[tsk1979]

In today's world everything from payment of credit card bills, getting an auto loan, bank account management, money transfer, even to a different account in another bank is done through the internet banking systems.
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.
Here is what you do
1. You go to a branch located in a part of the city where you would normally never go to even if you are paid to go there
2. after waiting for an hour, you will be called to a counter, and you will be given a form to fill
3.submit the form, and get acknowledgment.
4. Within one month max, bank will give you a closure letter with the amount to be paid. thankfully, it will be couriered to your address
5. Again you go to that particular branch, and wait for an hour or so, and then submit your check

Why can't you simply ask for a foreclosure online, bank can calculate the amount + service tax etc., and then you can submit a form online which will debit the amount from your bank.
After all, all installments are deducted monthly from your account.
why have this circus needing 2 visits to a far away branch.

If not do it online, why can't be this done at all major branches?
Maybe banks want to me foreclosure painful?

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

[Samurai]

Forget foreclosing, even normal closing is such a prolonged affair with HDFC Bank. I bank with HDFC for personal and company. Have very good experience, except for loan part. Their loan department people are worse than the government employees.

[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.

[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).

[tsk1979]

Since I am on 12%+ interest rate, 3% pre-closure penalty is not that much.

[msdivy]

It isn't over after the cheque is submitted. Bank must give Hypothecation Termination certificate and it might take more time.

[selfdrive]

Originally Posted by tsk1979

Since I am on 12%+ interest rate, 3% pre-closure penalty is not that much.

that depends on how far ahead you are in your loan term. If you are halfway or more through your loan term, you have paid most of your interest and the rest of the payments would be more repaying your principal. In such a case you would be better off not prepaying your loan (unless you have other reasons to close)

[anujmishra]

I am also auto loan customer from HDFC and after knowing tsk1979's pain, I should be ready with that. I am paying 9.5% interest as of now. I think this is pretty good rate considering Safari and other people paying interest around 11 - 12%.

I am also planning to close the loan sometimes in 2012 and I feel this thread would help me out at that time.

[narayanang76]

TSK you are right. This is too many steps of which many could be avoided. Not expecting them to tell the amount and then we pay.

As I ahve seen the steps with foreclosute with SCB (standard chartered bank with a home loan scenario) were:
Raising a request for pre-closure with the bank (calling the customer care number)
Bank will send the preclosure letter with details (outstanding balance, payment penalty and total amount to be paid, and validity of the said letter)
Go personally to ANY SCB branch and deposit the payment cheque / bank also give other option of cash/dd/online payments.
On receipt of the payment they issue a receipt (payment subject to verification)
Within few woring days the remaining process of closure / documentation will be complete.

I see that these were simpler than your HDFC experience and here HDFC was very strict - I feel it might be deliberate also

[ghodlur]

Is foreclosing a loan from own sources still calls for pre penalty clause. Also would an auto loan not have a seperate loan account like the home loan account where you can transfer the balance outstanding and the bank would then know that the principal is zero and issue a loan closure statement. I guess I am asking for too much of an ideal world.

[PAVAN KADAM]

I beg to differ on eveyone's views.

Being associated with the loan department with HDFC since the last 11 years, i can confidently vouch by saying, HDFC Bank has the best team involved here.

Step1:
Call customer service and place a request for Pre-closure. The pre-closure letter reaches you within the next 7 working days time. Send a DD for the amount mentioned. Once its realised, within the next 15 days time, you receive the Loan closure letter and HP cancellation letter.

Step2:
Go to your nearest HDFC Bank. Request for the loan closure letter, pay the closure amount at the counter, get an interim loan closure statement. Within the next 15 working days, you will receive the loan closure and HP cancellation letter.

3% pre-closure penalty is common across all Banks, While Citi charges 5%.

While you guys harp about other banks, please get in touch with your friends who have closed loans with other banks and you will realise, how hard they are trying to get the refund of the Next EMI deducted from their account after closure.

