Procedure of Car Financing Through A Delaer

8/3/2019 Procedure of Car Financing Through A Delaer

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Chapter 1INTRODUCTION


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INTRODUCTION

TO COMPANY:

Aakriti World is a leading DSA in the Jalandhar region. DSA means Direct Sales Associatewho

sources business for a bank or finance company from the market. Other than the direct

sources the Banks appoint Dealers /others as their Direct Sales Associate for expanding

their lending business

Aakriti world entered in to the auto finance in the year 1996 and in 1998 they got associated with

the CITI BANK and CITICORP Maruti Finance Ltd. for Auto finance and other retail financing.

In the very first year of operation, Aakriti was placed at no.1 for auto finance in the state of

Punjab and they grabbed a very good market share in Jalandhar. Later on in their endeavor to

penetrate further in to all sections of retail financing viz. Auto, Two wheeler, Housing Loans,

Personal Loans, credit Cards etc. they entered into agreement with ICICI Bank Ltd. in may,

2000.

ICICI Bank being confident in their progressive performance, allowed them to expand their

network in markets adjoining Jalandhar viz, Kapurthala, Hoshiarpur, Phagwara, Nawanshahir

etc. With their relentless team effort they further penetrated into Himachal area, in year 2003

with opening up a branch in Palampur and Dharamsala, in year 2004 in Pathankot, Mandi and

Kullu and in 2005 they opened up their office in Jammu and Batala also.

In this growth of theirs, the firm Aakriti Financial Services and other sister concerns got mergedto constitute a company in the name and style of Aakriti Professional Services Pvt. Ltd... It has

become a professional company with the definite levels of hierarchy in the management having

fully transparent structure.

To handle the huge customer base and to generate fresh business they developed their own Call

Centre at their head office in Jalandhar, which ensures better after sales service to the customers.

With the relentless efforts of their marketing as well as back office teams the company achieved

new heights every year. From a single office, they became a thirteen branch company with staff

strength of 200 and total disbursement of Rs. 85 crore wherein Rs. 50 crore were contributed by

car loan and rest 35 crore from housing loan.

They are currently in association with ICICI Bank Ltd.., Tata Capital, Kotak Mahindra Prime,

Axis Bank, HDFC Ltd. for marketing their financial products in Jalandhar and surrounding areas.

They are also associated with ICICI Lombard, Bharti Axa, Reliance, Bajaj Alliance, HDFC

ERGO general insurance companies for marketing their insurance products.


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OVERVIEW OF THE ENTIRE PROJECT

Opening up of dealership for Chevrolet Sales India in Jalandhar, a leading car provider.

Chevrolet sales is operating in more than 200 countries in the world and has an established sales

and service network in India with more than 208 outlets .The Parent company of Chevrolet sales

India is General Motors worlds leading automobile manufactures operating worldwide for 76

consecutive years. Chevrolet Sales presently have 4% market share in India and the projected

figure is 10% by 2011.

Latest Venture of the Parent Company

Shanghai Automotive Industry Corporation steps into India with JV partner General Motors,

SAIC operates eight joint ventures in china covers four GM brands- Cadillac, Buick, Chevrolet

and Saab and would jointly initially bring two or three compact cars in India.

Aakriti World had received a letter of intent from General Motors India Ltd. for being appointed

as a dealer to operate in Jalandhar region.

Area of Operation

Their area of operation will be Jalandhar, Nawansher, Kapurthala, Phagwara and adjoining areas.

Work Profile

They have established a showroom for selling the cars manufactured by General Motors in India.

They have also established a workshop for providing after sale services to the customers.

Aakriti World has established sales and service center in Jalandhar. They are in process offurther extending the Chevrolet sales and service outlet in Nawansher District which is a rich

NRI area in Punjab.


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EXISTING BUSINESS ACTIVITY

Car Loan, Home Loan, Insurance Services and Used Car Website

They are currently in association with ICICI Ltd., TATA Capital, Kotak, Axis Bank for

marketing their financial products in Jalandhar. We are also associated with ICICI Lombard,

Bharti Axa, Reliance, Bajaj Alliance, HDFC Ergo General Insurance Companies for marketing

their insurance products. Apart from this they are also running their own used car website for the

last 5 years in the name of car4u.in through which they promote customer to customer used car

deals.

