DEPARTMENT OF BUSINESS ADMINISTRATION

UNIVERSITY OF LUCKNOW

“Market study on used car loans: scope for financing under this segment”

Internship Report submitted to SBI in completion of the requirement of Summer Internship at State Bank of India

Submitted By- Project Mentor-

KUSHAL BHALLA MR. H.A.CHARLES Chief Manager (HLST & MPST)

May 16 to July 16 2013

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DECLARATION

I hereby declare that the project report titled “Market study on used car loans: scope for

financing under this segment” at SBI, LHO Lucknow is my own work and has been carried

out under the able guidance of Mr H. A. Charles (Chief Manager, HLST & MPST

Department). All care has been taken to keep this report error free and I sincerely regret for

any unintended discrepancies that might have crept into this report. I shall be highly obliged

if errors (if any) be brought to my attention.

Thanking You.

Date: ____________ (KUSHAL BHALLA)

Place: Lucknow E-mail: kushal.bhalla9@gmail.com

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ACKNOWLEDGEMENT

My Summer Internship Project with SBI has been an enriching experience for me. As an

Amateur to the corporate environment with no prior work experience, this training has been a

very insightful and learning experience. It would have been impossible to gain this

experience without the help, guidance and encouragement that I have received from different

quarters.

It is my proud privilege to release the feelings of my gratitude to several persons

who helped me directly or indirectly to conduct this project work. I express my heart full

indebtedness and owe a deep sense of gratitude to my corporate guide Mr H.A.CHALES

C.M., (HLST & MPST) Zonal office, SBI, Lucknow, for their sincere guidance and

inspiration in completing this project.

I am extremely thankful to the Director, Co-ordinator and the faculties of the

Department of Business Administration, University Of Lucknow for their coordination and

cooperation and for their kind guidance and encouragement.

I am also extremely thankful to all those persons who have positively helped me

and customers who responded my questionnaire, around whom the whole project cycle

revolves.

KUSHAL BHALLA THANKING YOU

MBA (2012-14)

(Department of business Administration),

University of Lucknow

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TABLE OF CONTENTS

S.NO TITLE PG.NO

1. TABLE OF CONTENTS 3

2. LIST OF CHARTS 4

3. LIST OF TABLES 5

4. INTRODUCTION 6

Brief profile of student 7

Brief profile of project mentor 8

Brief profile of organization 9 - 17

Nature of the project 18

Brief objectives/responsibilities assigned by the project mentor 19

5. FRAMEWORK OF STUDY 20

Theoretical framework 21 - 54

Specific objectives of the project 55

Scope of study 56

Limitations of study 57

Period of study 57

6. METHODOLOGY AND ANALYSIS 58

Methodology 59 - 61

Analysis 62 - 82

Observations 83 - 84

Recommendations 85 - 86

Conclusions 87

7. BIBLIOGRAPHY 88

8. ANNEXURE 89 – 94

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LIST OF CHARTS

S.NO TITLE PG.NO

1. 3-level Evolution of Certified Programs 29

2. You are in which profession? 63

3. Age of Respondent? 64

4. Gender of Respondent? 65

5. Income of Respondent? 66

6. Marital Status? 67

7. Number of children? 68

8. Do you own a car? 69

9. Is it new car or Second Hand Car? 70

10. Car Purchased from? 71

11. How did you come to know about dealer? 72

12. Would you buy a new car or pre-owned car? 73

13. If pre-owned car, would you prefer to buy from? 74

14. Factors considered in buying a car? 75

15. Have you heard about “Sbi Used Car Loan"? 76

16. From where you heard about “Sbi Used Car Loan”? 77

17. Since when is your organization established? 78

18. Does your organization use middlemen? 78

19. What kind of promotional activities do you use? 79

20. Festive season is the peak time for the Maximum Sales? 79

21. What is the average sales per year? 80

22. Crosstab of Profession and Buying a New Car or a Pre-Owned 81

23. Crosstab of Income and Buying a New Car or a Pre-Owned 82

24. Awareness of USED CAR LOAN- Age wise 83

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LIST OF TABLE

1. Different products of sbi 13

2. Indian customer expectations 30

3. Penal interest 43

4. Car loan interest rates for 3 years duration for purchase of pre-owned car 54

5. You are in which profession? 63

6. Age of Respondent? 64

7. Gender of Respondent? 65

8. Income of Respondent? 66

9. Marital Status? 67

10. Number of children? 68

11. Do you own a car? 69

12. Is it new car or Second Hand Car? 70

13. Car Purchased from? 71

14. How did you come to know about dealer? 72

15. Would you buy a new car or pre-owned car? 73

16. If pre-owned car, would you prefer to buy from? 74

17. Factors considered in buying a car? 75

18. Have you heard about “Sbi Used Car Loan"? 76

19. From where you heard about “Sbi Used Car Loan”? 77

20. Since when is your organization established? 78

21. Does your organization use middlemen? 78

22. What kind of promotional activities do you use? 79

23. Festive season is the peak time for the Maximum Sales? 79

24. What is the average sales per year? 80

25. Crosstab of Profession and Buying a New Car or a Pre-Owned 81

26. Crosstab of Income and Buying a New Car or a Pre-Owned 82

27. Awareness of USED CAR LOAN- Age wise 83

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PART - I

INTRODUCTION

PROFILE OF STUDENT

PROFILE OF PROJECT MENTOR

PROFILE OF ORGANIZATION

NATURE OF THE PROJECT

OBJECTIVES/ RESPONSIBILITIES

ASSIGNED

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INTRODUCTION\

PROFILE OF STUDENT

NAME- KUSHAL BHALLA

Email id- kushal.bhalla9@gmail.com

Mobile no- 9450430068, 7275221988

Currently pursuing MBA at the Department Of Business Administration, University of

Lucknow.

OBJECTIVE: - To work in a challenging environment in an organization with good

prospects that will help me in enhancing my skills along with the growth of the organization.

Work Experience

S BI Life Insurance Co. Ltd Insurance Advisor Duration: Aug’09-27oct’10

To promote the SBI Life Insurance product in the market. To maintain relationship with the clients & help them on the issues regarding the

information of product and services of the company. To update and validate the database of the company.

Future Generali Life Insurance Co. Ltd

Assistant Sales Manager Duration: 28Oct’10- 16Sep’11

Work as an ASM and maintained healthy relationship with the clients. I completed my Ytd goal sheet in 2 months (Nov and Dec) and I made 5 coding

in those months.

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I got 7 lacks premium YTD and completed the criteria of next level promotion i.e S.M.

Star Union Dai-Ichi Life Insurance Co. Ltd

Assistant Manager (marketing officer) Duration: 12Jan’12- 14Jul’12

Posted as assistant manager in union bank of India, Deoria cluster. I handled the 7 branches of union bank in Deoria cluster. I got 15 lacks in life insurance business, 25 lacks as fixed deposit and 10 lacks in

mutual fund in a day. I rewarded by the General Manager of UBI with Regional head of SUD in April

month for highest premium in U.P and Uttrakhand. I achieved the highest incentive in Gorakhpur region.

PROFILE OF PROJECT MENTOR

NAME: - Mr H.A.CHARLES

DESIGNATION: - CHIEF MANAGER

(HLST AND MPST)

STATE BANK OF INDIA,

ZONAL OFFICE, HALWASIYA,

LUCKNOW

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PROFILE OF THE ORGANIZATION

STATE BANK OF INDIA is a multinational banking and financial services company based

in India. It is a government-owned corporation with its headquarters in Mumbai,

Maharashtra. As of December 2012, it had assets of US$ 501 billion and 20,193 branches,

including 157 foreign offices, making if the largest banking and financial services company

in India by assets.

The bank traces its ancestry to British India, through the Imperial Bank of India, to the

founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the

Indian Subcontinent. Bank of Madras merged into the other two presidency banks – Bank

of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in turn

became the State Bank of India. Government of India nationalised the State Bank of India in

1955, with Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India.

In 2008, the government took over the stake held by the Reserve Bank of India.

SBI provides a range of banking products through its network of branches in India and

overseas, including products aimed at non-resident Indian’s. SBI has 14 regional hubs and 57

zonal offices that are located at important cities throughout the country.

In addition to banking, the company, through its various subsidiaries, provides a range of

financial services, which include life insurance, merchant banking, custodial services, general

insurance (non-life insurance) and primary dealership in the money market. Its segment

include Treasury, which includes investment portfolio and trading in foreign exchange

contracts and derivative contracts, Corporate/Wholesale Banking, which comprises lending

activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets

Management Group. Retail Banking, which comprises of branches in National Banking

Group, includes personal banking activities, including lending to corporate customers and

other Banking business. Page | 10

MANAGEMENT

The State Bank of India has 15 Members on its Board of Directors, who are responsible for

the management of the bank’s business. The board in addition to monitoring corporate

performance also carries out functions such as approving the business plan, reviewing and

approving the annual budgets and borrowing limits and fixing exposure limits. MR. PRATIP

CHAUDHURI is the Chairman of the Bank.

MISSION, VISION AND VALUES

MISSION

To retain the Bank’s position as premier Indian Financial Service Group, with world class

standards and significant global committed to excellence in customers, shareholders and

employee satisfaction and to play a leading role in expanding and diversifying financial

service sectors while containing emphasis on its development banking rule.

VISION STATEMENT

Premier Indian Financial Service Group with prospective world- class Standards of

efficiency and professionalism and institutional values.

Retain its position in the country as pioneers in Development banking.

Maximize the shareholders value through high-sustained earnings per share.

An institution with cultural mutual care and commitment, satisfying and Good work

environment and continuous learning objectives.

