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  1. Anonymous
  2. Finance, Insurance
  3. Wednesday, April 10 2013
Looking for car loan, but heard of some friends of mine that agents do 1+1 in car loan and make quick buck. How is it like and how to get saved from it
Gagan Modi Accepted Answer

In Car Loan, 1+1 has 2 ways of duping a customer
- One is manipulating the loan deal
- Second is rather more grave with even cheating to extent of an EMI

For eg, say you going in for 36 month loan

in Scenario - 1
The customer pays the advance EMI upfront...
Say for Santro, 3 Lakh loan for 3 yrs.... Presuming SBI EMI comes at Rs. 9750 @ 10.5%
and Private Bank EMI comes @ Rs. 9860 @ 11.5%

Now agent brings in to see say 1 advance EMI of whose net impact will be Rs. 9766 (deal becomes 36 month with 1 adv EMI)
to further bring down he may ask customer for payment of 2 advance EMI - 9674

Now see- the EMI of 9674 is much better than SBI EMI of 9750

Why customer will make payment of 2 advance EMI
- generally these agents collects papers after 10th and says around 15th that loan is approved (say January for eg.)
- They ask customer to issue payment of EMI for this month and the next month - as 2 advance EMI (EMI for Jan and Feb)
- they complete all formalities and hold the file till 2nd or 3rd of next month and gets it disbursed so that EMI in bank will hit in the following next month. (Loan disbursed on Feb and EMI will start in Bank in March)

Now customer is happy that he has got lower EMI but in actual is paying a much higher interest rate
Reason - EMI calculated on loan amount - 2 adv EMI of Rs. 9674 calculated on Rs. 2,81,000 (disb amount - though loan amount will remain in as Rs. 3,00,000 with 2 adv EMI)

In Scenario - 2, which happens what is called cheating and is the dark area in car loan business
The Agent offers a lower interest rate to customer - say 10%
Customer been told that his loan tenor was 36 months and been he is paying 2 advance, his net outflow to bank will be 34 months

Now comes the grave area, agent/exec converts the deal from 36 month 2 adv EMI to 35 month with 1 adv EMI .
now what happens is that

SBI ROI is advertised as 10.5%
Agent pitches to customer and advertises EMI as 10% with Private Bank

Customer turns happy that though he is paying 2 EMI in advance and 34 EMI to bank but he is saving .5% lower rate of interest

But final loan statement will be
3 Lakh loan, 35 month EMI with 1 advance EMI
ROI yes will be shown @ 10%

But - the fishy part is the EMI - EMI will be Rs. 9830
Have you checked the original EMI with SBI without any advance EMI - It was Rs. 9750 @ 10.5%

Surprised how come your EMI has increased despite bank record showing @ 10% - the EMI of Rs. 9830

This is how car loan fishy part operates - the agent has taken benefit of 1 advance EMI - which is not showing in your bank records

Trust, it answers !!

p.s - Well - you could have put your name. Its better to have any name better than Anonymous

  1. more than a month ago
  2. Finance, Insurance
  3. # 1
Chetan Accepted Answer
Thanks, my dealer says that if i take loan from outside - the loan agent can do 1+1
How can i safeguard - if gets a lower rate to prevent my 1+1 emi

  1. more than a month ago
  2. Finance, Insurance
  3. # 2
Admin Accepted Answer
Ensure that whatever papers - loan agreement you sign in has :-
EMI - clearly defined
Loan Tenure - clearly defined
Advance EMI - 1 month
Interest Rates - clearly defined

Whatever EMI you getting from independent source - do not miss to check on EMI Per Lakh with below
EMI Chart

Do not sign on papers having 59 EMI with 1 Advance or 58 EMI with Zero Advance
Cross check your emi - to find exact rate and tenure from above EMI Chart.

  1. more than a month ago
  2. Finance, Insurance
  3. # 3
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