Company Name M/s Aakriti World

Franchisee Car Loans (ICICI Bank, Axis Bank, Tata Capital, Kotak

Mahindra Primus Ltd.)

Home Loans (ICICI Bank, Axis Bank, HDFC, India Bulls)

Insurance (ICICI Lombard, Bharti Axa, Reliance, Bajaj

Alliance, HDFC ERGO general Insurance Companies)

Achievement Leading DSA in Regionand now a dealer DSA for various Banks.

Customer Base Vast customer base including Major Corporate Houses,

Industrialists, employees, professionals and self employed

people in all locations.

Strength Very Good relations with all auto dealers and corporate of

Jalandhar, Ludhiana, Hoshiarpur, Nawansher, Amritsar

Head Office Aakriti World

Vassal Tower, Civil Line, Opp. President Hotel

Jalandhar


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EXECUTIVE STAFF PROFILE

Designation No. Experience Education

General Manager 3 10-12 years Graduate

Marketing Manager 3 7-8 years Graduate

Service Manager 2 6-7 years Graduate

Office Executives 5 4-5 years Graduate

Accountant 2 10-12 years Post Graduate

Staff is well qualified and mostly graduates and post graduates They have been trained well for various jobs Staff is very dedicated and highly motivated Time to time training is given to staff in order to make them familiar with latest

advancements and technological innovations.


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ORGANIZATION STRUCTURE

MD

VP

GM

(Sales)

GM

(Service)

GM

(Finance)

MM 1 MM 2 MM 3

Ankur

Nitin

Varinder

Sandeep

Jagjeet

RaviTL

Rohit

Showroom

HostessSunil

Technicians

Assistant

ManagerHarpreet

Senior

Advisor

Senior

Advisor

Technicians

Assistant

Manager

Harkesh

Service

Manager

Body Shop

Manager

Finance

Manager

Insurance

Manager

CRM

EDP And

Accounts

Executive Executive


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MAJOR TIE UPS WITH BANKS

Private Sector Banks:

Industrial Credit and Investment Corporation of India (ICICI) Housing Development Finance Corporation(HDFC) Kotak Mahindra Prime Limited Axis Bank Tata Capital Limited Mahindra and Mahindra financial Services Limited Magma Fincorp. Limited IndusInd Bank Limited

Nationalized Banks:

State Bank of India (SBI) State Bank of Patiala


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BUSINESS STRENGTHS

Hardcore Selling Experience

Innovative Marketing SchemesFamily Background and Local Contacts

Motivated and Experienced Team

Direct Relations with Corporate houses, Banks and professionals

Highly Professional and ethical approach

FINANCIAL STRENGTHS

Movable Assets

Capital in the running business can be utilized for further investment Deposits in various banks and financial institutions

Immovable Assets

Parental House located in prime location of Jalandhar constructed in 11385 sq feet area. Commercial and residential plots worth in crores.

Support from Banks

Apart from this the firm enjoys a good relation with the bankers. Any type of need based capital

can be raised with their help without going through much complications and long procedures.


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STRATEGY BEING EMPLOYED

The company intends to approach the market for increasing its sales and customer base of

various cars and other financial services on the basis of following analysis:

Where Whom How

Where To Target

Jalandhar City and Jalandhar Cantt Peripheral towns like phagwara, kapurthala, nawanshahr, nakodar, kartarpur etc. Doaba region between Sutlej river to Beas river dominated by NRI families Rural market, villages of the company region which are dominated by agriculturist and

landlords

Whom To Target

MUL, Hyundai and Tata small car owners Medium car owners of all companies Business houses and traders associations Jalandhar being centre of leather, sports goods and hand tool exports form a potential

market to be targeted.

Major Corporate operating in the area Landlords NRI Families Doaba region particularly is famous for NRI Families Rural Market

With resources and awareness already in Punjab villages they are also a good segment to

be looked at

All relevant market segments will be directly approachedHow To Target

Sales Strategy

Advertisement and promotional activitiesRegular advertisement will be taken through newspaper insertions, hoardings and kiosks

etc. Promotional events will be organized in the region. This will include special displays

at various important locations. Aggressive direct marketing tele - marketing will be taken

up for the direct and extensive personal approach to the customer.


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Tie up with finance and Insurance companiesThe firm is currently in association with ICICI bank ltd., Kotak Mahindra, Axis bank for

marketing financial products in Jalandhar. They are also associated with various

insurance companies for marketing their insurance products.