VALUES

Excellence in customer service

Profit orientation

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Belonging commitment to Bank

Fairness in all dealings and relations

Risk taking and innovation

Team playing

Learning and renewal

Integrity

Transparency and Discipline in policies and systems

COMPETITORS

Competitors and other players in the field:-

Top Performing Public Sector Banks

Vijaya Bank

Andhra Bank

Allahabad Bank

Punjab National Bank

Dena Bank

Top Performing Private Sector Banks

HDFC Bank

ICICI Bank

AXIS Bank

Kotak Mahindra Bank

Centurion Bank of Punjab

Top Performing Foreign Banks

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Citibank

Standard Chartered

HSBC Bank

ABN AMRO Bank

American Express

Strength/ Opportunities:

The growth for SBI in the coming years is likely to be fueled by the following factors:

• Continued effort to increase low cost deposit would ensure improvement in NIMs and hence earnings.

• Growing retail & SMEs thrust would lead to higher business growth.

• Strong economic growth would generate higher demand for funds pursuant to higher corporate demand for credit on account of capacity expansion.

Weakness/ Threats:

The risks that could ensue to SBI in time to come are as under:

• SBI is currently operating at a lowest CAR. Insufficient capital may restrict the growth prospects of the bank going forward.

• Stiff competition, especially in the retail segment, could impact retail growth of SBI and hence slowdown in earnings growth.

• Contribution of retail credit to total bank credit stood at 26%. Significant thrust on growing retail book poses higher credit risk to the bank.

• Delay in technology upgradation could result in loss of market shares.

• Management indicated a likely pension shortfall on account of AS-15 to be close to

Rs50bn.

• Slowdown in domestic economy would pose a concern over credit off-take thereby impacting earnings growth.

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DIFFERENT PRODUCTS OF SBI:DEPOSIT LOANS CARDS DIFFERENT CREDIT

CARDS Savings Account Home

Loans Consumer

Cards SBI International cards

Life Plus Senior Citizens Savings Account

Loan Against Property

Credit Card SBI Gold cards

 Fixed Deposits

Personal Loans

 Travel Card SBI Gold Master cards

Security

Deposits

Ca r Loan Debit Cards Your City Your Cards

Recurring Deposits

Loans against Securities

Commercial Cards

Tax-Saver Fixed Deposit

Two Wheeler

Corporate Cards

Partnership Cards

Salary Account Pre- approved Loans

Prepaid Card

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Advantage WomanSavings Account

Retail Asset Purchase Card SBI Employee Cards

Rural Savings Account

  Farmer Finance

Distribution Cards

People's Savings Account

Business Instalment        Loans

Business Card SBI Advantage Cards

 Freedom Savings Account

Flexi Cash Merchant Services

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1

“Best Executive” Award to the Chairman by Asia Money.

State Bank of India also improved its ranking in “Fortune” 500 Global List, “Forbes”

list of 2000 largest companies in the world, “Banker” list of top 1000 world banks,

Brand Finance – Global 500 Financial Brand recognition, to name a few.

“Most Admired Infrastructure Financier” Award by KPMG,

“Top Public Sector Bank under SME Financing” by Dun and Bradstreet

2

The Bank was voted, for the third year in a row, as the “Most Preferred Housing

Loan” and “Most Preferred Bank” in the CNBC AWAAZ Consumer Awards in a

survey conducted by CNBC TV18 in association with AG Nielsen & Company.

The Bank was also awarded the “Best Home Loan Provider” as well as “The Best

Bank” – by Outlook Money Awards, 2008.

3

SBI has been rated as the Best Public Sector Bank for Rural Reach by Dun &

Bradstreet.

The Bank has won awards for topping SHG-Bank Credit linkage in Orissa, Jharkhand,

Maharashtra, Uttarakhand, Tamil Nadu and Uttar Pradesh.

4

The Bank was awarded Reader’s Digest “Pegasus Corporate Social Responsibility

Award 2007” in recognition of its contribution towards Rural Community

Development.

5

The Bank was conferred the following National awards by the Government of India

(GOI), Ministry of Micro Small and Medium Enterprises for the FY 2007-08:

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First under "National Awards for excellence in lending to Micro Enterprises".

Second under "National Awards for Excellence in MSE Lending".

The Bank was also presented an award for outstanding performance in the area of

finance to SMEs by Dun & Bradstreet.

6

State Bank of India Voted THE BEST BANK in Cash Management Services in

local currency by Asia Money.

7

State Bank of India wins 2 awards for Best Rural Banking Initiative and Best IT

Architecture

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NATURE OF THE PROJECT

Many of us prefer buying a second-hand car or a used car after obtaining a driving licence.

The argument is: it is always better to go for a new car after honing your driving skills in a

used car.

Also, financing the used car is no more a nightmare. A large number of lenders, both in the

banking as well as the NBFC space, like SBI, Allahabad bank, Tata Capital, Magma Fincorp

and Fullerton Credit, finance used cars.

As per my project title “Market study on used car loans: scope for financing under this

segment” the nature of the project are as follows.

You can get finance for any model of a new car. However, in the case of used cars,

the age of the car plays a crucial role in deciding whether it is loan worthy or not.

"The age of the car and the tenure of the loan combined together would generally not

exceed five years"

Once you have identified a car you wish to purchase and approach a bank, the bank

sends in a valuation expert to calculate the value of the car.

In general "used car" loans would cost 3% higher than new car loans. So while the

interest rates for a new car loan would be 11-14 %, a "used car" loan would cost you

14-16 %.

Today the used car market has a number of organised dealers like Maruti True Value,

Mahindra First choice, Hyundai Advantage , Toyota U Trust and Automart India.

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OBJECTIVES/ RESPONSIBILITIES ASSIGNED BY THE

PROJCET MENTOR

My project mentor gives the responsibility to take the survey of some of the well-known

certified used car dealers and some private car dealers in Lucknow. The name of the dealers

are as follows.

Maruti True Value,

Honda Auto Terrace,

Ford Assured,

Toyota U Trust,

Hyundai Advantage,

Car bazar,

Tata Motors Fortune Cars,

– To know the nature of the market for used cars in the Cities.

– To enumerate the various players for used cars in the cities.

– To enumerate the various reasons for customers opting a used car.

– To find out the awareness/ knowledge level of customers on the concept of ‘Used Car

Loan’ offered by “State Bank of India”.

– To access the impact of promotional activities on the sale of used cars.

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PART - II

FRAMEWORK OF STUDY

THEORETICAL FRAMEWORK

SPECIFIC OBJECTIVE OF THE PROJECT

SCOPE OF STUDY

LIMITATIONS OF STUDY

PERIOD OF STUDY

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THEORETICAL FRAMEWORK

INTRODUCTION:-

A used car, a pre-owned vehicle, or a second-hand car, is a vehicle that has previously had

one or more retail owners. Used cars are sold through a variety of outlets, including franchise

and independent car dealers, rental car companies, leasing offices, auctions, and private party

sales. Some car retailers offer "no-haggle prices," "certified" used cars, and extended service

plans or warranties.

History:-Founded in 1898, the Empire State Motor Wagon Company in Catskill, New York was one

of the very first American used car lots.

Used vehicle retailer:-The Federal Trade Commission recommends that consumers consider a car retailer’s

reputation when deciding where to purchase a used car.

Vehicle history reports:-In the United States, an estimated 34% of consumers (in 2006) are buying a vehicle history

report for used cars. Vehicle history reports are one way to check the track record of any used

vehicle. Vehicle history reports provide customers with a record based on the vehicle's serial Page | 23

number (VIN). These reports will indicate items of public record, such as vehicle title

branding, lemon law buybacks, odometer fraud, and product recall. The report may indicate

minor/moderate collision damage or improper vehicle maintenance. An attempt to identify

vehicles which have been previously owned by hire car rental agencies, police and

emergency services or taxi fleets is also made. Consumers should research vehicles carefully,

as these reporting services only report the information to which they have access.

In some places the government is a provider of vehicle history, but this is usually a limited

service providing information on just one aspect of the history.

Used car pricing:-

Used car pricing reports typically produce these forms of pricing information.

Dealer or Retail Price is the price you should expect to pay if buying from a licensed

new-car or used-car dealer — retail price.

Dealer Trade-in Price or wholesale price is the price you should expect to receive

from a dealer if you trade in a car. This is also the price that a dealer will typically pay for a

car at a dealer wholesale auction.

Private-Party Price is the price you should expect to pay if you were buying from an

individual. A private-party seller is hoping to get more money than they would with a trade-in

to a dealer. A private-party buyer is hoping to pay less than the dealer retail price.

Haggle-Free Price is a price at a dealer or wholesaler that is non-negotiable. The price

is typically highly competitive. Some examples are former rental car companies.

The growth of the Internet has fuelled the availability of information on the prices of used

cars. This information was once only available in trade publications that dealers had access

to. There are now numerous sources for used car pricing. Multiple sources of used car pricing

means that listed values from different sources may differ. Each pricing guide receives data

from different sources and makes different judgments about that data.

Pricing of used cars can be affected by geography. For example, convertibles have a higher

demand in warmer climates than in cooler areas. Similarly, pickup trucks may be more in

demand in rural than urban settings. The overall condition of the vehicle has a major impact

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on pricing. Condition is based on appearance, vehicle history, mechanical condition, and

mileage. There is much subjectivity in how the condition of a car is evaluated.

There are various theories as to how the market determines the prices of used cars sold by

private parties, especially relative to new cars. One theory suggests that new car dealers are

able to put more effort into selling a car, and can therefore stimulate stronger demand.

Another theory suggests that owners of problematic cars ("lemons") are more likely to want

to sell their cars than owners of perfectly functioning vehicles. Therefore, someone buying a

used car bears a higher risk of buying a lemon, and the market price tends to adjust

downwards to reflect that.

