TNN | Jan 6, 2013, 07.14AM IST
MUMBAI: State Bank of India has reduced processing charges on auto loans to a flat Rs 500 irrespective of the size of the loan. The bank has also decided to continue with its festival offer of lower processing fees on home loans, which was to end in December 2012.
On car loans SBI was earlier charging 0.5% processing fee. The fees were halved during a festival offer in October to 0.255%, which meant Rs 2,550 on a Rs 10 lakh car loans. “Now the charges will be Rs 500 flat irrespective of the size of the loan” said a bank official. He added that the charges were reduced in keeping with aggressive promotions by other lenders.
SBI’s car loans at 10.5% are the cheapest in the industry. It also offers loans of the longest tenure up to 7 years. However, one key difference between SBI and other private lenders is that SBI’s auto loans are on floating rate and will move along with the bank’s base rate. The loans can be pre-paid at anytime without attracting any penalty. SBI’s home loans are available at 10% up to Rs 30 lakh and at 10.15% for loans above Rs 30 lakh. The processing fees vary from Rs 1,000-5,000 depending on the size of the loan and Rs 1,000 for take over of loans from other lenders.
HDFC Bank had announced a 50-75 basis points reduction in its auto loans with effective from January 1, 2013. Following this, the bank’s auto loans are available in the range of 10.75% to 11.5%. HDFC Bank offers only fixed rate loans and there is a penalty for early closure of the loan. The third-quarter is the busiest quarter when it comes to auto loans because of the new year models that come into the market. Also, many buyers chose to make their purchase at the tail end of the financial year to get advantage of depreciation benefits.