Demonstrations and loan melaIn coordination with other finance companies various loan melas, service camps,

exchange offers will be organized to induce fresh sale in the market.

Product demonstrations will be made at various peripheral towns and villages to promote

the sales.

Personal InfluenceThe firm has gained and maintained goodwill, vast customer base and familys personal

influence will help in sale of GM products.

Trained Staff and product knowledgeTrained staff and better product knowledge will help in achieving good numbers.

Service Strategy

Providing quality service

Modern service station will be setup Modern equipment for world class services will be installed System will be adopted for complete customer convenience

Trained and Qualified Staff

Qualifies service staff has been recruited Regular training will be imparted to staff Regular evaluation of the quality and efficiency Establishment of dedicated customer care department Special attention to every visiting customer Feedback from customer after service


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TO TOPIC:

This report is on the topic Procedure of Automobile Loans. The project was carried out at

Aakriti World under the esteemed guidance of Mr. Harpreet Singh. In the present world, everyperson wants to own the luxuries of life, but due to non availability of finance everyone is not

able to do so. Hence some apply for loans and thus comes the need for financial institutions to

lend various services to the people.

The reason for selecting particular financial institution is that, it has been serving to huge

customer from last 15 years and offer a technology enabled customer interface that provides easyaccess and superior customer service. Aakriti World had a network of 13 branches spread over inPunjab and Himachal Pradesh. It aims to serve all the financial needs of its customers with the

help of various banks and other financial institutions. The entire process of sanctioning or

rejecting a loan involves a number of processes.

This study involves the various processes involved during the sanctioning or rejection of a loan.

Affordable interest rates and easy loans section by banks and other financial institution has

increased the demand automobile loan in India.

The most common type of vehicle financing, is dealership financing. In this arrangement,

a buyer, a dealership and a bank/finance company enters into a contract where the dealer

arranges finance for the buyer and the buyer agrees to pay the amount financed, plus an

agreed-upon finance charge, over a period of time. The bank, finance company or credit

union through their collection agency services the account and collects the payments.

Dealers typically sell the contract to an assignee, such as a bank, finance company or credit

union. The dealership submits the credit application to one or more of these potentialassignees to determine their willingness to purchase your contract from the dealer . These

finance companies or other potential assignees will usually evaluate your credit application using

automated techniques such as credit scoring, where a variety of factors, like your credit history,

length of employment, income and expenses may be weighted and scored. Since the bank,

finance company or credit union does not deal directly with the prospective vehicle purchaser, it

bases its evaluation upon what appears on the individuals credit report and score, the completed

credit application, and the terms of the sale, such as the amount of the down payment. Each

finance company or other potential assignee decides whether it is willing to buy the

contract, notifies the dealership of its decision and, if applicable, offers the dealership a

wholesale rate at which the assignee will buy the contract, often called the buy rate. Most

dealerships have separate Finance Department, which provides one-stop shopping for

financing. The Finance Executives will ask you to complete a credit application. Information on

this application will include: your personal and professional details viz name; Social

Security number; date of birth; current and previous addresses and length of stay; current

and previous employers and length of employment; occupation; sources of income; total

gross monthly income; and financial information on existing credit accounts. The


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dealership will obtain a copy of your credit report, which contains information about

current and past credit obligations, your payment record and data from public records (for

example, a bankruptcy filing obtained from court documents).

The dealership is usually the most convenient source of financing , but convenience comes at a

high cost. The interest rate on dealer-financed loans is usually higher than on bank or creditunion loans - sometimes substantially so. Dealers set purchasers interest rates based on their

credit rating and then tack on fees and extra percentage points.

Thats how dealers generate revenue. Dealers also make money by selling your loan to other

lenders, which pay them part or the entire markup as a commission creating an incentive for

dealers to pile on as much interest as possible


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WHAT IS CAR FINANCE

Owing to the presence of various conglomerates and private sector banks in India, funding a carhas now become very trouble-free and effortless task. To benefit from its growing popularity, all

banks are endorsing their products competitively in the market. Their products are customizedwith novel service offerings and subsidies. A comprehensive, flexible and modified financingalternative for the purchase of new cars are accessible throughout the world.

The best car finance scheme is the one that provides the lowest rate of interest and extended loan

tenure. However, the best deal should not be estimated by solely considering EMI amounts,

rather how much is entirely forfeited by you in the total loan term should be taken into

consideration.

