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Business News/ Money / Ask Mint | Bank car loans cost less, take more time
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Ask Mint | Bank car loans cost less, take more time

Ask Mint | Bank car loans cost less, take more time

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I lost my job recently due to a mass layoff. I have a car loan for Rs3 lakh and a home loan for Rs20 lakh. I am managing to pay off my home loan from my savings but am unable to keep up with my car loan commitment. What will happen if I don’t pay my car loan temporarily? Can I do something about it?

Angeline Fernando

Angeline, I know times are tough now but things are improving and I am sure this is just a temporary setback you are facing. In finance matters, prompt action leads to the best results. If you are unable to keep up your car loan commitment, the first thing you need to do is to talk to the bank and request it to permit you to hold off EMI payments until you get a job. If the bank does not agree, you could think of liquidating some of your existing assets to repay the loan.

Don’t leave this issue unattended or the loan default could lead to your car being impounded. This will affect your credit rating and make it difficult for you to obtain loans in the future or make them very expensive. So I would urge you to take up the matter with the bank concerned at the earliest.

I am planning to buy a Maruti Swift. My dealer has a tie-up with only HDFC Bank and Kotak Bank, but I have been told that public sector banks offer car loans at a much cheaper rate. Can I approach a bank directly? Will I face any problems if I do so? Alternatively, how can I negotiate for a better deal?

Shankar Chouhan

You are free to approach the bank of your choice. Most dealers offer an insurance premium waiver option or cash discounts to make the loan offer attractive, but it is better to cross-check and compare total loan cost. Sometimes finance arranged through dealers could turn out to be more expensive. Approaching the bank directly has its drawbacks as well as benefits. Banks could take more time to process the loan, but rates will be cheaper. You can also go to independent finance companies that specialize in car finance for faster approvals and prompt service.

Queries and views at feedback@livemint.com

Adhil Shetty is the CEO and co-founder ofwww.BankBazaar.com

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Published: 04 Jan 2010, 09:43 PM IST
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