Here's how you can get the best auto loan

In an online chat with Get Ahead readers on September 30, Harshal Chandorkar, senior vice-president, consumer relations, CIBIL, answered their auto loan queries.

Here is the unedited chat transcript:

Deepak N: Hi, i am having a auto loan for my second hand car , and the intreast rate is around 16%, is it possible to switch the loan to different bank which is having lower % of amount, and what could be the benefits will i get

Harshala C: Do look at the Terms and Conditions of the Auto Loan. And if it is permissible to switch you can opt for switching the loan.

Abdul Warith: How is credit score related to auto loan?

Harshala C: Like any other loans and credit cards, auto loans are also reported to CIBIL and get reflected in the borrower's credit report. And information in the CIBIL report is used to calculate the CIBIL TransUnion Score

kaushal: what is the best way to negotiate for a four-wheeler loan

Harshala C: You can go and find out the Rate of Interest that is being offered by 3-4 banks of your choice. You can then compare the interest rates offered by different banks and then choose. Also do access your own CIBIL Report and Score. You may negotiate if you have a good credit history and score

salim: What kind of documents are needed for hassle-free auto loan processing?

Harshala C: Typically, documents you will need to submit are: Proof of Identity: Passport copy, PAN Card, Voters Id card, driving licence( Laminated, Recent, Legible) Income Proof: Latest salary slip with form 16. Address Proof: Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card. Bank Statement: Last 6 months

shaishav: If I have a credit score of more than 700 can i negotiate hard with the loan financier?

Harshala C: Typically, documents you will need to submit are: Proof of Identity: Passport copy, PAN Card, Voters Id card, driving licence( Laminated, Recent, Legible) Income Proof: Latest salary slip with form 16. Address Proof: Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card. Bank Statement: Last 6 months

shaishav: If I have a credit score of more than 700 can i negotiate hard with the loan financier?

Harshala C: While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above.

arif khan: if my Score is less then 580,will i get a Loan

Harshala C: While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above. You may find it difficult to get a loan with a score of less than 580

shoban babu: My Name is in CIBIL, but my Credit Score is good can I get a Loan. What should be the credit score? S. Babu.

Harshala C: While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above.

amit: On net take home of 75K with existing loan emi's of 17K what is the advisable car loan ?

Harshala C: Most of the banks have a loan eligibility calculator - which will take into consideration your income, monthly expenses and other fixed obligations like EMIs, premium payments, etc. Do check your loan eligibility on such websites

adil: Will my credit score be affected if I had availed of 0 pc finance schemes?

Harshala C: If you have not missed your payments on the 0% finance scheme it will not affect your score negatively.

anil: How can I get the best rate for an auto loan? I plan to purchase a Duster this Diwali?

Harshala C: Do your research to find out which lender is offering the best rate of interest. Access your own CIBIL report and Score. If you have a good history and score - you may negotiate for better terms and conditions.

abc xyz: does pre closure of auto loans incur any hidden cost? please clarify.

Harshala C: Generally pre closure of auto loans do not have any hidden charges. However do discuss this specifically with the bank. After you close your loan make sure you have taken a loan closure letter from the bank.

appa: How do discounts and other goodies help consumers who avail of auto loans? Or they just a trap to ensnare gullible loan takers?

Harshala C: Dealers offer attractive discounts during festive season. Approach a reputed dealer and negotiate for the best price and terms & conditions Compare loan options: Research online to check the available car finance options and narrow down the ones that best suit your requirements.

waman: What are the catches one should watch out for while going in for a two-wheeler or four-wheeler loans?

Harshala C: Select your car model: Select the model that best suits your requirements. Dealers offer attractive discounts during festive season. Approach a reputed dealer and negotiate for the best price and terms & conditions Compare loan options: Research online to check the available car finance options and narrow down the ones that best suit your requirements

Check your credit report and score before applying for the loan Contact rival financiers and get their best rates -- ask them to recommend a dealer for the car of your choice. See if that dealer is giving you a better deal. If you have a good credit score check with the finance companies what better terms and conditions can they offer you on the loan

Apply for the loan option only after reconfirming all the finance details best suitable to you. Make sure that you get the best value for your money.

omi: Does it make sense to take an auto loan directly from bank and then buy car from a dealer or should I go to a DSA?

