IDBI Bank Car Loan Review

As a bank which claims to ride on “a cutting edge core Banking Information Technology platform”,  the IDBI Bank has a number of finance plans for its customers. One such scheme is the Express Auto Loan which covers a wide range of vehicles as well as high end bikes.

Click here to Apply for a Car Loan Online

Eligibility criteria

Both salaried as well as self-employed individuals can avail of car loans under the Express Auto Loan. In case of salaried employees, the following conditions have to be met:

•    The applicant must be at least 21 years of age.
•    Maximum age of the applicant should not be more than 60 years.
•    The applicant must have been at least two years in service.
•    The applicant should have a minimum income of Rs 1,50,000 per annum.
•    The applicant should be able to produce Salary Slip, Form 16/ ITR, Bank statement showing salary credit.

Self-employed professionals applying for Express Auto Loan should meet the following conditions:

•    The applicant should be minimum 21 years old.
•    The maximum age of the applicant should not exceed 65 years.
•    The applicant must be in a profession or a profit-making business for the last two years at least.
•    The applicant must have an annual income of at least Rs 150000.
•    The applicant should be able to produce Balance Sheet, Profit and Loss Account of the business concern , Form 16 A/ ITR, Bank statement showing sufficient income.

Quantum of loan approved

The IDBI website does not specifically mention the minimum and maximum amount of loans that can be availed under the Express Auto Loan. However the webpage claims to offer “maximum funding” to buyers of cars and high end bikes who wish to finance their purchase from IDBI Bank. Also there is no word on the margin required under Express Auto Loan plan.

Documentation necessary for loan approval

Individuals who wish to apply for car loans under the Express Auto Loan plan from IDBI Bank must present the following documents along with the completed application form.

•    Proof of identity which can be a copy of the Passport/ PAN Card/ Election Id card/ Driving License/ Photo Credit Card or the Employers ID Card
•    Proof of age which can be a copy of the School Leaving Certificate/ Passport/ Driving License/ Election ID Card/ Birth Certificate/ LIC Policy of the PAN Card.
•    Proof of Address which can be a copy of Telephone Bill/Electricity Bill or Title deed of property/Rental Agreement or the Employer’s letter or Sales Tax RC/ITR/Form 18 or Passport or Driving Licence or Election Id Card.
•    Proof of Income :
*    In case of salaried employees this should be the salary slip of the last three months and Form 16 of the last two years.
*    For self-employed individuals proof income would constitute Balance Sheet as well as the Profit & Loss Account of the last two years
*    Bank statement of the last six months in case of both salaried employees and businessmen. The bank statement should mention salary credits in case of salaried applicants.

Loan Tenure

Under its Express Auto Loan scheme, IDBI Bank allows borrowers up to five years to repay the loan.

Terms of Repayment

Repayment is done through Equated Monthly Installments (EMIs) comprising both principal and interest. Servicing of EMI would be through Post Dated Cheques (PDCs) or standing instruction or Electronic Clearing System (ECS).

Rate of Interest

Even though the IDBI Bank website claims to offer “attractive interest rates” on its car loans, the Express Auto Loan webpage does not specify the exact rates it will charge the borrowers under the finance plan. However under the Special Festival Offer, the bank claims to offer an 8.5% rate of interest on its car loans.

Other charges

IDBI Bank imposes several other charges on its car loan applicants. Borrowers availing a car loan up to Rs seven lacs can expect to pay processing fees worth 0.5% of the loan amount or Rs. 2500, whichever is lower. In case the loan amount is above Rs 7 lacs, the processing fees are 0.75% of the loan amount or Rs.7500, whichever is lower. However in each case service taxes shall be added over and above the processing fees.

Borrowers availing a car loan from IDBI Bank also have to pay a documentation fee  which is 0.2 percent of the loan amount.

The Auto Express Loan scheme from IDBI Bank does not mention whether it offers finance for the purchase of pre-owned vehicles.

IDBI Bank does not mention several points which may of importance to a prospective car loan applicant. It gives no details on the maximum or minimum amount of loan that can be availed under its Express Auto Loan or whether and how much prepayment charges a borrower needs to pay in case he/she wishes to foreclose a loan before the end of the loan tenure. Moreover the IDBI Bank website is silent on the security conditions attending the loan like collateral deposit or presence of a guarantor. Finally the information on the website is also vague on the time taken to process a loan.

However IDBI Bank has a Special Festival Offer for prospective customers of car finance schemes. On January 25, 2010, the bank announced that it has decided to extend this offer till March 31, 2010. This scheme offers auto loans at a fixed rate of 8.50% per annum in the first year and after that at 3% below the BPLR (minimum 9.75% per annum) for the remaining period of the loan.

Prospective applicants can fill and submit the online form which will allow a representative of the IDBI Bank to contact them. alternately, those interested in availing car finance from the bank’s Express Auto Loan scheme can contact any of the IDBI Loan Centers which are the only branches offering loan facilities at present. The Express Auto Loan webpage has a link to both the online application form as well as the list of IDBI Bank Loan Centers located across the country.