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  1. Tapan Jain
  2. Finance, Insurance
  3. Friday, December 21 2012
I want to know that Banks today charges car loan processing fees. Then why is my dealer asking to deposit PF to him and not to issue a cheque in favor of Bank.
If the Bank charges a processing fees then cheque should be issued in favor of Bank, how can the dealer collect the processing fees and not issue a receipt also for the payment. Is it Legal
Gagan Modi Accepted Answer
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Hello Tapan,

Its not that dealer collects processing fees on behalf of Bank, Rather the disbursement done by the Bank is short due to processing fees a component for it

For ex - Say you
Car you buying costs Rs. 7 Lakh
loan amount is Rs. 5 Lakh, no advance emi and Processing fees is Rs. 5000

Now when the Bank will make payment to dealer it will make payment as Rs. 5,00,000 - Rs. 5,000 = Rs. 4.95 Lakh against the loan
The balance amount i.e Rs. 7 Lakh - Rs. 4.95 Lakh = Rs. 2.05 Lakh will be supposed to payable to dealer

Now - no where is the dealer collecting processing fees - rather the bank on other hand is making short disbursement to extent of PF

For receipt - Every Bank has a customer receipt in there loan agreement booklet which has EMI, processing fees, loan amount and other details filled up
Still - if you want a payment acknowledgement - you can approach the Bank to issue the same post disbursement of loan, a dealer would be of little help to you


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