Indian Bank Car Loan Products Review

Established as part of the Indian national movement in 1907, the Indian Bank has a more than a century old history of providing customer friendly banking services and products. One of these is the Indian Bank’s finance scheme for new as well as pre-owned cars.

Eligibility conditions

To be eligible for car loans under Indian Bank’s Vehicle finance scheme individuals should be:

*    Salaried employees who have been in service for at least three years Or
*    Businessmen, Professionals and Self-employed with minimum experience of three years Or
*    Retired with sufficient pension to meet repayment conditions.
*    Capable of earning a gross monthly income of Rs 20,000.

Quantum of Loan

The maximum amount of loan that can be availed under Indian Bank’s Vehicle Finance scheme is Rs 15 lacs. In case of salaried applicants, this amount can go up to twenty times their gross monthly salary. However the take home pay should be more than 40% of gross income after deduction of EMI for the proposed loan, apart from other deductions. The income of the spouse can also be clubbed with that of the applicant to calculate the loan amount provided the spouse has a steady income.

For businessmen and self-employed professionals, the maximum loan amount will be calculated after considering their average income earned in the last 3 years and their ability to repay the loan.

The Indian Bank website does not mention how long it will take to process a car loan after completing all necessary documentation.

Margin required

If applying for new car loan from Indian Bank, prospective borrowers should be prepared to pay 10% of the on road cost of the vehicle which is inclusive of registration, insurance, road tax and accessories charges.

Documentation needed for car loan

The following documents have to be submitted by the applicant for the processing of the loan.

*    Completed Application Form with passport size photograph of the applicant.
*    Proof of Identity such as PAN Card / Voter’s ID/Passport/Driving License.
*     Proof of residence such as Recent Telephone Bill / Electricity Bill / Property Tax Receipt / Passport / Voter’s ID.
*     Proof of business address in respect of applicants who are businessmen or industrialists.
*    Proof of Employment.
*    Salary Certificate in case of salaried applicants.
*    Proof of other income like rent, interest on investment, if any.
*    Balance Sheet for the past three financial years in the case of Professionals, Businessmen and Self employed applicants.
*    Income Tax / Wealth Tax (if applicable) Returns for the past 3 years.
*     Copy of Driving Licence.
*    Quotation for Vehicle to be purchased from the authorized dealer.

Loan Tenure

According to the Vehicle Finance scheme from Indian Bank, loans taken for purchase of new cars have to be repaid within a maximum period of five years. There is no holiday period for borrowers. The repayment of principal loan amount and the interest will have to be made by a maximum of 60 Equated Monthly Installments or EMIs.

Rate of interest

Under the Indian Bank Vehicle Loan, borrowers will have to pay 11% rate of interest if purchasing a new car and if the loan repayment tenure is below three years. For repayment periods above three years, new car loans carry a marginally higher 11.25% rate of interest.

Processing fee and service charges

According to the terms and conditions accompanying car loans from Indian Bank, borrowers will have to pay a processing charge of 0.30% of loan amount with a minimum fee Rs 300. The Indian Bank Vehicle Loan webpage does not mention if and how much prepayment charges a borrower has to pay in case he/she wishes to foreclose the car loan.

Security conditions

Applicants for car loans under Indian Bank’s Vehicle Loan scheme must be ready to meet the following security requirements:

*    Hypothecation of Vehicle to be purchased out of Loan.
*    If the loan amount exceeds Rs. 7.50 lacs then additional security equivalent to amount exceeding Rs. 7.50 lacs to be provided by the borrower in the form of Fixed Deposit Receipts / NSCs / LIC Policy (with surrender value equivalent to the security to be provided) / Mortgage of immovable property.

The Indian Bank Vehicle Loan website does not specify if a third party guarantor is required to stand surety for the car loan.

Loans for pre-owned cars

Besides offering finance for new cars, Indian Bank’s Vehicle Loan scheme allows customers to purchase used cars as well. However in this case, the pre-owned car must not be more than three years old and must have been certified by a reputed automobile engineer or valuer. While there is no special limit on the amount of loan that can be taken for purchase of used cars, the applicant in this case is required to meet a margin of 40% as opposed to 10% for new car loans. Moreover documentation for used car loan will require the applicant to present the valuation certificate of the vehicle in question along with other necessary documents.

While the repayment period is the same for used car loans as that of new car loans at a maximum of five years, the rate of interest is slightly higher in the former case. Applicants for pre-owned car loans should expect to pay 12% rate of interestin case the repayment period is less than three years and 12.25% in case of loan tenures above three years.

Other conditions governing loan security and loan processing charges appear to be the same for used as well as new car loans.

The website of Indian Bank does not highlight any tie-up with certain car dealers or automobile companies. However the bank does offer a special rate of interest for prospective buyers of Tata Nano cars. In this case, applicants can expect to pay a slightly lower 10.50% rate of interest.

For further information on car loan products, prospective applicants can contact a representative or the nearest branch of Indian Bank.