Controlling used car depreciation:-

Car companies have a vested interest in ensuring that cars do not depreciate too heavily for

two main reasons:

Brand reputation : If a car becomes known for losing a lot of money as a used car,

it scares consumers away from buying them new.

Fleet sales : Car companies survive because of fleet sales, which give manufacturers

crucial guaranteed sales that allow them to plan production volumes and achieve economies

of scale that make selling cars to consumers more viable. The manufacturers sell cars in large

blocks as company cars, or to leasing businesses and these deals are all worked out on the

likely value of the cars when they are sold off again (for example in 24 months). Car

manufacturers, lease companies and anyone with large stocks (of cars) has a vested interest in

ensuring that cars do not lose value too quickly.

They often attempt to manage the depreciation through securing positive media coverage of

the cars and managing supply into different sales channels (such as auction, supermarkets and

dealers) so that there is no over-supply of any particular model in any geographic area.

This ensures that demand per car stays high and prices do not drop too quickly.

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OVERVIEW OF THE INDIAN SECOND HAND CAR MARKET

The pre-owned, or used, car market continues to be fragmented and unorganized. Despite the

rapid growth of the organized used-car dealers and manufacturer-owned pre-owned car

outlets, the market for old vehicles continues to be dominated by individuals trying to sell and

buy cars.

However, the pre-owned vehicles market is likely to mature as the car ownership base grows.

The scorching pace at which the new car market has grown this fiscal and the growth

projections for the next are indicators of the potential growth of the used-car market in the

next few years.

Further, in addition to the number of two-wheeler owners who are looking to buy a car,

the number of existing small-car owners hoping to upgrade to a three-box (sedan) car will

progressively drive used-car sales in the two critical B and C segments. The C segment

(particularly entry-level) used car sales are expected to witness the kind of sales boom

that B segment used cars saw over the past two years.

Organized market imminent

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Company-owned used-car outlet and increased demand for certified used cars are likely to

become the dominant themes. It is evident, from the surge in the number of car manufacturers

entering the pre-owned cars business, that the used car market is getting increasingly

attractive, both in terms of its potential to generate sales volumes and higher margins. For the

car-maker, the organized used-car business also throws up the possibility of better using the

dealer-cum-service outlet's vehicle servicing capacity.

The manufacturer-sponsored pre-owned car business has seen entrants such as the car

market leader Maruti Udyog, with its Maruti True Value brand, Ford India, with its Ford

Assured, and Hyundai with its Hyundai Exchange brand. After starting out in a small

way amongst their dealerships, many of these manufacturers are now actively involved in

streamlining their used-car operations.

Better place to shop

For the used-car buyer, the manufacturer-sponsored outlet is much better place to go

shopping. In addition to being able to buy a certified car at a fair price, these outlets will also

ensure that the paper work is right, throw in a couple of free services, offer an extension of

warranty at times, help with the transfer of the vehicle's ownership and complete formalities

at the regional transport office (RTO).

A certified used car, including the charges for inspection and certification, is usually priced 5-

10 per cent more than a similar used car in the unorganized segment. Despite the higher cost,

for the average first-time car buyer, a certified car is the better option. In the absence of any

organized car history services being offered by independent consultants and a more

transparent vehicle insurance system, getting background information about the previous

owner and the used-car is extremely difficult for buyers looking for a deal.

Used-Car Buyer Behaviour:

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However, used-car buyers continue to be hesitant to shop for their cars at manufacturer-

sponsored outlets.

A recent study about the resale value of cars in India conducted by NFO Automotive, part of

the NFO World Group, threw up interesting points. Some of the key findings of NFO

Automotive inaugural 2003 India Used-Car Buyer Study (UCBS) were:

Very few Indian buyers pay for an expert to evaluate the vehicles; most rely on their personal

mechanics and friends.

Low reliance on vehicle financing at 20 per cent compared to nearly 65 to 70 per cent for new

car buyers.

Word-of-mouth, classified advertisements, and used-car brokers are the key sources of

deciding brand and price, with the Internet and manufacturer-backed sources playing only a

limited role.

Lack of shopping - over 60 per cent owners are pre-determined in their used-car model

choice and do not shop around. The age of car (model year) and kilometres on the vehicle are

the top evaluation criteria. The degree of importance attached to accident history, ownership

transfers, and service/ parts availability is relatively lower.

Used-car finance

More than two-thirds of all new cars sold are part financed through auto loans. Intense

competition, reliable retailing channels and cross-subsidization of the financier's interest costs

by the vehicle manufacturer have brought down interest rates for new cars dramatically

during the last two years. However, the interest rates for financing used-cars continue to be

uncompetitive.

The interest rate for financing of new cars ranges between 7 per cent and 11 per cent on a

reducing balance basis depending on manufacturer and model. On the other hand, interest

rates on used cars range from 14 to 19 per cent, close to the rates for a personal loan.

The interest rates for certified cars being offered by manufacturer-sponsored outlets are

usually lower than financing for used-cars bought from the open market.

This again is largely due to the higher reliability factor and, in some cases, to some kind of

preferred financing arrangement the manufacturer has with the financier.

More reliable experience- Page | 28

Overall, the process of buying a used-car can be fruitful and risk-free, if you take the

necessary precautions (refer accompanying story) and opt for buying a certified car. With the

increased presence of the organized used-car dealer, the rate of growth in the pre-owned car

market is likely to outstrip new car sales.

Though a more market-friendly interest rate, which is on a par with the prevailing rates for

new cars, will continue to elude used-car financing, at least the differential between the two

rates are expected to gradually narrow. This is likely to happen after the reliability factor goes

up in the used- car market.

Tip sheet

Buyers

Check out these following aspects before closing a deal: If you are on a tight budget and plan to buy an entry-level car in any of the segments, a used-

car may not always be the best option to upgrade to the higher segment. Instead, you may opt

for a new car in the lower segment.

If you do decide to upgrade to a bigger, higher segment used-car, then you have to be ready

for accelerated depreciation post-purchase and uncompetitive interest rates, if you are part

financing the buy.

It is better to go in for a certified used-car rather than trusting the judgment of your

neighbourhood mechanic.

Check the used-car seller's insurance records for the car's claims (accident) history, if any.

Avoid cars that have had more than one previous owner.

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A used-car owner who has been meticulous with the car's paper work and maintains an

exhaustive log of repairs, oil change, service will, in all probability, have been meticulous

with the car too.

If you are confident of about your own assessment skills and feel that you can do the job of

scouting for a used-car better, then the pointers given in the box alongside may be of help.

Sellers

Here are a few pointers that can be of use when you decide to sell your car:

Selling your car through a used-car dealer may be a better option than attempting it yourself, despite

the commission that you have to fork out to the dealer.

It will also still be worth it, especially if your car is more than three/four years old, to get the vehicle

used-car certified by an authorized car dealer or certifying agency.

Passenger car manufacturers are nowadays offering attractive loyalty bonuses and exchange plans for

programmes for existing car owners to upgrade or switch to a new car. But if your car is not more

than three years old, it may still fetch a better price in the open market. So, sell that car yourself and

talk down the price of the new one with the dealer. You will win both ways.

Go to the used-car market with realistic expectations. Remember if your car has had crashes in the

past, no matter how well it has been restored, its resale value will have dropped never be the same.

If you have avoided frivolous repairs and the subsequent insurance claims from your auto insurance

company, or if your car has had an accident-free history, then, do not forget to transfer the no-claims

bonus from the used car's insurance policy to the insurance cover for the new car. You can transfer

almost half of your no-claims bonus and help shave off a large chunk of the premium payable on the

new car.

ANALYSIS OF THE MARKET

• Global Scenario

In developed markets like U.S, Europe, Japan etc the market is very big and organized.Page | 30

Level 1 Market is highly unorganized, dominated by purchase houses and C2C

Level 2

Level 3

Market is highly unorganized, dominated by purchase houses and C2C; new car dealers also start their used car programs.

Certified programs by OEM’s start as customers started demanding for assurance from OEM’s.

- U.S Market Size: 1:3(48 Million)

- Japan Market Size: 1:1.8(8.4 Million)

- India Market Size: 1:1(Estimated)

3-level Evolution of Certified Programs-

• Indian Used Car Market

Estimated - To be 1:1 - i.e. for every one new car one old car is sold

- In U.S the market is 1:3

- Indian market is also growing in the direction of the developed markets.

Market Structure

• Customer to Customer- 60%

- I.e. between friends, relatives and reference individuals.

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• Broker Market- 30%

• Organized Market- 10%

• Lacks-

- Reliability

- structured pricing mechanism

- structured exchange/ upgrading facility

- Assurance, warranty, etc

CUSTOMER ANALYSIS

Indian Customer Expectations-

Seller expectation

Seller expectation Brokers OEM backed dealership

Correct pricing of vehicle

reflecting market value

Prices offered by brokers

are as per the market.

Pricing is as per or above market,

however only in exchange

scheme.

True evaluation of the None finds faults in cars Yes, thorough elaborate checklist.

Page | 32

vehicle which do not exist.

Financial

speed of setting the account

reliability

Yes, at a cost

Very low

Yes

High

Form of payment- wants

flexibility between cash and

cheque.

Mostly cash Cheque

Car to be left in the

dealership

Unsafe Safe

Credibility of the buyer Doubtful Can be known

Logistics- time and distance

of travel to selling point.

Few pockets in the city or

through local workshops

One or two outlets in limited

cities.

Buyer’s expectation:

Buyer’s

expectation-

Brokers OEM backed dealership

Buy a reliable

car

Unreliable Reliable

Backed by refurbishment and warranty

provided by a third party.

