Car Loan pre-payment penalty

POSTED BY Paresh ON January 31, 2013 7:52 pm COMMENTS (3)

Hi,

I have taken Rs. 3,00,000 Car Loan in March 2010 for 5 years with EMI of Rs. 6,500 form State Bank of India. After good salary hike in 2012, I started paying extra amount Rs. 8,000 (means total Rs. 14,500). Due to it now current outstanding loan is around Rs. 36,000 and on 2nd Feb 2013 I am paying all outstanding amounts.

By one enquiry, I came to know that as I am paying loan before decided tenure so bank will charge pre-payment penalty. As per my knowledge RBI instructed to all banks to stop taking pre-payment penalty on home loan and auto loan.

Bank is saying that RBI made this rule in 2011 so if loan was taken before 2011 then person has to pay pre-payment penalty. Is it correct?

Please let me know your thoughts.

Thanks

Paresh

 

3 replies on this article “Car Loan pre-payment penalty”

  1. jackson says:

    I am going to get SBI loan for Rs 275000 with 5 years Tenure. They asked to pay the EMI of 5885. What is the procedure to pay the prepayment. Is there any minimum amount to be paid as prepayment. For example i am planning to pay Rs.4000 each month extra. Please advise

  2. Paresh says:

    Thanks for reply.

    I discussed with SBI they told that now even if I will pay regular EMI for Rs. 36,000 outstanding loan then also I have to pay pre-payment penalty. They told you paid extra amount and due to it SBI lost interest.

    Do you have any URL where it is mentioned that RBI instructs to Banks to stop taking pre-payment penalty on auto loan for existing customers.

    I have one link but it is for Home Loan http://rbi.org.in/scripts/NotificationUser.aspx?Id=7258&Mode=0

    Please provide me same link for auto loan and existing customers then only I can argue with them.

    Regards
    Paresh

  3. Dear Paresh, the interpretation of the staff of SBI is wrong. My take, please do not close the loan in full. Please increase your EMI to close the loan automatically in next few months if SBI people do not pay heed to your request for penalty waiver.

    Thanks

    Ashal

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today