SBI offers car loans for the longest tenors (84 months) and also provides finance for both new cars as well as old cars (not more than five years old). Interest for Car loans shall be on daily reducing balance, unlike the flat rate of interest or interest based on annual reducing balance method used by several other financiers. Finance includes for one-time road tax, registration fee and insurance premium also.
Additionally SBI provides free Personal Accident Insurance upto the outstanding amount, so that in case of accidental death, your near and dear ones are not required to repay the loan. Another attractive feature is no advance EMIs, that is you need not pay any amount as EMI prior using your car.
Purpose of SBI Car Loan
- Term loans for purchase of: new passenger cars, Multi Utility Vehicles (MUVs) and SUVs.
- Used car, MUV, SUV upto 5 years old. No financing of old vehicles on the basis of duplicate Registration books.
- Reimbursement of cost of unencumbered, single ownership vehicle not more than 2 years old
Eligibility for availing SBI Car Loan
- Permanent employees of State/Central Govt., Pvt. Sector companies, PSUs, corporations & reputed establishments.
- Professionals/self-employed & others who are IT assessees
- Persons engaged in agriculture and allied activities.
- High net worth salaried executives of multinationals.
- Age: 21- 65 years. (for sanction of loan). Loan to be fully repaid before borrower attains age of 70 years. [Loans can be sanctioned to individuals who have sufficient, regular and continuous source of income for servicing the loan repayment beyond 65 years].
Minimum income for taking SBI Car Loan
- Salaried: NAI of applicant and/or co-applicant, if any, together to be Rs.1 lac and above. NMI of applicant(s) should be at least 2 times of EMI.
- Self-employed and Professionals: NAI of applicant and/or co-applicant, if any, together to be Rs.1 lac and above for the last year as per income tax return
- Persons engaged in agriculture and allied activities: Same as for Self-employed and Professionals except that income tax return will not be required.
Maximum Loan Amount For SBI Car Loan
- New vehicles: no ceiling. Used/refurbished vehicle: Rs.15 lacs.
- Max. loan restricted to: 30 times NMI for salaried & 2.5 times NAI for others.
- Regular income from all sources with satisfactory proof considered. Income of spouse / father/ mother/ brother /sister may be included if he/she joins as co-borrower.
Margin and Total Cost of SBI Car Loan
- For new & used/refurbished vehicles: 15% of ‘on road’ price.
- Margins may be reduced in certain cases. Total cost to include onetime road tax, octroi, registration charges, insurance premium and accessories.[Any consumer offer/discounts by the manufacturers / dealers should be reduced from the ‘on-road price’ .
- Maximum cost of accessories not to exceed 5% of cost of vehicle or Rs. 25,000 whichever is less.
Repayment Period and Mode of SBI Car Loan
- New vehicles: max.upto 7 years for Salaried and upto 5 years for Self-employed and Professionals.
- Old vehicles: Max. repayment period to be fixed as per age of vehicle. Recovery should be such that loan gets repaid within 7/5 years from the date of original sale.
- Old & new vehicles: customer to have option for payment in shorter duration.
- Repayment in Equated instalments preferably through check-off for salaried / PDCs where check-off not available / SI / ECS with 6 undated cheques to cover the loan amount.
- Customised repayment through equated instalments for agriculturists: Since income of agriculturists is seasonal, the repayment schedule in their case will be aligned with their expected cash flow to reduce chances of default in a/cs. The periodicity of instalments is to be decided upon the merits of each case, on a realistic basis, coinciding with harvest of the crop at half yearly/yearly intervals or coinciding with the generation of income from ancillary agricultural activities pursued by the borrower e.g. dairy/poultry etc. or in monthly/quarterly instalments in case of other regular sources of income.
- Repayment cycle: For loans disbursed on or before 15th of the month and on or after 16th of the month, the repayment date should be fixed as 10th and 20th of the following month respectively.
Prepayment Penalty of SBI Car Loan
- Prepayment fee of 2% of the amount of loan prepaid if the loan is taken over by any other bank/financial institution or it is repaid before expiry of half of the agreed repayment period or partial repayment is being made in the first year.
- No pre-payment penalty if loan is foreclosed for taking a fresh car loan for new or used car from Bank.
Security of SBI Car Loan
Hypothecation of vehicle and noting of hypothecation charge in the books of RTO. No other security to be obtained. Any other security incl. third party guarantee to be obtained only when there is a need for credit enhancement e.g. credit score below threshold limit, any other business consideration.
Insurance of SBI Car Loan
The vehicle to be kept comprehensively insured in the name of borrower for the market value or at least 10% above the loan amount outstanding, whichever is higher. Bank’s interest as a hypothecatee should be noted in the Insurance certificate & policy, a copy of which is to be retained with the loan documents. Insurance register is to be maintained.
Inspection For Standard Assets of SBI Car Loan
- Waived after the initial inspection. But required if there is a default of 2 monthly instalments.
- NPAs: twice a year. Inspection register is to be maintained
Processing fee of SBI Car Loan
- 0.50% of loan amount [inclusive of service tax] min.500/-& max.10000/-
- GM [Network] can reduce it upto 50%, during short promotional drives and wherever bulk finance is involved with check-off from reputed employer.