Page | 33

Fair price Unreliable At par with market

Transparency Very poor Good

Clean

documentation

Very poor Yes

Top 5 reasons for Customer Going for Finance

1. 49%- fast paper work

2. 43%- interest rate

3. 41%- reputation of finance company.

4. 33%- good finance terms

5. 21%- flexible of finance terms.

Page | 34

Buying a New Car vs Used Car

Regular product launches, frequent model updates and easy access to financing have created

an abundance of used cars in the Indian automotive market. We have seen some tempting

propositions that would be better described as “pre-worshipped”

Rather than "pre-owned". Product quality in this market is much higher than ever before and

a good find will offer incredible value for your money.

Team-BHP has studied the pros and cons of buying a pre-owned car and now shows you why

it’s worth a second look.

Page | 35

PROS:

More car for your money: OR same car for lot less money. Depreciation of value

accounts for the major cost of owning a car – why not let someone else take the hit? For the

price of a new car you can bring home a well-maintained pre-owned car from a much higher

segment. Sedans from segments C and D lose as much as 40% of their value in the first year

alone. A one-year old Skoda Octavia RS, which retails new for almost 15, 00,000, can be ₹had for about 9, 50,000 – little more than more than the price of a new Honda City Vtec. ₹Further down the price range, a late model Honda Accord can be had for the price of a new

Suzuki Swift, and a 3 to 4 year old Honda City, Mitsubishi Lancer or Maruti Baleno will go

for close to the same price as a new Alto.

Reliability: Gone are the days of used cars needing regular trips to the mechanic. With

most cars on the market today, long-term reliability is part of the package. Japanese

manufacturers typically rule the roost in this area and offer reliable performance for at least

200 000 km, if properly maintained. A well-maintained sedan with 40 000 km on the

odometer can be considered a virgin.

Certified pre-owned cars: Certain authorized dealerships now offer certified pre-owned

cars. While these cars carry a premium on their price tags, they are put through an exhaustive

inspection and change of parts to ensure a near-new car experience. Some certified pre-

owned cars are also cosmetically improved by the dealer.

Extended warranties: If the pre-owned car you are looking at is only a year or two old,

odds are that you can take advantage of an extended warranty. There are two types of

extended warranties: those that cover almost all components (like a new car warranty), and

others that warrant only the engine and transmission.

Financing availability: Financing is now available for used cars, though your financial

institution may have restrictions on the model vintage.Page | 36

CONS:

Less depreciation: If you are a business owner, the taxable benefits of depreciation are

likely to be important to you. Used cars depreciate less than new cars and consequently offer

fewer tax write-offs.

Not the latest: The best deals to be had are often on cars that are a generation or two old,

such as older Honda Accords, Toyota Qualis, and Maruti Zens. Of course, there are also

some good deals available for current generations.

Higher interest rates: The interest rates on used car loans are significantly higher than

on financing for new cars. Potential customers generally buy pre-owned cars with cash. On

the bright side, if you or your family has invested in fixed deposits,you are in luck. Taking a

loan against fixed deposits leads to very lucrative interest rates, minimal paperwork (if at all)

and flexible repayment plans. Click here (Car Loan against Fixed Deposits) to read the full

discussion on this subject.

Car history: Pre-owned cars may have been damaged by negligence, floods, or accidents

and only superficially repaired. Verifying car history can be a time consuming chore.

Page | 37

Difficult to find: There is much effort involved in searching for a pre-owned car that suits

your taste and budget. You may have to scan many advertisements and visit several

dealerships before finding the car for you. It is not as simple as walking into a showroom and

filling the order form for a new car.

Maintenance: This is an often-overlooked factor. The cost of maintaining a pre-owned car

of a given price will be more than the cost of maintaining new car of the same price. For

example, a 5 lacs rupee pre-owned Honda Accord or Mercedes Benz W124 will cost more in

upkeep than a new 5 lacs rupee car.

Page | 38

SBI CAR LOAN SCHEME

FOR USED VEHICLES

1. Purpose:

Term Loans are sanctioned by the Bank for purchase of passenger cars, Multi Utility

Vehicles (MUVs) and SUVs not more than five years old. However, financing of old vehicles

on the basis of duplicate Registration Books will not be entertained

2. Eligibility:

Age: 21-65 years.

Loan must be fully repaid before the borrower attains the age of 70 years.

Loans can be granted by sanctioning authority to individuals who have sufficient,

regular and continuous source of income for servicing the loan repayment beyond 65 years.

Permanent employees of State/Central Govt., Public Sector Undertakings,

corporations, private sector companies, and reputed establishments are eligible under the

scheme. Professionals, self-employed and others who are income tax assesses and persons

engaged in agriculture and allied activities can also avail of the loan facility.

2.1. Salaried Persons :

Net annual income of applicant and/or co-applicant if any, together to be 1,00,000/- ₹and above.

Net monthly income of applicant(s) should be at least 2 times of EMI

Page | 39

(Clarification: net monthly income will be equivalent to monthly Gross salary net of all

statutory deductions like Income Tax and compulsory deductions like Employee Provident

Fund etc. No other deductions should be deducted from the monthly Gross Salary to arrive at

the NMI. Accordingly, NAI will be 12 times of NMI as defined above.)

2.2. Self-employed and Professionals :

Net annual income of applicant and/or co-applicant if any, together to be 1,00,000/- ₹and above for the last year as per income tax return.

Net monthly income of applicant(s) should be at least 2 times of EMI

2.3 Persons engaged in agriculture and allied activities: Same as for Self-

employed and Professionals except that income tax return will not be required.

(Clarification: Regular income from all sources can be considered provided the sanctioning

authority is satisfied with the proof of income. Income of spouse, father, mother, brother,

sister, son and daughter may be included for arriving at the loan eligibility (any one). The

person whose income is included will join as a coborrower. The maximum number of

applicants should be restricted to two.)

3. Authorized Branches:

3.1 It has been decided by the appropriate authority to authorize “All scale III & above

branches, all PBBs, all District Head Quarter branches, Project Area branches and all

Branches authorized by the AGM (RBOs) to process, sanction and disburse car loans

till 30.09.2013”.

The following should be ensured:-

a. Mapping of these branches to the dealers of different car manufacturers have to be ensured.

Number of car loans per branch have to be given as targets and monitored;

Page | 40

b. The identified branches have to process the car loan applications through LOS, where in

score cards/ CIBIL checks have already been automated;

c. The loans will be controlled by the controllers;

d. RACPCs will accept the documents from the branches at fortnightly intervals for follow up

and maintenance;

e. The RC book and the insurance certificate etc. will be followed up by the respective

RACPCs in BPR centers and by the sanctioning branches in Non BPR centers.

f. We advise that the car loan applications falling beyond the discretionary powers delegated

to the Branch Managers of authorized Branches need to be sanctioned by the Regional

Manager of the respective Regional Business Office, in BPR and Non-BPR centers as well.

This will also ensure uniformity and clarity in approach at all the Circles.

3.2 The branches other than those mentioned under 3.1 above will source the car loan

applications and get them processed and sanctioned through respective CPCs.

4. Loan Amount:

4.1 The maximum loan amount that can be granted would be restricted to 30 times the net

monthly income of salaried persons (i.e., net of all deductions including actual monthly tax

deductions at source). In case of others, maximum loan amount would be 2.5 times the net

annual income (i.e., income as per latest income tax return filed less taxes payable). For

agriculturists the annual net income should be arrived at by branches, based on the nature of

their activity, (i.e., farming, dairy, poultry, and orchards) land holding, cropping pattern,

yield, etc. and average level of income derived there from in the area.

Subject to a maximum of 15 lacs.₹

4.2 Regular income from all sources can be considered provided the sanctioning authority is

satisfied with the proof of income.

Page | 41

4.3 Income of spouse, father, mother, brother and sister may be included for arriving at the

loan eligibility (any one). The person whose income is included will join as a co-borrower.

The maximum number of applicants should be restricted to two. The loan repayment should

be made from the account of the person in whose name the vehicle is registered or through an

account with us in the joint names of the borrowers.

4.4 In no case should the EMI/NMI percentage exceed 50%.

4.4.1 EMI will include all EMIs towards existing loans and proposed loan;

4.4.2 The NMI will be equivalent to the Total Gross Income less statutory and

compulsory deductions like Income Tax, Employee Provident Fund etc.

4.5 However, the Branch Manager/RACPC head or the sanctioning authority, where such

sanctioning authority is not below the rank of Chief Manager, will have the discretion to

grant a higher loan, subject to EMI/NMI percentage not exceeding 60% in case of tie-ups

with reputed PSUs/ corporates or institutions or owing to strategic reasons.

4.6 For customers with NAI of 10 lacs and above, the EMI/NMI ratio may be relaxed up to ₹70% by sanctioning authority not below the rank of Assistant General Manager.

5. Margin:

5.1 For all Loans margin is 15%

5.2 The total cost of vehicle is inclusive of one time road tax, octopi, registration, insurance

and accessories. Any consumer offer or discounts announced by the manufacturers and

dealers should be reduced from the on-road price of the vehicle.

5.3 The maximum cost of accessories should not exceed 5% of the cost of vehicle or ₹

25,000/-, whichever is less.

Page | 42

5.4 The sanctioning authority will have discretion to reduce the margin by 5% where check

off facility from a reputed employer is available. He may permit further relaxation in margin

upto 5%.

6. Valuation:

6.1. Certificate of fitness/valuation from a reputed garage would be required which should be

retained with the loan documents. The garage should be authorized by the Liaison Officer in

the LHO/ZO in big cities.

6.2 Branches should ensure that the fitness and valuation is appropriate to the past ownership

pattern. Care should be taken to avoid models, which have a low second/third hand demand

like Fiat Uno, Daewoo, Matiz, etc.

