Punjab & Sind Bank Car Loan Review

Established more than a century ago with a view to social commitment, Punjab & Sind Bank continues with its founding mission to this day. One aspect of the bank’s customer-friendly products is its auto loan scheme which reaches out to a large segment of the society.

The Punjab & Sind Bank Car Loan plan offers finance for the purchase of new car/ jeep/ van or a second hand four wheeler.

Eligibility conditions

In order to avail a car loan from the Punjab & Sind Bank, an applicant must be:

1    A salaried Employee:
2    Of the Central / State Govt. OR
3    Of a Public Sector Undertaking OR
4    Of Local Registered Bodies OR
5    Of Universities recognized by U.G.C.  OR
6    Of Schools/ colleges run by Govt. OR
7    Of local bodies
8    An employee of a corporate client of the Bank
9    An employee with a minimum of three years of service
10    A self-employed individual or a professional like a CA, doctor, architect etc.
11    The general public subject to loan repayment capacity.
12    At least 21 but not more than 65 years of age.

Quantum of loan

The Punjab & Sind Bank allows a maximum limit of Rs 10 lacs under its car loan schemes provided the applicants meet certain conditions. In case of salaried employees, the maximum limit of car loan is three times the average of annual salary of the last three years as calculated from salary slips of salary certificates. On the other hand Self-employed individuals and professionals can avail a maximum car loan of three times the average of their annual income as per Income Tax Returns but still with a ceiling of Rs 10 lacs.

In order to arrive at a larger eligible amount for car loans, the salary or income of the spouse can also be added to that of the applicant.

Margin required

In case of loans for new vehicles, the Punjab & Sind Bank imposes a margin of 20% which has to be met by the applicant from his or her own resources.

Documentation

The Punjab & Sind Bank website does not specify the documents that a car loan applicant must produce with the completed application form. However considering the eligibility criteria, applicants must be ready with the proof of income which in case of salaried employees may constitute their salary certificates or Income Tax Returns. Likewise, self-employed individuals and professionals should keep their Income Tax Returns and IT Assessment orders handy in case the bank wants to see them. Applicants may also be required to produce a document confirming their age. Other kinds of documents required for loan processing may be proof of identity and proof of address. The Punjab & Sind Bank website also makes no mention of how long it takes to process a car loan after complete documentation.

Loan tenure

New car loans from Punjab & Sind Bank carry a maximum tenure of 5 years which means the principal amount together with the interest must be repaid within 60 Equated Monthly Installments or EMIs.

Processing and prepayment fees

The Punjab & Sind Bank levies a processing fee of Rs 500 on all loans for the purchase of cars, jeeps or vans.

In case a borrower wishes to foreclose a car loan, he or she will have to bear a prepayment charge of 1% of the outstanding loan amount.

Rate of interest

The Punjab & Sind Bank has a Benchmark Prime Lending Rate or BPLR of 13%. Currently the bank charges 10% floor rate or 3% lower than the BPLR on new car loans of up to 3 lacs. For loans above Rs 3 lacs, it goes up to 10.50% floor rate which is 2.50% lower than the BPLR.

Loan amounts between Rs 10 lacs and Rs 20 lacs carry an 11% rate of interest and for those above Rs 20 lacs it rises to a floor rate of 11.75% which is 1.25% lower than the BPLR.

However for collateral linked car loans, the Punjab & Sind Bank allows a 9.50% floor rate of interest.

Security Conditions

For all vehicles purchased with its loans, the Punjab & Sind Bank requires the hypothecation of the vehicle into which the Registration and comprehensive Insurance policy with bank clause must be incorporated.

Presence of guarantor

The Punjab & Sind Bank does not require a third party guarantor from its salaried borrowers where the installment is being paid by salary deduction and the employer has given an undertaking to remit the terminal benefits available in case of non-repayment of loan.

However for others, the bank requires the presence of third-party, mutual or spousal guarantee who will stand surety for the car loan.

Loans for pre-owned vehicles

Other than extending finance for new cars, Punjab & Sind Bank also offers loans for second-hand vehicles which however must not be more than two years old. Usually the maximum amount of loan available for used cars is Rs 6 lacs. However, in special cases the loan amount may exceed Rs 10 lacs wherein the proposals are sanctioned after proper appraisal outside the purview of schematic lending. In case of term loans for higher limits up to Rs.30 lacs, the proposals may be sanctioned by the Branch Manager or Zonal Manager in accordance with their “ maximum aggregate discretionary powers", after compliance of guidelines like margin, income etc.

The margin required for used car loans is 30%. However according to the Punjab & Sind Bank regulations, the loan amount shall not exceed 70% of market value of vehicle or value of vehicle after depreciation at the rate 20% per year, whichever is lower. The repayment tenure for used car loans is a maximum of 36 months. Finally loans for pre-owned vehicles also carry a higher rate of interest as compared to those applicable to new car loans. Currently the rate of interest on used car loans is 14% which is 1% higher than the BPLR.

Other terms and conditions like those related to eligibility and security of loans are the same for new as well as used car loans.