Harshala C: Dealers offer attractive discounts during festive season. Approach a reputed dealer and negotiate for the best price and terms & conditions Compare loan options: Research online to check the available car finance options and narrow down the ones that best suit your requirements Check your credit report and score before applying for the loan.

If you have a good credit score check with the finance companies what better terms and conditions can they offer you on the loan

kapadia: What are the hassles one must take care of while pitching for an auto loan?

Harshala C: Approach a reputed dealer and negotiate for the best price and terms & conditions and offers for the festive season Compare loan options: Research online to check the available car finance options and narrow down the ones that best suit your requirements Check your credit report and score before applying for the loan so that there any hassles when you apply for the loan.

rajat: I am planning to buy a CNG WagonR. (a) In the current time, what would be a good rate. I've been offered between 10.75 to 13 per cent. (b) what should be a decent processing fee?

Harshala C: You can access your credit score and report on CIBIL's website in 3 easy steps: Step 1: Fill online form- Visit http://rediff.ly/1gsxk and duly fill in the online request form Step 2: Payment – Make payment of Rs. 470 via Net banking / Debit / Credit / Cash Card Step 3: Authentication – Answer 2 questions based on your credit history

If you are successfully authenticated you can download your credit report consisting your credit score and also receive it via e-mail. If you fail the authentication then you can upload scanned copy of your identity proof and address proof on CIBIL's website. The report will then get delivered to you via express delivery

Abhijit G: Hi, In which Bank is providing lowest interest rates in Auto loans??? Weather any extra processing fee will the there....Please suggest.

Harshala C: Compare loan options: Research online to check the available car finance options and narrow down the ones that best suit your requirements

Most of the banks will have Processing fees. It is a one-time charge taken for processing and legal paperwork. It is in the range of 2-3 per cent of the loan and has to be paid upfront to the company.

jeet raju: I am planning to buy a used car between 4-5 lakh. what is the best interest rate available

Several website offer an easy comparison of the available car finance options including the rate of interest and processing fees. This comparison will help you narrow down the ones that best suit your requirements

jeet raju: i had a credit card payment settlement which happened due to a fraud against me long back. i came to know about it later and settled the case. Now no bank is ready to issue a credit card to me. my CIBIL score is 800. can i be outrightly debarred from getting a credit card or do i have some rights and can approach somewhere against this?

Harshala C: While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above.

If you have a letter from the bank where you settled your credit cards due post the fraud against you, it may help if you show that letter to the bank where you are applying for a loan or credit card

dinesh: The 0% finance schemes that the RBI recently clamped on, will they help or harm consumers? HOW?

Harshala C: Here's a typical example of the 0 percent EMI scheme. So let's say, X Bank gives Y a loan of Rs 10, where Y pays back Re 1 per month in 10 months. The impression created is that there is no interest rate charged. But if Bank X is also charging a processing fee of Re 1, then the actual money lent will be Rs 9. In other words, Re 1 processing fee actually works as an interest.

So the RBI move is good news for customers. The RBI policy is aimed at creating awareness among the common people about the schemes floated by the companies and banks. Many people want to buy gadgets even when they don't have the financial capacity to buy. And by getting into these EMI offers they may get into unmanageable amount of debt.

Abul Mansoor: I have not taken any loan or credit card sice my birth but when I tried to apply for a car loan for th efirst time they rejected my car loan saying my credit score is less, How do I increase my credit score?

Harshala C: If you have never taken a loan or a credit card, CIBIL will not be able to generate a credit report or a score for you. Please check with the bank for the reason for rejecting the loan.