7. Take Over Of Loans:

(i) Takeover of car loans may be considered selectively where:

(e) The vehicle is not more than 2 years old

(f) It is a single ownership vehicle

(g) no insurance claim has been availed and

(h) The account of the borrower with the other bank is a Standard Asset i.e. all repayments

have been made as per terms of sanction of the original financier.

(ii) The loan should be repaid within 7 years from the date of the original purchase of the

vehicle

(iii) Reimbursement of costs of unencumbered vehicles can also be given under the above

takeover norms and other terms of financing old vehicles up to 2 years of age.

(iv) In case of takeover of Car Loans from other banks. The rates of interest for new vehicles

will be applicable, if no change in ownership is envisaged.

Page | 43

8. Repayment :

8.1 The loan should be repaid in suitable monthly/quarterly instalments acceptable to the

customer in such a manner that the loan is liquidated as under: Maximum 7 years for all

categories of borrowers

8.2 The customer will have option for payment in shorter duration.

8.3 In case of Car Loans to agriculturists, the periodicity of instalments for repayment should

be decided upon the merits of each case, on a realistic basis, coinciding with harvest of the

crop at half yearly/yearly intervals or coinciding with the generation of income from ancillary

agricultural activities pursued by the borrower e.g. dairy/poultry etc. or in monthly/quarterly

instalments in case of other regular sources of income.

8.4 For old vehicles recovery should be such that the loan gets repaid within 7 years from the

date of original sale.

8.5 The repayment should be fixed on the basis of equated instalments, preferably with a

check off facility in the case of salaried persons.

8.6 The Equated Instalment will be determined on the basis of the current rate of interest.

8.7 Where check off facility is not available, postdated cheques should be obtained.

8.8 Under check off arrangement, an Irrevocable Letter of Authority, as per Annexure-Car II,

is required to be obtained from the borrower (employee) concerned and a letter of

undertaking is to be taken from the employers as per Annexure-Car III.

Page | 44

8.9 In case of Govt. officers, who are themselves the Drawing and Disbursing authorities and

take car loans, a letter of undertaking on the lines of Annexure- Car VIII need only be

obtained.

8.10 Wherever Electronic Clearing Service (ECS) is available, the Bank may use the services

for paperless debit of instalments. Additionally, six undated and duly signed cheques to cover

the loan amount should be obtained from the borrower

8.11 Repayment cycle : For loans disbursed on or before 15th of the month and on or after 16th of the month, the

repayment date should be fixed as 10th and 20th of the following month respectively.

8.12 Seizure of vehicle : Whenever a cheque is dishonored or an instalment due remains unpaid for the first time it

should be immediately brought to the notice of the borrower by issuance of a notice.

9. Rate of Interest : Interest rates will be as conveyed from time to time.

9.1 Rate of interest in case of takeovers: In Case of takeover of Car Loans from other banks,

rates of interest for new vehicles will be applicable, if no change in ownership is envisaged.

9.2 The various concessions offered and conveyed as follows:

i. Special concession under Plus schemes given under all products viz. Home Loans, Auto

Loans, Festival Loan and SARAL, and under Credit Khazana will be 0.10%.

ii. Network GMs have discretion to quote concession of 0.25% in interest rate to all

customers who are eligible under the Corporate Salary Package subject to upper ceiling on

concessions.

Page | 45

9.3 The effective interest will increase or decrease with every increase or decrease in the Base

Rate or whenever the rate of interest on Car Loans are revised without changing Base Rate,

this should be advised to the borrower(s).

9.4 While generally the Equated Monthly Instalment need not be changed with every change

in the interest rate, should the borrower seek an EMI reduction consequent to a rate reduction

the same may be permitted if the account is a standard asset and the loan amount outstanding

is at least 5 lacs and the interest rate reduction is of 1% or more.₹

9.5 The above facility will be permitted only once during the currency of the loan.

9.6 The Bank also reserves the right to increase the EMI in case of interest rate rise.

9.7 The product codes are as under:

Used Car Up to 3 years 6251 1033

Used car > 3 to 7 years 6251 1034

It has been decided to revise the Base Rate downwards by 5 bps from 9.75% to 9.70%

effective from 4th February, 2013. Accordingly, the revised interest rates effective from 4th

February, 2013 will be as under:

(Base Rate = 9.70% p.a.)

SL.NO Tenure Rate of Interest1 Up to 3 years 7.25% above Base Rate i.e. 16.95% p.a

2 > 3 years 7.50% above Bate Rate i.e. 17.20% p.a

10. Penal Interest:

10.1 Extant policy on Penal Interest Rate on was reviewed in the light of the special

characteristics and requirements of Personal Segment loans, and the Board has approved the

revised Penal Interest Rate Policy for Personal Segment loans as under:

Page | 46

Extant instructions for standard

Personal Segment Loans

Revised instructions for proposed for

standard Personal Segment LoansPenal interest should not be charged for

loans up to 25,000/-₹No change

For loans above 25000/- , penal ₹interest rate @ 2% on the entire

outstanding for the period of default

should be recovered if the EMI

remains unpaid for a period of 30 days

from the due date.

For Loans above 25000/- , if the irregularity ₹exceeds EMI or Installment amount, for a

period of one month , then penal interest

would be charged @2% p.a.(over and above the

applicable interest rate) on the overdue

amount for the period of default. If part

installment or part EMI remains overdue, then

penal interest should not be levied*. This

provision

10.2 As per the extant loan policy of the Bank, the sanctioning authority has been given the

discretion for sanctioning waiver of application of penal interest for default in payment of

interest/installment in case of Term Loans. It has now been decided to add the following

qualifiers for use of this discretion:-

(a) Waiver will only be ex-post facto, i.e. the system will levy penal interest as per the rule,

and appropriate authority can permit refund, and

(b) Discretion should be utilized only where the borrowers’ claims for waiver is merited on

facts such as late presentation of PDCs by us, etc.

10.3 Provisions of this policy may also be used by the operating units to correct the existing

anomalies in the p-segment loan accounts which have arisen due to application of incorrect

penal interest.

Page | 47

10.4 Deputy Managing Director & Group Head (NBG) has been given authority, subject to

compliance with RBI guidelines, BCSBI/IBA Code etc. to raise the floor limit above the

minimum prescribed by the RBI, (Presently 25,000 as per minimum floor prescribed by ₹RBI) within the Bank according to business exigencies but in compliance with RBI guideline.

11. Processing Fee:

Processing fee is to be recovered on the loan amount upfront as under:

(a) When loans are sanctioned: 0.51% of the loan amount subject to Minimum of 510/- and₹

maximum of 10200/-.₹

(b) When loans are rejected: 25% of the ‘Processing Fee’ will be retained if the application is

rejected after pre-sanction survey subject to Minimum of 510/- and maximum of 2550/-.₹ ₹

The General Manager of respective Network’s at the Circle can reduce processing fee up to

50%, in car loan in respect of:

(a) Short term promotional drives;

(b) Bulk finance with availability of check-off from reputed employers.

12. Security:

a. Hypothecation of vehicle and noting of hypothecation charge in the books of R.T.O.

b. Spouse should be made co-borrower, if his/her income has been taken into account for

computing eligibility of loan amount.

Page | 48

c. Any other security including third party guarantee may be obtained only when there is a

need for credit enhancement e.g. credit score below threshold limit, any other business

consideration.

No other security to be obtained.

13. Documentation:

i) Application Form – Annexure-Car I

ii) Irrevocable Letter of Authority from the borrower – Annexure-Car II

iii) Letter from the Drawing and Disbursing Officer – Annexure-Car III

iv) Letter forwarding demand draft/Banker’s cheque to supplier /dealer – Annexure-Car IV

v) Hypothecation Agreement – Annexure -Car V

vi) Guarantee Agreement where applicable – Annexure-Car VI

vii) Arrangement Letter – Annexure-Car VII

viii) Irrevocable Letter of authority where Drawing and disbursing officer himself is the

applicant – Annexure-Car VIII

14. Insurance:

14.1 The vehicle purchased is to be kept comprehensively insured in the name of the

borrower for the market value or at least 10% above the loan amount outstanding, whichever

is higher, and the Bank’s interest as a hypothecate should be noted in the certificate of

insurance and insurance policy. A copy of this is to be retained with the loan documents.

14.2 Insurance register is to be maintained.

15. Mode of Disbursement:

Page | 49

15.1 It has been decided that all car loan proceeds should be disbursed only by way of

RTGS/NEFT facility. In case the dealer is maintaining account with the branch of State Bank

of India, the proceeds should be credited through CBS system.

15.2 The existing “letter from branch forwarding demand draft/banker’s cheque to

dealer/supplier” needs to be suitably modified to provide for payment of proceeds by way of

RTGS/NEFT or through CBS system to the dealers. The format of the letter is attached as

Annexure- Car-IV.

15.3 The names and addresses of the dealers are available in LOS and therefore the

genuineness of the dealer can be checked from LOS. Also the account number of the dealers

should be obtained beforehand, and any change in account number should be dealt with

caution.

16. Prepayment Penalty :

Pre-payment fee of 2% of the amount of the loan prepaid will be levied if;

The loan is taken over by any other bank/financial institution

Or

The loan is repaid before expiry of half of the agreed repayment period

Or

Partial repayment is being made in the first year

However, no pre-payment penalty should be levied if the loan account is foreclosed for

taking a fresh car loan for new or used car from Bank.

17. Pre-sanction survey and completion of KYC formalities :

To be conducted as under:

(a) Only one official from RACPC, MPSF or Branch to visit the customer for KYC & Pre-

sanction survey which should be done together. The KYC, Pre-sanction Survey & Opinion

Page | 50

Report prepared by official of any of these offices under his/ her signature & seal should be

acceptable to sanctioning authority.