Basics

Car financing is a procedure wherein those who want to buy a car do so by getting the money for

payment from another source and then paying it back a little at a time over a certain period. Thereason for opting to get car financing is simple. Very few people have the financial capability tobuy a car up front with cash. Even if they did, it would be unwise to deplete the majority of their

resources for one item at a given time. Thus, car financing is an option for those who want to geta car without spending a big chunk of their money up front.

Dealership

There are different sources when it comes to car financing. One of the most common is with thedealership itself. Dealerships often offer an in-house system that's been put in place to increasetheir sales. They understand that without a method for deferring the large outflow of cash by

their clients, cars will most likely not be sold. The advantage of this that it is the most convenient

way of getting payment options for your car. There is no need to talk to different people andexplain the situation because you are dealing with the same parties. However, the disadvantage

could be that the dealership might insist on terms that will increase the sale price of the car.

Another common type of loan that they might want to enforce is the front-loaded type. This

means that the payments the person makes have higher interest at the beginning of the loan thanat the end. This can prove to be a disadvantage for those who are capable of paying off their

loans early.

Banks

Banks and other financial institutions often offer car loans. One of the advantages of gettingassistance from this particular source is that their rates are usually quite competitive. Since they

have no interest in the car the way a dealership does, banks can give an objective assessment onthe price of the car. Finally, the interest offered by banks is usually classified as simple, which

means that the interest rate is spread evenly throughout the time given for the loan. The

downside is that the application process might take longer because it is still subject to approval.


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Considerations

It is a good idea for a person to explore all possibilities for financing the car before closing thedeal. Arming yourself with solid research can prepare you for a wise financial decision. Consider

the amount total monthly payment that you can reasonably afford. Once you identify the price,

then it is easier for you to find a source for car financing to suit your needs.

Characteristics of Car Finance

Banks finance up to 90% of the cost of the new car and 85% of the cost of the used car. Normally public sector banks provide lower interest rates compared to the non-banking funding

firms

The interest rate in Car finance is estimated on a monthly basis The banks provide loan term of 12 to 60 months. Some banks even provide 7 years of loan term For a salaried individual, banks offer loan up to 3 times of his yearly income.

For a self employed person, banks offer loan up to 6 times of his yearly income.

Benefits of Car Financing Through Dealership

For the vehicle buyer, dealership financing offers:

1. Convenience: Dealers offer buyers vehicles and financing in one place.

2. Multiple financing relationships:The dealerships relationships with a variety of banks and

finance companies mean they can offer buyers a range of financing options.

3. Special programs: From time to time, dealerships may offer manufacturer sponsored low-rate

programs to buyers.


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Some Important Car Loan terms

This involves learning the meaning of certain car loan terms that one may encounter that can

affect the extent of financing. Understanding them will help applicant know what goes into the

dealers pricing of a car and enable you to better negotiate how much you will pay, as well as the

terms of your car loan.

Amount financed: This is determined by multiplying the purchase price by the interestrate. Next, subtract that amount from the purchase price. Then add state taxes to thatamount and subtract the down payment. AF = purchase price (purchase price x interest

rate) + taxdown payment.

Annual Percentage Rate (APR): The yearly cost of a loan to the borrower. Its similarto the interest rate. However, it also includes other charges and fees so as to reflect the

total cost of the loan.

Captive Finance Company: A finance company that is separate from a dealership but isowned by the same parent company in order to provide financing for the dealerscustomers. There may be incentives offered to use this company for your car loan.

Dealer charges: What the dealership charges for extras such as an extended warranty. Dealer holdback: An allowance that the manufacturer gives to the dealer. It is usually

between 2 and 3 percent of the manufacturers suggested retail price (MSRP) and allowsthe dealer to sell the vehicle at cost but still receive a small profit from the manufacturer.

Dealer invoice: The amount that a dealer is billed from the manufacturer for the car. Destination charge: The fee charged for shipping, freight, or delivery of a vehicle to the

dealer from the manufacturer or port of entry. This charge is passed on to the buyerwithout any markup.

Factory-to-dealer incentive: A discount or rebate offered by a manufacturer to moveslow-selling cars or excessive inventories.

Manufacturer Suggested Retail Price (MSRP):A manufacturers recommendedselling price for a vehicle and its options.

