If you really think about it, it's easier getting a loan for a car than a loan for bus fare!
  • Car Loan BYTES FROM OUR KITCHEN

    Car Loan Surrender Letter

    As the automakers increase the price of new and old car models this year in an effort to make up for the rise in production costs, more consumers are turning to banks for auto finance. Banks and Non-Banking Financial Companies (NBFCs) offer new and used car loans at competitive interest rates for a loan tenure ranging from 1 to 7 years.

    The loan is repaid to the bank by the borrower in Equated Monthly Installments (EMI) over a specified loan tenure. At the time of car loan approval, the borrower has to sign a loan agreement to that effect. Although car loans are easy to obtain as long as the applicant meets the car loan eligibility criteria, the borrower has to make it a point to read the terms and conditions of the loan agreement carefully before signing it.

    Car Loan Agreement - Surrender Letter Clause

    No matter what type of loan you choose - personal loan, car loan or home loan, there are several clauses in the loan agreement which are put in place to protect the interests of both the lender and the borrower. The car loan surrender letter is one such clause that is put in place by the legal team of the lending institution in order to safeguard the interests of the lender (bank). That is why, as a borrower, it is wise to familiarise yourself with any loan agreement clause that you are agreeing to and understand the implications of the clause before signing the document.

    Although most borrowers are familiar with the car loan surrender letter, they may not have fully comprehended the importance of the clause. A car loan is a secured loan where your car acts as collateral. If you default on your car loan, the bank will repossess your car and put it up for auction to compensate for the outstanding dues. This process is known as foreclosure.

    You may wonder as to why the bank requires you to sign the surrender letter beforehand. As a car is a movable property, there have been many instances where a borrower who defaults on a car loan has gotten rid of the car by illegally selling it and pulling a disappearing act on the bank. In an effort to prevent such a hassle, the banks ask the borrowers to sign the car loan surrender letter at the time of loan approval. Getting the borrower to agree to the clause beforehand helps the bank safeguard its interest wherein it can repossess the car rightfully (as per a court order) in the case of a defaulted car loan.

    Car Loan Foreclosure Notice

    Banks don't repossess the car in the first instance of a missed EMI payment. Rather, the borrower will receive sufficient notice from the bank regarding the outstanding dues. Only when the borrower has failed to heed the notice does the bank initiate the process of car loan foreclosure. A borrower who makes timely EMI payments doesn't have to worry about the clause. However, the unscrupulous ones who indulge in malpractices will have to face the implications of the clause involving the car loan surrender letter.

    Some banks may charge a foreclosure fee. Banks advertise the auction details of the car in print. The borrower can choose to bid for the car at the auction if he or she can drum up sufficient funds to get the car back. The car will be sold to the highest bidder to recoup the debt that the borrower owes to the bank.

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    Voluntary Surrender of the Car to the Bank

    When a bank forecloses a car loan, the credit score and credit history of the borrower is negatively affected. A voluntary surrender of the car may sound like a better idea. Whether you surrender your car voluntarily or the bank repossesses your car, it implies the same thing - your inability to repay the car loan as per the agreed upon terms. However, voluntary surrender of the car to the bank will show the future lenders who take a look at your credit report that you took responsibility for the debt you owed. A bad credit report shows the borrower’s poor credit management skills which can lead to dismal future loan prospects. Take steps to improve your credit score and credit history so as to increase your chances of loan approval.

    Low Debt-To-Income Ratio

    Maintaining a low debt-to-income ratio will ensure that the borrower does not default on his or her car loan repayment. When choosing the loan amount, keep in mind, your car loan EMI payments must not exceed more than 50% of your income. Make a higher down payment on the car of your choice in order to lower the total cost of your car loan. Choosing a suitable loan tenure will also help you keep a check on the total cost of your car loan. A short loan tenure means higher EMI payments but lower interest payments whereas a long loan tenure means lower EMI payments and higher interest payments.

    To find out how much your car loan will cost you on a monthly basis, use the free online car loan EMI calculator. You will get instant and accurate results of your car loan EMI calculation. The tool is simple and easy to use. Enter the car loan amount, loan tenure, interest rate, and processing fee in the tool and click on the ‘calculate’ button. You will get an amortisation table which represents the periodic car loan repayment schedule. The table consists of car loan EMI payments, overall interest payments, and the outstanding dues after each EMI payment. As per the results, you can choose an appropriate loan amount and loan tenure so as to keep the cost of your car loan to a minimum.

