than the above, HUFs, Trusts and Institutions are also eligible to apply for car loans under the Corp Vehicle plan.

The primary requirement for any applicant of car loan is minimum net income of Rs 120000 per annum.

Amount of loan

The maximum amount of loan that can be availed under the Corp Vehicle scheme is Rs 75 lacs per vehicle. This amount is quite high as compared to other lenders since Corporation Bank allows buyers of heavy as well as water transport vehicles to seek finance under the Corp Vehicle plan.

Margin

Borrowers are required to meet a margin of 15% of the “on-road” cost of the new vehicle. This cost includes price of the vehicle as well as Accessories, Registration, Road tax and Insurance charges.

Documentation

The Corp Vehicle webpage has a very useful link to a checklist of documents needed to accompany the completed car loan application form.

Common documents

Among the important documents that all individual applicants need to submit are:

•    Proof of age and residential address which can be a copy of the Passport/Voter Identification Card/Ration Card/SSC Certificate/Pan Card

•    Net-worth Statements -Details of Assets and Liabilities of Borrower /
Guarantor [ Format available in the Branch ]

•    Two passport size photographs of the Applicant and Guarantor

•    Applicant’s Bank passbook showing transactions of last one year

•    Proforma Invoice from the Authorised Dealer / Vehicle Supplier

•    Proof of advance payment to Authorised Dealer, if any.

Proof of Income

In case of salaried employees, proof of income needs to include:
•    Latest salary certificate showing particulars of deductions for other loans, if any
•    Latest Income Tax Assessment Order/ Return/Tax Paid Receipt.

Self-employed individuals need to produces Copies of Balance Sheet and Income Statement for the past three years duly certified by Chartered Accountant.

In case of agriculturists, income certificate issued by revenue authority is required as income proof for car loan application.

Transport operators need to furnish:

•    Experience in line of business
•    Particulars of operational viability.

Post-Dated Cheques

In case the loan applicant does not have an account with Corporation Bank.

The checklist under Corp Vehicle Plus scheme mentions additional documents which are:

•    Copy of the driving licence
•    Quotation for cost of body building of the vehicle.
•    Statement of account for the last 6 months from the existing banker.

Loan Tenure

Corporation Bank allows borrowers under its Corp Vehicle and Corp Vehicle Plus plans to repay the loan over a maximum period of 84 months.

For salaried employees however, the Equated Monthly Installment or EMI in respect of installments/notional interest of existing & proposed loan together should not exceed 50% of take-home salary. In case of self-employed professionals, the annual EMI in respect of installments/notional interest of existing & proposed loan together should not exceed 50% of the net annual income.

Rate of Interest

According to current information on the Corporation Bank website, the rate of interest on Corp Vehicle loans are 10.50% for tenure less than three years, 11% for tenure between three and five years and 11.25% for loan tenure between five and seven years. If borrowers avail the car loan under the Corp Vehicle Plus scheme, they can pay a reduced rate of 8% only during the first year of loan tenure. From second year onwards, the prevailing slab rates will come into operation.

Processing and service charges

The Corporation Bank levies a minimum fee of Rs 1000 or 1 percent of the loan amount on all loan applications. There is no waiver of the processing or service charges under the Corp Vehicle Plus scheme. The Corp Vehicle webpage does not mention the prepayment fee in case a borrower wishes to foreclose the car loan.

Security conditions

For all vehicles purchased with finance from Corp Vehicle plan, the bank requires hypothecation along with noting of Bank's lien in the Registration Certificate and Insurance Policy.

Guarantor

Presence of Guarantor is not mandatory. However based on risk perception, the sanctioning authority of the bank may stipulate third party guarantee or collateral security on a case to case basis.

Loans for used cars

Other than offering finance for new cars, Corporation Bank also extends loans for pre-owned cars. Such cars however should not be more than three years old from the date of first purchase. While there is not mention of the loan amount in case of used cars, the margin is higher as compared to loans for new cars. Applicants for used car loans must be ready to pay a margin of 25% of market value as certified by the competent valuer. The checklist for Corp Vehicle Plus scheme mentions additional documents needed for used car loans. These documents are:

•    Sale offer letter / agreement from the present owner /seller of the vehicle.
•    Valuation report from approved valuer of the Bank OR from authorized dealer of the vehicle.
•    Copy of insurance policy.
•    Copy of RC book

The Corp Vehicle webpage does not mention any difference in loan repayment period or rate of interest applicable to loans for pre-owned cars.

The different types of car loan products from Corporation Bank are tailored for varying purposes. Interested parties can either apply online or download the application form from the bank website and then submit the completed form to the nearest branch.