Monroney Sticker Price:The sticker on the cars window listing its base price,manufacturers installed options, manufacturers suggested retail price, destination chargeand fuel economy.

Sticker price: The same as the MSRP.


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Car Finance offered by various Banks in India:

Name of the

Bank

Eligibility in terms

of yearly income

(Rs in Lakhs)

Rate of

Interest

EMI

in Rs

Processing

chargesPrepayment costs

ICICI Bank 1215 9.0-13.07,466 -

8,048

Rs 2500 to Rs

5000

5% on primary sum

prepaid

IDBI Bank 1215 8.5 - 9.19 7,394 Rs.2500 DNA

RelianceConsumer

Finance

1215 9.5 7,537 DNA1% on primary sumprepaid, eligible after

30 months

ABN Amro 1215 15.0 8,349 NIL4% on primary sumprepaid

Syndicate

Bank10 12.0 7,900 NIL NA

United Bank ofIndia

1215 11.5 7,827

0.50% of the

entire finance

amount

NIL

Indian

Overseas Bank1215 11.5 7,827 Rs 134 to Rs 168

1% on primary sum

prepaid

SBI 15 11.25 7,790

0.50% of the

entire finance

amount

2% on primary sum

prepaid

Oriental Bankof Commerce

10 10.75 7,717 Rs 500 NIL

Kotak Bank 1215 10.5-11.07,681 -7,754

3% of the entirefinance amount

5.75% of primary sumoutstanding

AllahabadBank

10 10.5 7,681 NIL2% of primary sumoutstanding

HDFC Bank 18 10.5 7,681Rs 1600 to Rs3000

5% of primary sumoutstanding

Tata Capital 1215 10.0 7,6090.5% of theentire finance

amount

5% of primary sum

outstanding

Punjab

National Bank

12.5 10.5-11.07,681 -

7,754

Rs 4000 NIL

Canara Bank 1215 11.0 7,754

0.1% of the

entire finance

amount

DNA

The eligibility, rate of interest, emi, processing charges and the prepayment costs may change

subject to certain conditions.


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Chapter 2Important Classifications

AndFiling Of Documents


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CATEGORIZATION OF LOAN APPLICANTS

Business

Industries Individual

Proprietor Partnership

Firm

Self Employed Salaried


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DOCUMENTATION REQUIRED

In Case Individual

(Self Employed and Salaried)

1. Photographs -22. ITR Computation Chart(Last 2 years for self employed)

Form -16 (For Salaried)

3. Bank Statement (Last 6 Months)4. Resi Proof ( Pass Port/Voter Card/Ration Card)5. Pan Card Copy6. Ownership Proof (Electricity Bill/Water Bill/ Copy of Registry)7. Office address Proof8. Cheques

In Case of Industries

(Partnership Firm)

1. ITR Computation Chart, Balance Sheet With Audit Report(Last 2 years)2. Bank Statement (Last 6 Months)3. Office Address Proof4. Firm Pan Card Copy5. Partnership Deed6. Letter Head7. Photographs -28. Ownership Proof (Electricity Bill/Water Bill/ Copy of Registry)9. Pan Card (For Photo id And Sign.)10.Resi Proof ( Pass Port/Voter Card/Ration Card)

In Case of Proprietors and Companies

1. ITR Computation Chart, Balance Sheet With Audit Report(Last 2 years)2. Bank Statement (Last 6 Months)3. Office Address Proof4. Firm Pan Card Copy5. M.O.A6. Letter Head7. Photographs -28. Ownership Proof (Electricity Bill/Water Bill/ Copy of Registry)9. Pan Card (For Photo id And Sign.)10.Resi Proof ( Pass Port/Voter Card/Ration Card)


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FILING OF DOCUMENTS

The documents collected have to file in a proper order. The Documents are filed as follows:

Application formIRR calculation

Post-Dated Cheques

3 PagesECS/SI if any

Address proof

Photo and signature proofBank statement

IT copy/ letter from employerField Investigation Report

CIBIL

Log InStatus of File

Agreement

Sales certificateInsurance

Registration certificate

Documents collected and checked by Dealer

A) Application Form:

This form contains the required information about the customer as per the KYC norms (Know

Your Customer). It is got filled by the customer ensuring that he/she is applying for the carfinance form the bank. It contains information regarding general background of the customer

with special attention to personal and professional details.