(b) For existing customer, Pre-sanction survey and KYC can be waived if the address of the

customer has not changed and he is a:

Home/Personal Loan customer with minimum one year’s satisfactory track record.

OR

A car loan customer with a satisfactory track record, who wants to avail another car

loan.

OR

Customer having satisfactory deposit account with average balance of 50,000/- & ₹above and banking with us for at least one year.

OR

Under Corporate Tie-ups where check-off is available.

18. Inspection:

For Standard Asset accounts periodical inspections are waived after the initial

inspection. However, if there is a default of 2 monthly instalments, inspection would

be required. In case of NPA accounts inspections should be made twice a year.

Inspection register is to be maintained properly.

19. Discretionary Powers:

To be exercised as per the Delegation of Powers advised by the LHO.

20. General:

The following papers to be submitted along with loan application:

Page | 51

1. Statement of Bank account of the borrower for last 12 months. This will facilitate in

arriving at the credit score of the applicant in the car loan scoring model.

2. 2 passport size photographs of borrower/Guarantor(s).

3. Signature identification from bankers of borrower/Guarantor(s).

4. A copy of passport /voters ID card/PAN card.

5. Proof of residence by way of tax receipts, telephone bill, electricity bill or any other

document that comply with the regulatory and/or KYC requirements.

6. Latest salary-slip showing all deductions and TDS certificate-Form-16 in case of salaried

persons.

7. I.T. Returns/Form 16 for the last 2 years for salaried employees and 3 years in respect of

professional/self-employed/businessmen duly accepted by the ITO wherever applicable to be

submitted. It is not necessary to obtain both I.T. Return and Form 16 from the applicant.

8. Proof of official address for non-salaried individuals.

Relaxation may be permitted by obtaining ITR/Form 16 for 1 year and Statement of Bank

Accounts for 6 months, by one step higher sanctioning officer, provided they are satisfied

about the genuineness of source, amount and continuity of income confirming repayment

capacity of the borrower over the loan tenor. In all such cases the basis for income

verification should be properly recorded on the loan appraisal.

21. Processing Time:

Page | 52

The maximum time schedule for receipt of application and sanction/disbursal of the

loan is 2 days.

For effective monitoring of the above a register should be maintained at the

Branch/Offices on the lines of the register maintained for SIB advances.

Control Report and Irregularity Reports should be sent to controlling office as per

extant instructions for Personal Segment Advances.

22. Transfer of Accounts :

Standard assets can be transferred from one branch to other branch at the request of borrower.

23. Place of availing loan :

Loan can be availed at the place of permanent residence or work. However, inspection and

verification of asset would be done by an office located at the center where the asset is

maintained. An inspection fee of 350/- will be charged for this purpose.₹The inspection charges are to be recovered every time an inspection is carried out as per the

laid down instructions. The inspection fee of 350/- will be recovered by the inspecting ₹branch by raising a debit on the financing branch and credit it to its commission account. The

arrangement letter should clearly mention levy of this charge and its periodicity (if

stipulated).

Certified Pre-Owned Car:-

A certified pre-owned car or CPO is a type of used car.

Most often late-model, they differ from other used cars by having been inspected,

refurbished, and certified by a manufacturer or other certifying authority. They also typically Page | 53

include an extended warranty, special financing, and additional benefits. Luxury marques

Lexus and Mercedes-Benz were among the first to create CPO programs in the 1990s. There

are variations as to what is termed certified pre-owned, so the distinctions are important.

Manufacturer (or "factory") CPO vehicles are only sold at authorized dealers specializing in

that particular franchise. Factory CPO cars are generally five years old or newer and have less

than 80,000 miles. They often cost more than vehicles certified by independent authorities,

and are higher priced than a non-certified used vehicle. Independent programs can represent

good value and an alternative to an OEM program. Independents may hold a vehicle to a

higher standard than an OEM, or may be less stringent in their inspections. Independents

include brands such as the National Vehicle Certification Program (or "NVCP"), Car mark,

and others. Dealer-certified programs represent a third category, as they are often promoted

as Certified Pre-Owned. These vehicles generally have not been inspected by anyone outside

the dealership, but do typically carry a warranty or extended service contract to provide some

protection to the consumer.

With any certified pre-owned program, who does the actual inspection and reconditioning

repairs may be significant. Both OEM and dealer-certified program vehicles are typically

inspected by employees of the selling dealer- not by the manufacturer as may be assumed.

Independents may employ a disinterested third-party inspector to ensure objectivity, or may

allow the dealer to inspect their own vehicles.

Because warranties, vehicle inspection points, and other program components will vary,

prospective buyers would be wise to decide what defines CPO for themselves, by comparing

the programs to determine what best represents their needs and expectation

CERTIFIED PRE-OWNED CAR LOAN SCHEME

1. When the Used Car Loan Scheme was launched, the used car market was just picking

up and had not matured. Therefore, there was an element of abundant caution in pricing.

Some of the well-known certified used car dealers in India like

Maruti True Value, Page | 54

Honda Auto Terrace,

Ford Assured,

Toyota U Trust,

Hyundai Advantage,

BMW Infinity Cars,

Tata Motors Fortune Cars,

Mahindra First Choice,

etc. have already established as a good market players in this segment, while many more have

plan to come. Now the market has matured and reputed car dealers in cooperation with

manufacturers have come up with certified cars and offer certain advantages like extended

warranties, financing terms, service perks etc just like in the case of a new car. There is a

well-organized market and there is immense potential available in this particular segment.

2. To finance this category of car buyers in a focused manner, the competent authority has

approved “Certified Pre-Owned Car Loan Scheme” by tweaking our existing “Used Car

Loan” product and narrowing down the interest differential between New Car loans and the

Certified Car Loans. The new “Certified Pre-Owned Car Loan Scheme” is enclosed as

Annexure-1.

3. All other terms and conditions regarding eligibility, type of loan, margin, loan amount,

repayment period, processing fee, insurance, discretionary powers, and place of availing loan,

mode of disbursement, Pre-payment penalty and Penal Interest Rate etc are as applicable to

Used Car Loan scheme. Our existing Used Car Loan Scheme will run concurrently and will

cover other than Certified Pre-Owned Cars.

4. Documentation: Under Certified Pre-Owned Car Loan Scheme the additional valuation

certificate is not required. The company purchase vehicles directly from sellers and check

thoroughly the vehicle, insurance/service history and its ownership. They do not get the

vehicle transferred in their name. As and when they find a purchaser, they sell the vehicle and

Page | 55

transfer the vehicle to the purchaser. Hence the payment has to be made to these vendors as

they have already made payment to the original owner. A stamped indemnity will have to be

obtained on the letterhead of the Dealer of Certified Pre-Owned Car, to protect the Bank in

case of any ownership issues being raised by the original owner of the vehicle. The format of

indemnity approved by Law Department is enclosed as Annexure-2.

5. Service fee for sourcing business to SBI is to be paid at flat 2% of the sanctioned loan

amount to these Dealers. The above service charges is payable only if the repayment period

of the Car Loan is at least two years.

Page | 56

Car Loan Interest Rates for 3 years duration for purchase of pre-owned

car:

(fl: floating, fi: fixed)

Lender Rate

(%)

Duration More Info EMI for 3 yrs

loan(assuming

loan of ₹ 1

lakh)

ALLAHABA

D BANK

11.00(fl)

Up to 7years

Rate applicable for purchase of Any (new or pre-owned) car;In case of Salary tie-up & Full Collateral security, Doctors/Medical Practitioners

₹ 3,273.87

Vijaya Bank 11.30(fl)

Up to 5years

Rate applicable for purchase of Any (new or pre-owned)car

₹ 3,288.10

CorporationBank

12.10(fl)

Up to 3years

Rate applicable for purchase of Any (new or pre-owned) car

₹ 3,326.21

Bank Of India 13.00(fl)

Up to 6years

Rate applicable for loans above ₹ 10

lacs; purchase of Pre-owned car;

₹ 3,369.40

IndianOverseasBank

13.25(fl)

Up to 3years

Rate applicable for purchase of Any (new or pre-owned) car

₹ 3,381.45

Punjab AndSind Bank

13.50(fl)

Up to 5 years

Rate applicable for loans up to ₹ 10lacs; purchase of Pre-owned car;

₹ 3,393.53

State Bank OfIndia

17.25(fl)

Up to 3years

Rate applicable for purchase of Pre-owned car;

₹ 3,577.73

Page | 57

SPECIFIC OBJECTIVE OF THE PROJECT

Objective:

To know and study/analyses the “SCOPE OF USED CAR LOAN” by “STATE BANK OF

INDIA” in Lucknow city.

Sub Objectives:

– To know the nature of the market for used cars in the Cities.

– To enumerate the various players for used cars in the cities.

– To enumerate the various reasons for customers opting a used car.

– To find out the awareness/ knowledge level of customers on the concept of ‘Used Car

Loan’ offered by “State Bank of India”.

– To access the impact of promotional activities on the sale of used cars.

Page | 58

SCOPE OF STUDY

The geographical scope of the study is restricted to LUCKNOW only.

All the analysis and suggestions are based on the analysis of the both primary and

secondary data.

Therefore the scope of the study revolves around the following aspects:-

Consumer perception towards Used Car Loan.

Consumer awareness about Used Car Loan scheme and its benefit.

Aware the Bank about the customer problems, especially in case of automobile sector.

The value of a used car is considerably lower than a new car,

The depreciation cost is lesser as compared to the new car,

Used car loans are simpler, easily available and cost lower than the new car loans

Used car can be modified according to the owner's preference.

Page | 59

Limitations of study:

As we are short of time having only 6-8 weeks for the summer training so we

can’t do a deep study.

Less number of feedbacks is the limitation of this study.

