[hallik9]

Originally Posted by jkdas

My manager was dumbfounded when he was asked to pay a nice amount when he had to pre-close his car loan from HDFC.

Stay away from them if you intend to pre-close. Axis bank allows free pre-close if you are their customer ( and I guess all State banks).

+1
My experience with HDFC auto loans has been pretty bad.I was made to run around 3 different brances across Bengaluru city.Had to apply leave and do all this clerical work.I had decided in 2006 that I'd never ever take a loan with HDFC.
I took a loan with SBI for my current car(Swift D)
Believe me,this experience has been top class.My brother brought the ANHC last year and I recommended either SBI or AXIS to him.
He is very happy with Axis bank now.
No preclosure charges whatsoever.You can close the loan or prepay any amount from day 1.
I should have listened to my Dad's words the first time around when I approched HDFC.He kept asking me to stick to nationalized banks (He speaks from experience,he's been a banker himself for 35 years with a nationalized bank)

[ghodlur]

I would not want to add to the HDFC car loan bashing which is being done in the posts but one thing for sure, HDFC bank and HDFC are very different entities and so is their working culture. I myself had experienced the same during my loan application for my earlier Santro. The time taken was testing my patience and hence had to drop the idea of taking a loan from HDFC. But the delay was not from the branch where I had applied but from the main office.

[Abhi_Automobile]

Tanveer,

The game is simple, they make the process complicated and full of hassles, as they don't want you to close the loan. Simple!

BTW, I have inside info (from HDFC employee) that they are given 'official' training on how to make excuses. ICICI Bank people once 'blatantly lied to me on my face, telling me that the foreclosure charges are 6%, while I was running my fourth year of loan. BLATANT LIE.

[noopster]

I have had pleasant experiences with HDFC (not my primary banker) compared to ICICI but if what the OP is recounting is true, it's really a shame. The one time I foreclosed an auto loan (with HSBC back in 2002 or so), my DSA handled everything: I had to call up HSBC customer once to find out the outstanding amount, but after that just gave my guy a cheque and my original RC book. I don't recall ever going to a branch. They charged me 2% but that was part of the deal so I didn't complain.

[lottoman]

In my opinion its the same across all private banks.
I have had a personal loan auto loan from ICICI.
I have had epic problems trying to foreclose my personal loan from ICICI.

Infact their intention to penalize customers for foreclosing reached its peak, when i 2009 I had car accident and my beloved Baleno was totalled. I had only one more year of the car loan to pay off. (technically have paid all the interest component of the loan).

Insurance guys had compensated me for total loss, hence i went to ICICI to foreclose my loan. To my surprise they insisted that I pay 5% foreclosure charges, after a prolonged process they agreed a 50% waiver on the foreclosure charges which is 2.5% (BTW 2.5% is the industry percentage for foreclourse for total loss vehicles).

Its no surprise that for my Swift and Innova I didnt go to private banks.

My learning: Govt. undertaking banks make one run around initially after that one does not have worry about the hassle of foreclosure.

[SS-Traveller]

Originally Posted by tsk1979

Maybe banks want to me foreclosure painful?

but then isn't the 3% pre-payment penalty a deterrent for many?

Government banks make it painful for people to avail the loan, private banks make it painful to foreclose. Most of my loans have been out of Union Bank, and I pay instalments as I please - usually a little more than the decided EMI, and less when some months are financially not so good. In the end, a 36-month loan is paid off in 24-30 months. Add to that the pleasure of having your interest calculated on daily reducing balance, and no fancy forms & waiting at designated branches - any branch does my job.

The only loan from a private bank I've taken is from ICICI Bank, and it's such a pain - I cannot prepay lumpsums more than 4 times a year, I can't vary my EMIs by even a paisa from month to month, and any issues with customer service means I need to take a trip to a branch 10km away.

[rkg]

Hi!

My brother has savings( salary account) with ICICI when he was in gurgaon.

once he shifted to Bangalore salary a/c shifted to Citibank.
When my brother went to close the ICICI savings account he was told to come another day as they are busy.

he went after some time. then they took closure request and told they will send the balance amount by check ( amount is 35K)

it is more than two months still they have not sent the check.

it is true my brother should have taken out the money and then closed.

But if one wants close what is the problem Bank is having in giving back the clear money in the account?

[psp62in]

I believe the story is the same with most of the Pvt banks, and I would say ICICI is the worst from my own experience. Even foreclosure of a home loan is made so difficult and I basically consider them as loan sharks.

Would agree very much with SS- Traveller "Government banks make it painful for people to avail the loan, private banks make it painful to foreclose". But these days, the public sector banks are not that bad. So if one can bear with that bit of hassle with the public sector banks, dealing with them is any day more preferable and transparent.

[spadix]

Originally Posted by tsk1979

However, there is one thing which has me stumped.
I am not sure what is the case with other banks, but in case of HDFC bank, the procedure is stone age.

This was the case a few years back. I had to pass through all these hoops in 2004 to get my motorcycle loan foreclosed. I hear that it's different now.

Originally Posted by tsk1979

but then isn't the 3% pre-payment penalty a deterrent for many?

