Development Credit Bank Car Loan Review

A new generation private bank, the Development Credit Bank claims to offer its customers an extensive range of products and services. One of these is the car finance product titled DCB Auto Loan which allows an individual to avail a loan for purchase of a car for personal purposes.

Limits on amount of car loan

The minimum loan amount under DCB Auto Loan is Rs 1 lac while the maximum limit is Rs 10 lacs for individuals and Rs 20 lacs for non-individuals.

Click here to Apply for a Car Loan Online

Eligibility conditions

Individual applicants need to be at least 21 years old if buying a standard car, 23 years in case of a premium car and 25 years old if buying a super premium car.

*    The maximum age limit for Individual applicants is 60 years in case of salaried employees and 70 years for self-employed professionals.
*    Salaried employees need to have a minimum annual income of Rs 80,000 if taking a loan for a standard car or a minimum annual income of Rs 1 lac if taking a loan for a premium car.
*    Self-employed individuals must have a minimum annual income of Rs 60000 if seeking a loan for a standard car or an income of at least Rs 1 lac a year if looking to buy a premium car.
*    Salaried applicants for DCB Auto Loans must have had at least one year of employment
*    Self-employed applicants for DCB Auto Loans must have been employed with a profit making business entity for at least two years.
*    Salaried applicant must have resided in the same address for the past one year.
*    Self-employed applicants need to prove two years of residence in the same city out of which the last year must be in same address.

Documents required

The Development Credit Bank requires individual applicants for its car loans to submit the following documents with the completed loan application form.
*    Pay slips for the last 3 months in case of salaried individuals.
*    Income Tax returns of the last 2 assessment years, for self-employed individuals.
*    Statement of main / operative bank account for the last 3 months.  
*    Credit card / loan statement from bank / financier.
*    Proof of Identity which can be a copy of Passport/ration card/voter’s identification card or any other document approved by Development Credit Bank.
*    Proof of signature as ratified by applicant’s banker or any other document approved by Development Credit Bank,
*    Proof of address and Tele-contactability which may include a copy of the Passport/ration card/voter’s identification card or any other document approved by Development Credit Bank.
*     passport size photographs
*    Qualification certificates for self-employed professionals
*    Hypothecation / First Lien in favour of DCB

Margin required

The margin is the difference between the invoice value of the car and the loan amount sanctioned by the financer. Borrowers from the Development Credit Bank can avail a maximum car loan amount of 85% of the car value which means that the margin specified by DCB is 15%.

Term period of repayment

Under the DCB Auto Loan scheme, a borrower can repay the loan any time between one and five years of loan disbursement.

Rate of interest on car loans

The DCB Auto Loan webpage does not specifically mention the rate of interest for its car loans. It merely says that the rate of interest is linked to the Mortgage Benchmark Prime Lending Rate which at present is 14.75%. If the MBPLR constitutes the actual rate of interest on car loans, then it is quite steep as compared to the rate offered by other lenders.

Prepayment of car loan

If a borrower wishes to foreclose the loan, he/she will have to pay a substantial prepayment charge of 5% on the loan amount.

Loan processing and service fees

One of the biggest advantages of taking a car loan from Development Credit Bank is that it has no processing fees. This to some extend offsets the relatively higher rates of interest on the loan. However other service charges levied by the bank are as follows:

Cheque bounce charges = Rs 500

Late payment charges     = 3% of the dues per month

Cheque swap charges      = Rs 500.

The bank clarifies that it holds the right to charge service tax and other government taxes or levies as per prevailing rate in addition to the above mentioned service charges. Moreover the said schedule of charges can be changed by the bank anytime at the sole discretion of DCB Ltd and without any prior notice to the customers.

Loan processing time

On its website, the Development Credit Bank claims to offer ‘speedy processing’ of its DCB Auto Loans. However there is no mention of the exact number of days required to process a loan.

The Development Credit Bank offers finance only for new cars under its DCB Auto Loan scheme. There is no provision for advance in case a customer wishes to purchase a pre-owned or second hand vehicle.

The bank website has a link to EMI Calculator which is useful for prospective applicants to all kinds of loans including car loans. By feeding in details like the loan amount, the relevant rate of interest and the repayment period, an applicant can calculate the Equated Monthly Installment of EMI that he/she will be required to pay for the loan to the bank. However the bank website has no provision of online submission of car loan application and neither can one download a car loan application form. Furthermore, the bank does not provide information on whether it requires the presence of a guarantor or other loan security conditions.