- 25% of the fee to be retained if application is rejected after presanction survey [subject to min. of Rs. 500/- and max. of Rs. 2500/-]
Interest of SBI Car Loan
Loans only on floating rates which [for new loans] may also be revised without a change in SBAR.
SBI Car Loan - Documents To Be Submitted
Following papers are required for taking SBI Car Loan along with loan application:
- 2 passport size photographs of borrower/guarantor(s).
- Signature identification from bankers of borrower/guarantor(s).
- A copy of passport /voters ID card/PAN card.
- Proof of residence.
- Proof of official address for non-salaried individuals.
- Latest salary slip showing all deductions and TDS certificate-Form 16 in case of salaried persons.
- *The duly acknowledged I.T. Returns or Form No. 16 for the last 2 years for salaried employees and 3 years for professional, self-employed and businessmen. [not necessary to obtain both I.T. Return and Form 16 from the applicant.]
- *Statement of Bank account of the borrower for last 12 months
- For Salaried Customers:
1. Salary Certificate (in Bank’s format – Please find the attachment)
2. Form 16 & IT returns of the last 2 years
3. Last 12 Months’ Bank account Statements (For all accounts including loans)
- For Pensioners:
1. Copy of PPO (Pension Payment Order)
2. Pension statement
3. Last 12 Months’ Bank account Statements (For all accounts including loans)
- For Business Class:
1. Balance Sheet (For the last three years)
2. Profit & Loss Statement (For the last three years)
3. IT returns of the last 3 years
4. Last 12 Months’ Bank account Statements (For all accounts including loans)
5. Address proof of the firm.
*Relaxation may be permitted by obtaining ITR/Form 16 for 1 year and Statement of Bank Accounts for 6 months, by one step higher sanctioning officer, provided they are satisfied about the genuineness of source, amount and continuity of income confirming repayment capacity of borrower over the loan tenor. In all such cases the basis for income verification should be properly recorded on the loan appraisal.
Following documents are required on specified format:
- SBI Car Loan Application Form
- Under check off: Irrevocable Letter of Authority from the borrower & Letter from the Drawing and Disbursing Officer
- Letter forwarding demand draft/Banker's cheque to supplier /dealer
- Loan cum Hypothecation Agreement
- Guarantee Agreement where applicable
- Arrangement Letter
- Irrevocable Letter of authority where Drawing and Disbursing officer himself is the applicant
SBI CAR LOAN - FAQ
1. What makes of cars does SBI finance?
SBI finance all makes of new cars, and second hand cars not more than five years old. Thus, you are free to choose any vehicle you want to own.
2. Can my spouse's income be included for calculating the loan amount?
Yes, your spouse's income can be included provided he / she joins as co-borrower.
3. What is the repayment schedule like?
The minimum amount that you are expected to pay every month is the EMI. You can repay the loan in upto 84 EMIs.
4. What is EMI? How is it calculated?
EMI stands for Equated Monthly Installments. This installment comprises both principal and interest components. Your EMI would be calculated depending on the tenor you choose, to repay your loan. The EMI would be higher if you choose to repay within a shorter period as against a longer-term loan. You can also contact your nearest SBI Branch to know the EMI for proposed loan amount and tenor.
5. What Security do I have to furnish for availing the Car Loan?
A charge on the vehicle financed is noted with local Transport Authorities. Your spouse's guarantee, if his / her income has been considered for fixing the loan amount, would also be required. Some other security may also be required in certain cases.
6. How does SBI Car Loan compare with those offered by other institutions?
There is total transparency with regards to the rate of interest and the fees charged by SBI.
7. With whom does the discretion vest to relax EMI/NMI % ?
BM/RACPC head / sanctioning authority not below rank of Chief Manager will have the discretion to grant a higher loan, subject to EMI/NMI percentage not exceeding 60% in case of tie-ups with reputed PSUs/ corporates or institutions or owing to strategic reasons. It may be relaxed up to 70% by sanctioning officer not below the rank of AGM for customers with NMI of Rs. 10 lac and above.
8. The income of how many family members can be clubbed?
Income of any one family member - spouse, father, mother, brother or sister - may be included for arriving at loan eligibility and he/she to join as a co-borrower. Maximum number of applicants to be restricted to two. Loan repayment to be made from a/c of the applicant in whose name vehicle is registered or through an a/c with us in the joint names of the borrowers.
9. Can the stipulated margins be reduced?
The sanctioning authority will have discretion to reduce the margin by 5% where check off facility from a reputed employer is available. Beyond this, any further reduction (with or without check off) is to be approved by an officer of the rank of AGM or above (Division/ Branch/ controller/ RACPC) taking into account business expected, relationship, security provided etc.
10. What is the mode of disbursement?
Amount to be remitted direct to the supplier/dealer by a crossed ‘Account Payee’ DD/BC which should be forwarded under cover of a letter as per specimen. To safeguard against misappropriation of funds, the beneficiary’s Bank name and if possible, Bank a/c number should be ascertained from the beneficiary and mentioned in the draft/B/C. No charges to be levied for issue of B/C/DD.