B) IRR:

Means interest rate of return. This is calculated on and internal basis. This calculator gives thedetails of buying and lending rates and amount and also calculates the net commission to the

DSA in a particular loan case.

C) Post-Dated Cheques (PDC s)The bank collects post-dated cheques from the customers, which are duly signed and crossed

with the right amount of EMI Equal/Equity Monthly Installment, in the name of the Bank.

D) ECS (Electronic Clearance System)/SI (Standing Instruction) if any:ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in

nature. Essentially, ECS facilitates bulk transfer of money from one bank account to many bank

accounts or vice versa. Based on the geographical location of branches covered, there are threebroad categories of ECS Schemes

Local ECS


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Regional ECS

National ECS

SI is when the customer has an account in the bank and the amount due gets debited from his/her

account every month.

E) 3 Pages:

These include:-

1) Approval Memorandum:Various Parameters like Net Income to EMI ratio, Residence Type, Number of years in

business.etc. Are rated according to the organizations credit rating chart, and the overall rating isthen compared to the given norms and accordingly the loan is sanctioned.

2) Pre-Disbursement Checklist

A checklist, wherein the different documents required are tick marked depending on their

presence.

3) Disbursement Checklist

F) Address proof:These are the documents given by the customer for verification of the customers given address.

G) Photo/Signature proof:

These are the documents given by the customer for verification of the customer photograph andsignature

H) Bank Statement:

A Bank Statement shows the debits and credits made by and to the customer during a particularperiod. Generally, a bank statement for a period of last 6 months is required.

I) IT Copy / Letter from employeeIt returns copy of customer is required so as to confirm that he has never been a defaulter of tax.

Letter of employer confirming that particular person is employee in the origination.

Documents cross checked and status is defined by bank

J) Field Investigation ReportThis is conducted by the bank to cross check all the details submitted by the loan applicant. An

officer of the bank visits at the address given so as to verify it and confirm other details. After

this a field investigation is being conducted of the loan applicant where necessary details arechecked and cross verified.

Checking Files


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1) ID proof: should match application form

2) Address: proof should match application form3) Cheques/ECS (electronic clearing service) letter or standing

Instructions

4) Application form filled properly

5) Bank statement (no cheque bounces etc)

Cheques should be crossed &the right amount should be mentioned. Numbers of cheques are also checked ECS Form Has Tom Be Filled &Signed By Manager of Respective Banks Required signature should be there on agreement FI report if states that the customer is not recommended, field investigation is done again. The documents given from address& ID proof should be match the address &ID in then

application form.

Hypothecation on required documents should be marked. Application form should contain required signature check references, telephone numbers

(at least 1 should be landline no.)

K) CIBIL (Credit Information Bureau India Ltd.):This document contains information about the credit worthiness of the customer. Its acentralized agency operating for all the banks and financial institutions in common that has

revolutionized the lending facilities in India resulting into minimum fraudulent activities by thecustomers .Any person if has done any fraud with a bank or financial institution in any type of

loan or credit cards get reflected in the CIBIL and cannot get loan from any bank till he clears his

previous loan. The minimum score which one should have in order to get any type of loan is 740

points.

L) Loan File Log inAfter the Cibil report the loan application file with all required documents is log into the

computer. The log in of the file is being carried on by the respective bank.

M) Status of file

In this the financial institution verifies from the bank whether the loan is being passed or not. Incase of no, the required documents are again checked and this point field investigation is carried

again.

N) AgreementAfter the bank confirms the loan with the eligibility amount and the interest rate details an

agreement of the bank is signed by the loan applicant.

O) Sales Certificate, Insurance and Registration Certificate are given

PROCESS OF BANK


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1. Log In

2. FI & CIBI3. Filling of all required documents

4. Checking of files

5. Approval / Non approval of loans

6. Punch in (Disbursement) of files

1) Files received are entered into the computers consists of the details of the loan.

2) The documents are placed in order:

a) Document form regarding vehicle

b) Application form - 1c) FI report

d) Documents regarding address ID & Income

e) Agreement

f) 3 pages

g) CIBILh) Post dated cheques (placed in a special brown envelope)

i) IRR calculated & there are filed

3) Checking of files

The files are checked as mentioned before.

4) The files are scrutinized & depending on the documents in it they are either approved or not

approved.