Period of study:

16thmay to 16thjuly

Page | 60

PART - III

METHODOLOGY AND ANALYSIS

METHODOLOGY

ANALYSIS

OBSERVATIONS

CONCLUSIONS

RECOMMENDATIONS

9.

Page | 61

METHODOLOGY AND ANALYSIS

RESEARCH APPROACH

1. Exploratory research

Exploratory research is concerned with discovering the general nature of the problem

and the variable that relate to it. Exploratory research is characterized by high degree of

feasibility and it tends to rely on secondary data.

During this study, exploratory research is carried to identify the variable like, customer

satisfaction level, basis of purchase decisions, important of brand name, customer opinion

regarding various preferred feature, the innovative advertising strategies used by the

companies, which decides the strength of the company to be in the customers mind and also

to grab the major portion in the market.

After discovering the general nature and the variable relating to it, with the help of

exploratory research, a descriptive research will carried out during the study for the purpose

of accurate description of variables.

Descriptive research carried out with the help of primary data collected from the customer

through questionnaires.

2. Data collection approach

To carry out this research, primary data and secondary are collected.

Primary data (survey data)

Systematic collection of information directly from respondents. This data is collected for the

descriptive research. The survey data collected during the study includes the data collected

Page | 62

through questionnaire and face-to-face interview with customer to know about the consumer

behaviour.

Secondary data

The first step in data collection approach is to look for secondary data. Usually it is the data

developed for some purpose other than for helping to solve the problem at hand. Secondary

data are collected through various magazines, internal experts, website, directories, external

experts and miscellaneous report.

3. Measurement Technique

In this project following measurement techniques are used to collect information.

Questionnaire

For the purpose of this project self-administered questionnaire to potential customers and for

standard commercial business enterprises located in LUCKNOW city.

Analysis of DATA

Data are useful only after analysis. Data analysis involves converting the series of data

recorded observations into descriptive statements.

The survey will carried out in LUCKNOW city, and the sample size was 100.The

information gathered is transferred to a SPSS coding sheet, interpretation. The measurement

and evaluation of data is done using SPSS 19.0 version software, simple frequency cross tabs

and graphical representations.

Ethics of the research

In this study, the questionnaire is designed in such a way that the feelings of respondents as

well as the ethics of the company are not disturbed. The research and research report is not

misleading any way.

Page | 63

4. Sampling process

Sampling Population

All the people using A2 segment cars and the people who can afford an A3 segment cars and

standard commercial enterprises located in LUCKNOW.

Sampling Frame

List of standard commercial enterprises located In LUCKNOW, List of A2 segment car user

and list of people who can afford A3 segment cars.

Sampling unit

Standard Hotels, Business enterprises and households

Sample Size

100

Sampling Method

Samples are selected on Non probability convenient sampling method.

Data collection method

To collect the data we used both primary and secondary methods.

Page | 64

Page | 65

ANALYSIS

For Customers (Professionals)

Q 1. You are in which profession?

Pro fe s s io n o f Re s p o n d e n t

11 11 .0 11 .0 11 .08 8 .0 8 .0 1 9 .0

1 9 1 9 .0 1 9 .0 3 8 .02 4 2 4 .0 2 4 .0 6 2 .01 7 1 7 .0 1 7 .0 7 9 .02 1 2 1 .0 2 1 .0 1 0 0 .0

1 0 0 1 0 0 .0 1 0 0 .0

En g i n e e rDo c to rL e c tu ra rBu s i n e s sAd v o c a teBa n k e rT o ta l

Va l i dF re q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

Profession of Respondent

Pro fe s s io n o f Re s p o n d en t

BankerAdvocat eBusinessLect urarDoct orEngineer

Fre

qu

en

cy

30

20

10

0

Findings:

11 % of Respondents are Engineers

8 % of Respondents are Doctors

19 % of Respondents are Lecturers

24 % of Respondents are Businessman

17 % of Respondents are Advocates

21 % of Respondents are BankersPage | 66

Interpretation

Among different demographic classification in the research profession of the respondents is

the prime factor and her professional like business, advocates, bankers, engineers, lectures are

focused customers.

Q 2. Age of Respondent?

Ag e o f Re s po nde nt

3 6 3 6 .0 3 6 .0 3 6 .03 7 3 7 .0 3 7 .0 7 3 .02 3 2 3 .0 2 3 .0 9 6 .0

4 4 .0 4 .0 1 0 0 .01 0 0 1 0 0 .0 1 0 0 .0

2 5 -3 53 5 -4 54 5 -5 5> 5 5To ta l

Va l i dF re q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

Age of Respondent

Ag e o f Re s p o n d e n t

>5545-5535-4525-35

Fre

qu

en

cy

40

30

20

10

0

Findings:

36 % of Respondents are of age 25-35

37 % of Respondents are of age 35-45

23 % of Respondents are of age 45-55

Page | 67

4 % of Respondents are of age greater than 55

Interpretation

The other demographic classification is the age of the respondents, as India is having very

significant portion of young population so there are more than 73% of the people are in age

group 25 to 45 willing to have cars.

Q 3. Gender of Respondent?

Ge n d e r o f Re s p o n d e n t

8 8 8 8 .0 8 8 .0 8 8 .01 2 1 2 .0 1 2 .0 1 0 0 .0

1 0 0 1 0 0 .0 1 0 0 .0

Ma l eF e ma l eT o ta l

Va l i dF re q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

Gender of Respondent

Ge n d e r o f Re s p o n d e n t

FemaleMale

Fre

qu

en

cy

100

80

60

40

20

0

Findings:

88 % of Respondents are male

12 % of Respondents are male

Interpretation:

Page | 68

The gender is the prime important factor and the male is dominating the auto sector and

remote sector is growing

Q.4 Income of Respondent?

I ncome of Respondent

19 19. 0 19. 0 19. 042 42. 0 42. 0 61. 036 36. 0 36. 0 97. 03 3. 0 3. 0 100. 0

100 100. 0 100. 0

Rs 50, 000-Rs 1, 00, 000Rs 1, 00, 000-Rs 1, 50, 000Rs 1, 50, 000-Rs, 2, 00, 000> 2, 00, 0000Tot al

ValidFrequency Percent Valid Percent

Cumulat ivePercent

Income of Respondent

In c o me o f Re s p o n d e n t

> 2, 00, 0000

Rs 1, 50, 000-Rs, 2, 00,

Rs 1, 00, 000-Rs 1, 50,

Rs 50, 000-Rs 1, 00, 00

Fre

qu

en

cy

50

40

30

20

10

0

Findings:

19 % of Respondents are under income ₹ 50,000- ₹ 1,00,000

42 % of Respondents are under income ₹1,00,000-₹1,50,000

36 % of Respondents are under income ₹1,50,000-₹2,00,000

3 % of Respondents are under income greater than >2,00,000

Interpretation

Page | 69

as I have already told that companies are focusing on the middle class segment of the Indian

market in the income group or 1 lack to 2 lack which accounts to 78 % approximately

Q 5. Marital Status?

Ma ri ta l Sta tu s

8 1 8 1 .0 8 1 .0 8 1 .01 9 1 9 .0 1 9 .0 1 0 0 .0

1 0 0 1 0 0 .0 1 0 0 .0

Ma rri e dUn ma rri e dT o ta l

Va l i dF re q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

Marital Status

Ma ri ta l Sta tu s

Unmar r iedMarr ied

Fre

qu

en

cy

100

80

60

40

20

0

Findings:

81 % of Respondents are married

19 % of Respondents are Unmarried

Interpretation

Page | 70

Among the married and unmarried customers the car owner and the prospective car customer

are the married one the safety provided to the self and the family is prime importance in

buying car and they account to 80%

Q 6. Number of Children?

Nu m b e r o i f Ch i ld re n

3 1 3 1 .0 3 1 .0 3 1 .03 8 3 8 .0 3 8 .0 6 9 .01 2 1 2 .0 1 2 .0 8 1 .01 9 1 9 .0 1 9 .0 1 0 0 .0

1 0 0 1 0 0 .0 1 0 0 .0

On eT woMo re th a n 2NoT o ta l

Va l i dF re q u e n c y Pe rc e n tVa l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

Number oif Children

Nu mb e r o i f Ch i l d re n

NoMore t han 2TwoOne

Fre

qu

en

cy

40

30

20

10

0

Findings:

31 % of Respondents have one child

38 % of Respondents have two children

12 % of Respondents have more than two children

19 % of Respondents have no children

Page | 71

Interpretation

As above explained the safety of the family is one of the prime important the children of the

family and there safety is demanding the parents to own a car

Q.7 Do you own a car?

Dou y ou own a c a r

3 2 3 2 .0 3 2 .0 3 2 .06 8 6 8 .0 6 8 .0 1 0 0 .0

1 0 0 1 0 0 .0 1 0 0 .0

Ye sNoTo ta l

Va l i dFre q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu la t i v ePe rc e n t

Dou you own a car

Do u y o u o wn a c a r

NoYes

Fre

qu

en

cy

80

70

60

50

40

30

20

10

0

Findings:

32 % of Respondents have their own car

68 % of Respondents don’t have their own car

Page | 72

Page | 73

Q.8 Is it New car or Second Hand Car?

I s i t New car or Second Hand Car

17 17.0 17.0 17.015 15.0 15.0 32.068 68.0 68.0 100. 0

100 100.0 100.0

New CarPre-Owned carNo CarTotal

ValidFrequency Percent Valid Percent

Cumulat ivePercent

Is it New car or Second Hand Car

Is i t Ne w c a r o r Se c o n d Ha n d Ca r

Pre-O wned carNew Car

Fre

qu

en

cy

17. 5

17. 0

16. 5

16. 0

15. 5

15. 0

14. 5

15. 0

17. 0

Findings:

54 % of Respondents have new car

46 % of Respondents have Pre owned cars

Interpretation

As for the auto industry standards the sales of new and pre – owned cars is 1:1 as per the

research it is showing the same where how car seekers, and pre owned car seekers are equal.