[NetfreakBombay]

Originally Posted by Samurai

even normal closing is such a prolonged affair with HDFC Bank

My experience has been different. Last EMI was deducted in Jan 2011. Two weeks after that they automatically sent a letter with 3 - 4 forms that include N.O.C + few RTO related forms.

Did not require any followup from my side.

[Samurai]

Originally Posted by NetfreakBombay

My experience has been different. Last EMI was deducted in Jan 2011. Two weeks after that they automatically sent a letter with 3 - 4 forms that include N.O.C + few RTO related forms.

May be they are better in MH. I have just entered the 3rd car loan with HDFC, only because all my personal/company banking happens with HDFC. But the amount of hassle they give is infuriating. I had to threaten to cancel the loan application before they got their act together this time.

I would rate HDFC bank as the best bank except for their loan department.

Few years back they hounded my wife for months on her mobile phone regarding an educational loan taken by an ex-employee for his studies in USA. What's the connection? My wife was the finance manager in the company when that employee took his educational loan from HDFC. She hadn't provided anything beyond income certificate. The cro-magnon from the Bangalore loan office was holding my wife responsible for the loan. It finally took a very harsh letter, legal threat and verbal fireworks from us to the local branch who had our corporate account, before their pit-bull was leashed.

Therefore, I don't need somebody associated with HDFC loan department tell me how professional they are.

[bnzjon]

Originally Posted by PAVAN KADAM

I beg to differ on eveyone's views.

Being associated with the loan department with HDFC since the last 11 years, i can confidently vouch by saying, HDFC Bank has the best team involved here.

Step1:
Call customer service and place a request for Pre-closure. The pre-closure letter reaches you within the next 7 working days time. Send a DD for the amount mentioned. Once its realised, within the next 15 days time, you receive the Loan closure letter and HP cancellation letter.

Step2:
Go to your nearest HDFC Bank. Request for the loan closure letter, pay the closure amount at the counter, get an interim loan closure statement. Within the next 15 working days, you will receive the loan closure and HP cancellation letter.

3% pre-closure penalty is common across all Banks, While Citi charges 5%.

While you guys harp about other banks, please get in touch with your friends who have closed loans with other banks and you will realise, how hard they are trying to get the refund of the Next EMI deducted from their account after closure.

I agree with Pavan. The stated procedure was followed by the HDFC closure team to the T while closing my loan.

However, i wonder why take so many days to close a loan when loans are disbursed in 1 to 2 days flat ?

When i applied for a HDFC Car loan during July 2009, it was disbursed in 1.5 days flat to the dealer. I was charged Rs. 3000 as processing fee which was waived at the first "simple" request to the DSA.

During Dec 2010, i sold the car. I was charged 5% as prepayment penalty. I begged to all and sundry from the customer care to the branch manager to senior guys at HDFC. None bothered to waive off the preclosure penalty. All i wanted was to reduce the percentage from 5 to 3. I was informed bluntly that HDFC follows process and procedures to the T and no waivers for closure.

To get a customer, they go to any extend to please but at the time of closure, we talk about process and procedures

I was given an offer of 2 percent waiver if i take another car loan from them prior to the loan closure. Reason given by a senior person at the closure department was that the senior management will waive to whatever extend you demand to get a new loan business.

I work for a MNC Bank, my brother too work for a MNC Bank. The process and timelines for closure of a loan is much simpler and professional than what i experienced at HDFC Bank.

I will never do any business with HDFC in the future. My savings a/c with a decent balance stands closed, FDs withdrawn and am waiting for my Home loan with them to get over soon.

[NetfreakBombay]

Originally Posted by Samurai

May be they are better in MH.

I think this letter + forms were sent by some system rather than a person. So hopefully now this should be consistent across the country.

Originally Posted by Samurai

Therefore, I don't need somebody associated with HDFC loan department tell me how professional they are.

Just to clarify, I am not associated with them in any way (just a customer).