FAQ - CAR LOAN

Q. What makes of cars does SBI finance?
A. SBI finance all makes of new cars, and secondhand cars not more than five years old. Thus, you are free to choose any vehicle you want to own.

Q. Can my spouse's income be included for calculating the loan amount?
A. Yes, your spouse's income can be included provided he/she guarantees the loan.

Q. Do I have the option of choosing a fixed or floating rate for the loan?
A. You have the option to avail the loan with either a fixed interest rate or a floating interest rate. In the case of a fixed rate loan, the interest rate on the loan will remain fixed through the entire tenure of the loan, whereas in the case of a floating rate loan, the interest rate could decline or rise in line with the changes in the State Bank Advance Rate (SBAR). Fixed Rate option is available only for Car Loans upto Rs. 5 lac.

Q. What is the repayment schedule like?
A. The minimum amount that you are expected to pay every month is the EMI.You can repay the loan in upto 84 EMIs.

Q. What is EMI? How is it calculated?
A. EMI stands for Equated Monthly Installments. This installment comprises both principal and interest components. Your EMI would be calculated depending on the tenor you choose, to repay your loan. The EMI would be higher if you choose to repay within a shorter period as against a longer-term loan.

Q. What Security do I have to furnish for availing the Car Loan?
A. A charge on the vehicle financed is noted with local Transport Authorities . Your spouse's guarantee, if his/her income has been considered for fixing the loan amount, would also be required. Some other security may also be required in certain cases.

Q. How does SBI Car Loan compare with those offered by other institutions?
A. There is total transparency with regards to the rate of interest and the fees charged by SBI.
SBI offer loans for the longest tenors (84 months) with the flexibility to reduce the tenor by prepaying the loan without attracting any penalty.
SBI levys interest based on daily/monthly reducing balance, unlike the flat rate of interest or interest based on annual reducing balance method used by several other financiers
SBI provides finance for one-time road tax, registration fee and insurance premium also. SBI provide free Personal Accident Insurance upto the outstanding amount, so that in case of accidental death, your near and dear ones are not required to repay the loan.
SBI do not charge any advance EMIs

Q. How do I benefit if the interest is calculated on a daily reducing balance?
A. In a flat rate of interest (which is what many other players charge), the interest is calculated for the full tenor of the loan on the amount advanced. In effect you continue to pay interest on the amount you have already repaid. Similarly, on an annual reducing balance method, you will continue to pay interest on amounts you repay during the coming one year.
In the case of the daily/monthly reducing balance, which is the methodology SBI employs, your interest is calculated only on the outstanding loan amount, which reduces every time you pay off your EMIs or make any prepayments. This in essence lowers your effective rate of interest significantly.