    Borrow how much you can afford to repay. To avoid the rejection of your car loan application, check your car loan eligibility online. Multiple loan rejections can have a negative impact on your credit score. Banks check the repayment capacity of the applicant when processing a car loan application. Having a credit score of 750 or above indicates that the applicant is creditworthy. Likewise, having a minimum annual income of Rs.2 lakh and holding down a stable job, indicates the applicant’s capacity to repay the car loan on time. Do sufficient research when applying for a car loan. Visit a reliable third-party website to compare various car loan offers and choose one with a low-interest rate and flexible repayment options.

    Customer Reviews

    • Bank of Baroda Car Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      The experience with them has been quite good with this loan where the loan amount has been sufficient. The interest rate which they offered has been nominal when compared with the market rate and there has not been any extra charges which they had made so far. Their customer support team had also been supportive as well.
      Was this review helpful? 2
      , navi mumbai
      Reviewed on Jan 18, 2019
    • HDFC Bank Car Loan
      "Good Experience"
      0.5 5.0/5 "Blown Away!"
      Before three years I purchased second vehicle that is Hyundai I 10 , the documentation process was good with HDFC. The dealer coordinated with the bank, hence the process was quick. I got multiple options but I chosen HDFC, the Interest rate is better because I am an existing customer.
      Was this review helpful? 0
      , delhi
      Reviewed on Jan 18, 2019
    • HDFC Bank Car Loan
      "Good Experience"
      0.5 5.0/5 "Blown Away!"
      I was taken car loan from HDFC, first time I purchased SANTRO car, the documentation was very convenient. They gave me the door step service I went to the dealer and they done the process, and on time I got the car deliver. They gave me the flexible emi option.
      Was this review helpful? 1
      , delhi
      Reviewed on Jan 18, 2019
    • SBI Car Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It has been quite a good experience i had with this car loan and the loan amount which they had provided has been sufficient as well. The interest rate with them was around 9.25% which was nominal when compared with the market rate. The charges which they had made has been nominal as well, and even their customer support has been responsive as well.
      Was this review helpful? 2
      , bhubaneshwar
      Reviewed on Jan 17, 2019
    • SBI Car Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have been taken my car loan with State bank of India, they have given me sufficient loan amount, and i am satisfied with the loan amount , and the rate of interest they have charged me up to 9.45% which is bit high compare to other bank,i have asked for 9 % but its okay, and the processing fee they have charged me was nominal,overall service is good.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 17, 2019
    • Kotak Car Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have been taken my car loan with Kotak mahindra bank recently ,like 2 months before i took this loan, and i am happy with the loan amount they have given me ,it was sufficient for me, and the rate of interest they have charged me up to 9.3% which was nominal for me and the processing fee they have charged me was nominal, the loan amount process went smoothly. the overall service rendered by them was really good.
      Was this review helpful? 1
      , chennai
      Reviewed on Jan 17, 2019
    • Central Bank of India Car Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It was a good experience i had with this loan and the loan amount which they had provided has been sufficient. The interest rate with them is quite nominal when compared with the market rate. There has not been any sort of additional charges which they had made so far.
      Was this review helpful? 1
      , bangalore
      Reviewed on Jan 13, 2019
    • SBI Car Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I took my car loan in State Bank of India by last year. The charges are normal. I have spend down payment nearly 1L out of 7L. The branch is near to my residence so will never contact the customer service. The process was immediate and it was completed within 2 days.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Jan 12, 2019
    • HDFC Bank Car Loan
      "Its Excellent"
      0.5 4.5/5 "Excellent!"
      HDFC gave me the door step service for the car loan. I took the loan before three years. It was the fantastic experience for me because I got the better interest, I took the loan for 5 years but I done the foreclose in three years , there was no charges for it.
      Was this review helpful? 2
      , ahmedabad
      Reviewed on Jan 11, 2019
    • Capital First Car Loan
      "Good service"
      0.5 3.0/5 "Satisfactory"