Checked for:-

a) Age limit

b) Job stabilityc) Residence stability

d) Incomee) FI report

f) Tele verification report (when FI not present on time, telephone, 2guarantees on agreements)

g) CIBIL: If approved the delivery order is sent to the dealer and the file got is rechecked if notapproved the file got is scrutinized and the cause for non approval is found and remedies are

found for the same.

5 a) The rechecked and approval files are finally punched in the system .The details regardingthe customer, the agreement documents are fed into the computer, through fox-pro software.

b) The files that are punched are then entered into their (branch) system, for future records. The

important fields here are the date of first invoice, amount the no mentioned in the insurance

certificate, details of the cheques etc.c) The details of the file are again entered into the computer with disbursement details through

cancel.

d) The details with were entered through Fro- pro are converted into note pad and printed theprint copy taken is placed in the respective files. These files are then stamped and signed along

with the seal of the bank.


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6) Repayment track record subject to the following:

The repayment track should be at least 12 months The repayment should not have expired more than 12 months before the date of

application

Not more than 1 cheque bounces in 12 months Loan to value not exceeding 70%

Example: If volume of vehicle =X

Loan value is not equal to more than 70%of X


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3 Pages

1. Approval memorandumVarious parameters like Net income to Emi ratio: Resident type, Number of years in business etc

is rated according to their credit rating chart, and the overall rating is then compared to the given

norms &accordingly the loan is sanctioned\rejected. An approval memorandum is preparedbased on the field investigation report. The approval memorandum is basically a grading system

prepared to check whether the loan should be sanctioned or rejected. The approval memorandum

is prepared in such a way.Customer Name ____________________________

Residence Locality __________________________

Dealer ________________ Scheme______________Vehicle _______________ Tenure ______________

Parameter Grade Rating(To Be Filled By

Staff)

Gross Income A

Net Income B

EMI C

Net Income to EMI ratio D=B/C

Co-Hirer/Guarantor Income E

Self+Co-Hirer Income F=B+E

Total Income/EMI ratio G=B/C

Residence(Owned/Rented

and Years)H

Residence Type I

No. of Years in Business J

No. of Years in Service K

Employer Category L

No. of Dependants M

Age NStandard of living(as per

F.I)O

Total Initial Payment % P

Total

Average Rating


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2. Pre-disbursement check list

To check whether the required particulars are present in the fileExample: Proposal form, income proof etc. This is to ensure everything is correct and in order.

The pre disbursement checklist is prepared so as to ensure the forms are in order and whether the

reports are correctly filled in.

A pre disbursement checklist is of the following type:

Particulars Yes No Remarks

Proposal Form

Approval

Memorandum

Income Proof

Address Proof

Photograph BorrowerPhotograph Guarantor

Agreement Signed at

Proper PlacesPerforma Invoice

Security Dep. filled

and stampedPDC status

CoverageIRR

Bank Challan for IP

Proof/Dealer Receipt

Disbursement

VoucherBrokerage details

Signature Verification

NOC from otherPartners(In the case of

partnership firm)

Board Resolution/M

and AOA(Companies)

Field Investigation

Report


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3. Disbursement check list

This contains:i) Party name ii) Transaction structure i.e. invoice value, fixed amount, Emi amount

iii) Commission details iv) Initial payment

Here all the financial details regarding the vehicle are entered. The EMI (Equated MonthlyInstallment), Invoice Value, Down Payment and number of months for the installment are added

along with the initial payment. A disbursement checklist

Party Name ___________________

Transaction Structure:

Invoice Value_________ Advance EMI__________

Down Payment_______ Tenor ___________

Finance Amount_______ EMI Amount___________

Rate of Interest_________ First _______months X Rs____

Second______ months X Rs____

Last ________months X Rs____

First Due Date_____________ Last Due Date_____________

Initial Payment: ________________

Cheque/DD no: __________

Deposited on: ___________


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STATES CLASSIFICATIONS

Table-1

Category States

State Category I Andhra Pradesh, Tamil Nadu, Kerala,

Maharashtra and Gujarat

State Category II Delhi, Rajasthan, Punjab, Haryana,

Karnataka, Madhya Pradesh, West

Bengal, Chhattisgarh

SEGMENT VISE CARS DISTRIBUTION

Table-2

D+ C+ D C B

Audi Corolla Altis Captiva Linea Aveo UVa

Bentley Jetta Fiat 500 Fiesta Beat

BMW Civic Endeavour Figo Spark

Jaguar Laura Accord Fusion Palio

Land Rover Octavia Tuscon City Punto

Freelander Lancer, Cedia Vitara Jazz Ikon

Mercedes

Benz

Cruze Outlander I 20 Getz

Montero Pajero Verna Santro

Porsche Teana Xylo Logan

Fortuner X trail Swift Alto


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Prado Superb Swift dzire A-star

