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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
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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