      The process in getting my Car loan from them has been quite good and the process went smooth. The loan amount was sufficient but the interest rate with them has been quite high when compared with the market rate. Their customer support and their response has been good and has been helpful as well.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 10, 2019
    • HDFC Bank Car Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      My car loan experience with HDFC has been good and the loan amount which they had provided has been sufficient. The interest rate with them has been nominal and there has been some charges like processing fee. Overall their has been a help from their customer support as well.
      Was this review helpful? 1
      , pune
      Reviewed on Jan 09, 2019
    • HDFC Bank Car Loan
      "Average Loan Service"
      0.5 3.0/5 "Satisfactory"
      I have approached the bank directly for my car loan. Since I'm existing customer of HDFC for 13 years, i have chosen them. I purchased the loan amount of Rs. 2 lakhs. They have offered me a interest rate of 16% In October 2018, i have closed this loan. Total tenure period of the loan was 3 years. Car Dealer has recommended me about this loan.
      Was this review helpful? 4
      , srikakulam
      Reviewed on Jan 09, 2019
    • Magma Car Loan
      "Average service"
      0.5 1.5/5 "Bad"
      I have been using my car loan with Magma Fincorp previously, they have given me sufficient loan amount ,the rate of interest they have charged me was high,and the processing fee they have charged me was high , i was not happy with there service.
      Was this review helpful? 3
      , ghaziabad
      Reviewed on Jan 08, 2019
    • HDFC Bank Car Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have been using my car loan with HDFC bank, there service is too good, the loan amount they have given me was sufficient,the rate of interest they have given me up to 9% which is nominal for me,and the processing fee they have charged me was nominal only they have charged me up to 1% only,and still my loan is running ,there was no hidden charges they have charged apart from that,overall service is good.
      Was this review helpful? 1
      , ghaziabad
      Reviewed on Jan 08, 2019
    • HDFC Bank Car Loan
      "Nice offer and nice loan"
      0.5 4.0/5 "Great!"
      I had a car loan with HDFC 1 year back. They have given me a nice offer hence i opted the loan with HDFC. I'm not sure about the partial payment and pre-closure facility. They have given me a nice interest rate according to what i want. I was taken a loan amount of Rs. 3 lakhs.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jan 08, 2019
    • review Car Loan
      "Need to reduce the charges"
      0.5 3.5/5 "Pretty good"
      I have taken a car loan in Nissan Institution, it was good. I bought the car from same showroom and they have provided me a facility. The rate of interest was high. The documentation procedure was simple. I have taken the loan almost 2 years back and its still running. The loan tenure is 5 years.
      Was this review helpful? 1
      , mumbai
      Reviewed on Jan 08, 2019
    • HDFC Bank Car Loan
      "Looking for less interest rate"
      0.5 4.0/5 "Great!"
      My car loan experience was good with HDFC bank, loan amount was sufficient and the rate of interest was high when compared to other banks. Customer service was good and they responded on time. The tenure period for this car loan is for 5 years.
      Was this review helpful? 1
      , new delhi
      Reviewed on Jan 08, 2019
    • ICICI Bank Car Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have been holding my car loan with ICICI bank, the rate of interest they have charged me was nominal and they have charged me processing fee they have charged me which was nominal, the loan amount they have given me was sufficient according to the car price i got my loan, still this loan is running,overall service is good.
      Was this review helpful? 3
      , new delhi
      Reviewed on Jan 08, 2019
    • IOB Car Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have been holding my car loan with Indian overseas bank, the loan amount they have given me was sufficient, they have charged nominal rate of interest they have charged me up to 9 % which was nominal and there is zero processing fee , so far there service is have experience was good, they have not taken any hidden charges ,there overall service is good.
      Was this review helpful? 2
      , mumbai
      Reviewed on Jan 08, 2019
    • HDFC Bank Car Loan
      "Good loan experience with HDFC"
      0.5 4.0/5 "Great!"
      My car loan running with HDFC bank, the customer service is super and the fast approval on the disbursement. They taken 15 days to deliver the car. The principal amount is Rs. 4 lakhs for the tenure of 5 years, the car model is baleno which is latest.
      Was this review helpful? 3
      , aligarh
      Reviewed on Jan 07, 2019
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