I have to run the numbers. Even though I pay only 8.75% interest (actually 9.03% if you don't count stamp duty and processing fees) I think I can still save some money.

By the way, my loan agreement says 3% is after 24 months. It's much higher if I want to close it earlier (not that I could).

However, the loan manager and DSA who processed my auto loan last year sent me details of a new scheme with zero foreclosure charges, asking me to pass it on to friends. As luck would have it, this scheme happened well after my loan was disbursed and I got my vehicle delivered.

So HDFC is definitely improving even on the foreclosure penalty front.

BUT, and I agree with the others here, an SBI loan is so much more breezy in terms of repayment. I have an education loan with them. Initial disbursement took time but it's been more or less smooth since then. I had to go to the branch (en route my daily commute now) a couple of times to get some clarifications and the interest paid certificate for tax, but other than that I've been happy. The flexible payment system (loan account) is simply mind-blowing. I just NEFT/RTGS from my salary account (HDFC) into this SBI loan account!

The only reason I went with HDFC for my car loan was that I banked with them for 7+ years and generally liked the savings/salary account experience. And the RoI was pretty low (although Axis and later Kotak matched it). Axis looked great too but I thought it's better to go with a known devil than an unknown one .

Regards,
spadix

[GTO]

I hope you guys are cross-checking the foreclosure rates with what's stated in your loan agreement. And yes, they are always negotiable.

Back to the question : Why the circus? Simply because they do NOT want you to foreclose your loan. I recently cancelled an extra Vodafone SIM card of mine and boy, they put me through absolute hell (innumerable request calls, new formalities every visit and so on).

[Mafia]

Originally Posted by srishiva

I guess they dont want to make it easy. In Citibank, I just had to call them and ask what will be the total amount. The lady was able to tell that within a minute. I had to take the money to the loan branch and pay off. It was simpler than your case

If they make any pre-payment to be accessible online (with some calculators), people would have paid off much of their home loans every month or so. They dont want it.

I think it is just to discourage customers from availing the option.

Main difference between HDFC and Citibank would be the number of branches. I have used services of both and in terms of speed and efficiency no one come close to the Citi group IMO.

[Urban Nomad]

Recently i had pleseant experiance with Bank of Maharastra while foreclosing my car loan.

Three step process

1. Walk to the counter & ask the outstanding amount
2. Pay the amount
3. Colloect the NOC from Bank

all process took not more than 45 min & no charges for foreclosure

All this from Sarkari Bank. I think we need to relook at these banks.
These are giving better service than so called private bank

[ant_vas]

Hi,
here's what i did to pre-close my car loan from axis bank.

i went to their loan branch in jayanagar in bangalore, waited for my turn (15 min). the lady at the counter took the loan number and informed me the amount. then she gave me a form to fill, which i submitted right there along with the check. i was given acknowledgment and was informed that it would take max 20 days for the pre-closure confirmation letter to come to my postal address.


and i received the letter in 2 weeks time. just one visit to the bank and my thing was taken care off!

cheers
Vasanth

[PearlYamaha]

I had foreclosed three car loans in the last 5 years with The RBS. The process is much simpler and experience was always good.

As per the loan agreement, there is no part payment penalty upto 25% outstanding in a calendar year. The foreclosure charge is 4% for the total outstanding and they automatically deduct 25% of outstanding if you haven't availed the part payment within the calendar year or whatever is left from that 25%.

I always closed the loan on a Saturday or Sunday. Be there in the branch at their opening time (Advantage of early riser!) and it takes hardly 15 mins to complete all the procedure. The closure certificate, NOC et all is sent by courier within 10 working days.

I should also mention that on the third loan, the RTO did not cancel the hypothecation. The RC was hypothecated to ABN AMRO Bank N.V. and the NOC was issued by The Royal Bank of Scotland. After submitting all the documents to AASI, they called me up the second day to inform that the RTO cannot cancel the hypothecation as the names do not match. I then visited The RBS branch to collect a RBI circular on the bank's name change and completed the formalities with the RTO.

The interest rate offered was the least in comparison with other banks that I inquired.

[amit1234singla]

Originally Posted by SS-Traveller

Government banks make it painful for people to avail the loan, private banks make it painful to foreclose. Most of my loans have been out of Union Bank, and I pay instalments as I please - usually a little more than the decided EMI, and less when some months are financially not so good. In the end, a 36-month loan is paid off in 24-30 months. Add to that the pleasure of having your interest calculated on daily reducing balance, and no fancy forms & waiting at designated branches - any branch does my job.

The only loan from a private bank I've taken is from ICICI Bank, and it's such a pain - I cannot prepay lumpsums more than 4 times a year, I can't vary my EMIs by even a paisa from month to month, and any issues with customer service means I need to take a trip to a branch 10km away.

+1 to this. I have a home loan from SBI and car loan from ICICI. Whenever I have little extra, I just transfer the money to SBI loan account online from my salary account. Gets creadited in next couple of hours, no charges, no visits, no questions. Interest is on daily balance. On the other hand when I wanted to pay back my car loan, they wanted to charge 5% extra. I said, I will better pay off the EMI's and walked away.