Beetle Camry Sx4 Ecco

Passat Volvo Fabia Estilo

Touareg Cr-v Manza Ritz

Volvo Innova Wagon R

Polo Vista

LOAN TO VALUE GRID

Table-3

Model Category Tenure State Category I State Category II

Category I Upto 5 years 85% 80%

Category II Upto 5 years 80% 75%

Category III Upto 3 years 70% 65%

Upto 4 years 85% 85%

Category IV Upto 5 years 80% 80%


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SEGMENT LIST AND LATEST PRICE GRID

Table-4

Segment

Tenure 12-23 24-35 36-60 >60

B segment 16.25% 14.75% 13.50% 16.25%

C Segment 16.25% 14.755 13.00% 16.25%

C+ Segment 16.25% 14.75% 12.50% 16.25%

D Segment 16.25% 14.50% 12.25% 16.25%

D+ Segment 16.25% 14.25% 12.00% 16.25%

Payout 0.00% 1.00% Normal Normal

The Price Grid i.e. rate of interest charged by ICICI are as per in the month of May to July. Theycan be changed as per the rules and guidelines issued by Reserve Bank of India


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CHARGES AND COMMISSION CHARGED BY BANKS

Table-5

Processing Charges: ICICI BANK

Volume (INR) Processing Charges (INR)

Up TO 2.5 Lacs 2625

2.51- 4.00 Lacs 3650

4.01- 5 Lacs 4100

5.01- 10 Lacs 4450

Over 10 Lacs 4950

Table-6

Suraksha Charges: ICICI Bank

Volume (INR) Suraksha Charges (INR)

Up To 6 844

13-18 2402

19-24 3034

25-30 3687

31-36 4298

37-42 4867

43-48 5393

49-54 5878

55-60 6320

Processing Charges And Suraksha Charges are subject to Changes as per the

norms of the bank.


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Chapter -3Need And

Objectives of Study


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NEED AND OBJECTIVES OF STUDY

To study in detail the process of loan

To improve my general and practical knowledge

To study the procedure followed and formalities that customers have to fulfill whiletaking a loan.

To know about categories of applicants


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Chapter -4Research Methodology


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RESEARCH METHODOLOGY

DATA COLLECTION

The necessary information and data is collected as follows:

A. Primary sources: Information and data was collected from the applicants through personal interactionB. Secondary sources: Information and data was collected from company books, journals, periodicals etc. Information was collected from the brochures provided by the company


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Chapter -5Conclusion & Suggestions


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CONCLUSION& SUGGESTIONS

Conclusion

Growth in populations and income level had led to increase in the demand car loan.Better means of awareness have initiated people for good life style and car is now a daysbasic necessity of improved living standards. Growth in income level, expansion of the

international market, availability of good financial services has helped in making the

same available and thus high volumes in Car loans have arrived.

The basic purpose for which most people go for financing is easy payment of the totalcost of the asset and also for the income tax purposes.

Affordable interest rates and easy loans sanction by banks and a financial institution hasincreased the demand for loan in India.

Suggestions

The time taken in providing service to the customer should be minimized so as to givequick and efficient service

Another recommendation is that the company should undertake more promotionalactivities so as to make more and more customers aware of the cost benefit advantages of

taking services from them

More visibility through advertising is needed specially media advertising like TVchannels, radio stations, etc Special schemes like lucky draws, attractive prices could be used for promotion Awareness should be created at national level by the government for educating the people

about the pros and cons of the finance services so that the facility should bring them

better life rather than creating tensions and problems in everyday living.

According to the infrastructure available in India there should be a control over thenumber of cars a person can own there by initiating the necessity loans like home loans

and business loans at lower interest rates.


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BIBLOGRAPHY

www.aakritiworld.com

www.car4u.in

Company records, booklets, broachers and files

Procedure of Car Financing Through A Delaer

Documents

Transcript of Procedure of Car Financing Through A Delaer