State Bank of Hyderabad Car Loan Review

The State Bank of Hyderabad is today the largest Associate Bank of the State Bank of India, the biggest public sector bank of the country. A significant portion of the success of State Bank of Hyderabad owes to its wide range of banking services and products, one of which is the car loan scheme.

Under its car finance scheme, the State Bank of Hyderabad extends advance for the purchase of passenger cars, jeeps, Multi-Utility as well as Sports Utility vehicles.

Eligibility Conditions

To avail a car loan from State Bank of Hyderabad, the applicant must be between 21 and 65 years of age and one of the following:

1    A salaried employee of the Central/State Government, Public Sector Undertakings, Corporations, Private Sector Companies or reputed establishments.

2    A self-employed individual or professional

3    A person engaged in agriculture or allied activities.

4    A person who is an Income Tax assessee.

Income criteria:

Salaried applicants must be permanent employees and they should be drawing a net annual salary of Rs 75000 and above in order to be eligible for the State Bank of Hyderabad car loan.

In case of self-employed individuals, businessmen, professionals or other Income Tax assessees, the annual net income must be at least Rs.75000 or above for the last year as per Income Tax return.

Applicants engage in agriculture and allied activities must also have a minimum annual income of Rs 75000 or above but need not produce Income Tax Returns.

The State Bank of Hyderabad website does not specify the documents necessary for processing of loans. However considering that the bank has specific age and income criteria for car loan eligibility it can be assumed that the bank will require proof of income and age of the applicant when considering approval of loans.

Amount of loan

Car loan schemes from the State Bank of Hyderabad do not carry a ceiling on the loan amount. However salaried applicants can avail a maximum loan of up to 36 times their net monthly salary after taking into account all deductions including actual monthly TDS or Tax deductible at Source. For others like self-employed individuals, professionals and businessmen, the maximum amount of loan that can be availed is three times the net annual income.

Margin required

Under the car loan plan from State Bank of Hyderabad, the applicant will have to bear 15% of the “on road” cost of the vehicle, which includes registration, insurance as well as road tax.

Loan repayment period

The State Bank of Hyderabad car loan scheme carries maximum loan tenure of 84 months. However in case of salaried borrowers, the repayment period can be of a shorter duration where there is a check off facility. In case this facility is not obtained, Post-dated cheques are required to be submitted with the bank.

Rate of interest

Currently the State Bank of Hyderabad levies an 11% rate of interest on all new car loans with repayment period of less than three years. In case the loan tenure is between three and five years, the rate of interest is 11.25% while loans with more than five years’ repayment period carry an 11.50% rate of interest. The bank determines the interest rate on loans according to its Benchmark Prime Lending Rate which at present is 12.25% per annum.

Processing charges

The State Bank of Hyderabad does not charge any fee for the processing of car loans. However there is no mention whether and how much prepayment charge a borrower needs to pay in case he/she wishes to foreclose the loan.

Security conditions

For all cars purchased with loans from the State Bank of Hyderabad:

1    The vehicle has to be hypothecated with the bank
2    The vehicle has to be comprehensively insured for the entire market value.

Requirement of a guarantor

In order to stand surety for the car loan, the State Bank of Hyderabad requires the presence of any one of the following:

1    Guarantee of spouse if his/her income has been added to that of the applicant in order to arrive at a higher loan amount.

2    Security in the form of surrender value of LIC policy, NSCs, units of UTI, Deposits with Bank of Hyderabad, SBI Magnums, gold or any other security normally acceptable to the Bank for grant of advance, to cover at least 35% of the loan amount.

3    Third party guarantee for the loan amount.

Loan for used car

Besides extending advance for new cars, the State Bank of Hyderabad has finance options for pre-owned cars as well. However in this case, the car must not be more than five years old. Moreover it should have its original registration book since the bank does not allow financing of old vehicles on the basis of duplicate registration books.

As far as documentation is concerned, an applicant for used car loan must also produce a fitness/ valuation certificate from a reputed garage. In case the car is sold under the Maruti True Value scheme or Automartindia, no valuation certificate is required.

The eligibility criteria for used car loans from State Bank of Hyderabad are the same as those for new car loans. Interestingly the maximum loan amount allowed by the bank is also identical in case of both new as well as used car loans. Usually lenders impose a lower ceiling on the quantum of loan for used cars as compared to new car loans.

However State Bank of Hyderabad loans for pre-owned cars carry a higher rate of interest as compared new car loans. Loans which are repaid within three years will incur a 14% rate of interest, 1.75% higher than the bank’s current BPLR. The rate increases to 14.25% or 2% above the BPLR in case of repayment period of above three years.

Other terms governing used car loans from State Bank of Hyderabad like those related to processing fee, security conditions, requirement of guarantor and loan tenure are the same as those applicable to new car loans.

Prospective car loan applicants to the State Bank of Hyderabad can make use of the common loan application form for housing, car and personal loans on the bank website.