11. How is the repayment schedule customised for agriculturists?
Since income of agriculturists is seasonal, the repayment schedule in their case will be aligned with their expected cash flow to reduce chances of default in a/cs. The periodicity of instalments is to be decided upon the merits of each case, on a realistic basis, coinciding with harvest of the crop at half yearly/yearly intervals or coinciding with the generation of income from ancillary agricultural activities pursued by the borrower e.g. dairy/poultry etc. or in monthly / quarterly instalments in case of other regular sources of income.
12. Is a valuation certificate required for financing a second hand car?
Yes. Certificate of fitness/valuation from a reputed garage, which should be retained with the loan documents. The garage should be authorised by the Liaison Officer in the LHO/ZO in big cities. No valuation certificate is required if the car is sold under the Maruti True Value scheme or Firstchoice (Automartindia).
It should be ensured that the fitness and valuation is appropriate to the past ownership pattern. Care should be taken to avoid models, which have a low second/third hand demand like Fiat, Uno, Daewoo, Matiz, etc.
13. Is ownership of vehicle to be verified before financing used cars?
- In direct used car finance to individuals, the ownership of the vehicle is verified by the branch/RACPC during pre-sanction survey. However, in financing used cars through Maruti True Value, this procedure need not be followed and payment be made directly to the dealer of Maruti True Value.
- To protect the Bank in case of any ownership issues which may be raised by the original owner of the vehicle, an indemnity as specified should be executed on the letterhead of the dealer of Maruti True Value.
14. Is takeover of car loans from other banks permited?
Takeover of car loans may be considered selectively where:
- the vehicle is not more than 2 years old
- it is a single ownership vehicle
- no insurance claim has been availed and
- the borrower’s a/c with the other bank is a Standard Asset ie. all repayments are made as per terms of sanction of the original financier.
While taking over car loans from other banks, rates of interest for new vehicles will be applicable, if no change in ownership is envisaged.
Loan to be repaid within 7 years from date of original purchase of the vehicle Reimbursement of cost of unencumbered vehicles also permitted under above takeover norms and other terms of financing old vehicles upto 2 years of age.
15. Can EMI be reset if there is a fall / rise in interest rates?
Generally the EMI need not be changed with every change in the interest rate.
Reduction in EMI, if requested by the borrower consequent upon reduction of interest rate, may be permitted once during the currency of loan if:
- the account is a standard asset.
- the loan outstanding is at least Rs. 5 lacs and
- the interest rate reduction is of 1% or more.
The Bank reserves the right to increase the EMI should interest rates rise.
16. What is the maximum time schedule for sanction/disbursal of the loan?
The maximum time schedule for receipt of application and sanction/disbursal of the loan is 2 days.
17. What is subvention?
Subventions are monetary incentives offered by manufacturers/dealers, depending upon the demand and supply of vehicles at any point of time. A good percentage of vehicle financing is done in the market through tie-ups with such manufacturers/dealers who offer subventions.
18. How and when is the subvention amount received?
Where we receive bulk proposals under special arrangements with Maruti/ Telco, all subventions to be received will be credited to the accounts approved and appropriated against the initial instalment. The initial debit to loan account should be for the full amount of loan and the subvention amount subsequently credited to the loan account, to keep the system transparent. The Banker's cheque for the loan amount should not be handed over to the dealer prior to receiving the B/C for the subvention amount. The two should be done simultaneously.
19. Can services of recovery agents be used for seizure of vehicles?
Yes. Select agencies to be approved and charges payable to them to be fixed by the LHOs concerned. Their services can be availed for recovery of dues by seizure and sale of vehicles by fair means. Action for actual repossession should be initiated by sanctioning branch or office or where the loan is parked in case of non-payment of two instalments or dishonour of two PDCs and after the period of demand notice has expired. Notice is to be sent to borrower immediately on cheque dishonour / non payment of instalment even for the first time.
20. Is SARFAESI Act 2002 applicable to car loans?
Yes. The provisions of the Act cover seizure of movable property also. In case the borrower refuses to give peaceful possession of the hypothecated vehicle, Bank can issue a notice and take forceful possession by following the procedure as stipulated in SARFAESI Act provided the amount to be recovered is more than Rs.1 lac and more than 20% of principal granted and interest thereon.
21. What is the procedure for conduct of pre-sanction survey and KYC?
Only one official from RACPC, MPST or Branch to visit the customer for KYC & Pre-sanction survey which should be done together. The KYC, Pre-sanction survey & opinion report prepared by official of any of these offices under his/ her signature & seal should be acceptable to sanctioning authority.
Pre-sanction survey and KYC can be waived for existing customer if his address has not changed and he is a Home/Personal Loan customer with minimum one year’s satisfactory track record.
OR A car loan customer with a satisfactory track record, and wants to avail another car loan.
OR Customer having satisfactory deposit account with average balance of Rs. 50,000/- & above and banking with us for at least one year.
OR Under Corporate Tie-ups where check-off is available.