Page | 74

Q.9 Car Purchased from?

Car Purchased from

5 5. 0 33. 3 33. 310 10. 0 66. 7 100. 015 15. 0 100. 085 85. 0

100 100. 0

Cert if ied DealerUnCert if ied DealerTot al

Valid

Syst emMissingTot al

Frequency Percent Valid PercentCumulat ivePercent

Car Purchased from

Ca r Pu rc h a s e d fro m

UnCer t if ied DealerCer t if ied Dealer

Fre

qu

en

cy

12

10

8

6

4

2

0

Findings:

33 % of Respondents have purchased cars from certifieddealers

67 % of Respondents have purchased cars from uncertified dealers

Page | 75

Q.10 How did you come to Know about Dealer?

How di d you come to Know about Deal er

8 8. 0 53. 3 53. 35 5. 0 33. 3 86. 72 2. 0 13. 3 100. 0

15 15. 0 100. 085 85. 0

100 100. 0

Advert isement sFr iends/ NeighboursOt her DealersTot al

Valid

Syst emMissingTot al

Frequency Percent Valid PercentCumulat ivePercent

How did you come to Know about Dealer

Ho w d i d y o u c o me to Kn o w a bo u t De a le r

O t her DealersFr iends/ NeighboursAdver t isement s

Fre

qu

en

cy

10

8

6

4

2

0

Findings:

54 % of Respondents came to know about uncertified dealers through Advertisements

33 % of Respondents came to know about uncertified dealers through Friends & Neighbours

13 % of Respondents came to know about uncertified dealers through other dealers

Interpretation

Advertisement and word of mouth are playing very important role in him educating the

customers about dealers which account to around 87 % approximately.

Page | 76

Q.11 Would you buy a new car or pre-owned car?

Woul d you buy a new car or pre-owned car

21 21.0 30.9 30.943 43.0 63.2 94.14 4. 0 5. 9 100. 0

68 68.0 100. 032 32.0

100 100. 0

New carPre owned carDont Want CarsTotal

Valid

Syst emMissingTotal

Frequency Percent Valid PercentCumulat ivePercent

Would you buy a new car or pre-owned car

Wo u l d y o u b u y a n e w c a r o r p re -o wn e d c a r

Dont Want CarsPre owned carNew car

Fre

qu

en

cy

50

40

30

20

10

0

Findings:

31 % of Respondents wants to buy new car

63 % of Respondents wants to buy pre owned car

6 % of Respondents don’t wants to buy car

Interpretation

Among the prospective car customer’s majority of him customers are willing to buy the pre-

owned cars.

Page | 77

Q.12) If pre-owned car, would you prefer to buy from?

I f pre-owned car, woul d you prefer to buy from

16 16. 0 37. 2 37. 227 27. 0 62. 8 100. 043 43. 0 100. 057 57. 0

100 100. 0

Cert if ied DealerUncert if ied DealerTot al

Valid

Syst emMissingTot al

Frequency Percent Valid PercentCumulat ivePercent

If pre-owned car, would you prefer to buy from

If p re -o wn e d c a r, wo u ld y o u p re fe r to b u y fro m

Uncer t if ied DealerCer t if ied Dealer

Fre

qu

en

cy

30

20

10

0

Findings:

37 % of Respondents wants to buy pre-owned car from certified dealers

63 % of Respondents wants to buy pre-owned car from uncertified dealers

Interpretation

As budget is the prime concern for the customers who want buy the pre-owned cars and there

certified dealer are bit expressive for the customers of this segment. So majority of them go

to uncertified customers

Page | 78

Q.13) Factors considered in buying a car?

Factors consi dered i n buyi ng a car

29 29. 0 50. 0 50. 023 23. 0 39. 7 89. 73 3. 0 5. 2 94. 8

3 3. 0 5. 2 100. 0

58 58. 0 100. 042 42. 0

100 100. 0

BudgetMilageAgePersonal orCompany ownedTot al

Valid

Syst emMissingTot al

Frequency Percent Valid PercentCumulat ivePercent

Factors considered in buying a car

Fa c to rs c o n s id e re d i n b u y i n g a c a r

Personal or CompanyAgeMilageBudget

Fre

qu

en

cy

40

30

20

10

0

Findings:

50 % of Respondents considers budget while buying pre-owned car

40 % of Respondents considers milage while buying pre-owned car

5 % of Respondents considers age while buying pre-owned car

5 % of Respondents considers personal/company owned while buying pre-owned car

Interpretation

Page | 79

As the Indian customers are more concerned about the economy of the car the budget and

mileage are gain important.

Q.14) Have you heard about “Sbi Used Car Loan"?

Have you heard about “Sbi Used Car Loan”

Frequency PercentValid

PercentCumulative

PercentValid no 40 40.0 40.0 40.0

yes 60 60.0 60.0 100.0Total 100 100.0 100.0

Findings:

40 % of Respondents heard about “Sbi Used Car Loan”

60 % of Respondents didn’t heard about “Sbi Used Car Loan”

Page | 80

From where you heard about "Sbi Used Car Loan"

19 19.0 47.5 47.511 11.0 27.5 75.010 10.0 25.0 100.040 40.0 100.060 60.0

100 100.0

AdvertisementsFriends/NeighboursOther DealersTotal

Valid

SystemMissingTotal

Frequency Percent Valid PercentCumulative

Percent

From where you heard about “Sbi Used Car Loan”

From where you heard about “Sbi Used Car Loan”

Other DealersFriends/NeighboursAdvertisements

Freq

uenc

y

20

10

0

Q.15) From where you heard about “Sbi Used Car Loan”?

Findings:

47 % of Respondents heard about “Sbi Used Car Loan” from advertisements

26 % of Respondents heard about “Sbi Used Car Loan” from friends/neighbours

27 % of Respondents heard about “Sbi Used Car Loan” from other dealers

Interpretation

Advertising through different channel of media are to be focused as majority of the

respondents don’t know about the Sbi Used Car Loan.

Page | 81

For Dealers

1. Since when is your organization established?

Sin c e whe n is y o u r orga n iz a tion e s ta b lis he d ?

3 3 0 .0 3 0 .0 3 0 .02 2 0 .0 2 0 .0 5 0 .05 5 0 .0 5 0 .0 1 0 0 .0

1 0 1 0 0 .0 1 0 0 .0

0 -55 -1 01 0 -1 5To ta l

Va l i dF re q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

Since when is your organization established?

Sin c e wh e n i s y o u r o rg a n i z a ti o n e s ta b l i s h e d ?

10-155- 100- 5

Pe

rce

nt

60

50

40

30

20

10

0

2. Does your organization use middlemen?

Doe s y our o rga niz a tion us e m idd le m e n?

5 5 0 .0 5 0 .0 5 0 .05 5 0 .0 5 0 .0 1 0 0 .0

1 0 1 0 0 .0 1 0 0 .0

Ye sNoTo ta l

Va l i dFre q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu la t i v ePe rc e n t

Does your organization use middlemen?

Do e s y o u r o rg a n iz a ti o n u s e mid d le me n ?

NoYes

Pe

rce

nt

60

50

40

30

20

10

0

Page | 82

Page | 83

3. What kind of promotional activities do you use?

What kind of promotional activities do you use

Frequency Percent Valid PercentCumulative

PercentValid no 40 40.0 40.0 40.0

yes 60 60.0 60.0 100.0Total 100 100.0 100.0

What kind of promotional activities do you use?

Wh a t k i n d o f p ro mo ti o n a l a c ti v i t ie s d o y o u u s e ?

NoYes

Pe

rce

nt

70

60

50

40

30

20

10

0

4. Festive season is the peak time for the Maximum Sales?

What kind of promotional activities do you use

Frequency Percent Valid PercentCumulative

PercentValid no 30 30.0 30.0 30.0

yes 70 70.0 70.0 100.0Total 100 100.0 100.0

When is the peak time for the Maximum Sales?

Wh e n is th e p e a k t ime fo r th e Ma x i mu m Sa l e s ?

NoYes

Pe

rce

nt

80

60

40

20

0

Page | 84

5. What is the average sales per year?

W h a t is th e a v e ra g e s a le s p e r y e a r?

6 6 0 .0 6 0 .0 6 0 .03 3 0 .0 3 0 .0 9 0 .01 1 0 .0 1 0 .0 1 0 0 .0

1 0 1 0 0 .0 1 0 0 .0

2 5 - 1 2 51 2 5 - 2 2 52 2 5 - 3 2 5T o ta l

Va l i dF re q u e n c y Pe rc e n t Va l i d Pe rc e n t

Cu mu l a t i v ePe rc e n t

What is the average sales per year?

Wh a t i s th e a v e ra g e s a le s p e r y e a r?

225- 325125- 22525- 125

Pe

rce

nt

70

60

50

40

30

20

10

0

Page | 85

ANALYSIS USING SPSS

Analysis Using SPSS

Crosstab of Profession and Buying a New Car or a Pre-Owned

Profession of Respondent * Woul d you buy a new car or pre-owned carCrosstabul ation

Count

2 1 31 3 46 10 1 174 10 1 153 10 135 9 2 16

21 43 4 68

EngineerDoctorLecturarBusinessAdvocateBanker

Profession ofRespondent

Total

New carPre owned

carDont Want

Cars

Would you buy a new car orpre-owned car

Total

Pro fe s s io n o f Re s p o n d e n t

Banker

Advocat e

Business

Lect urar

Doct or

Engineer

Co

un

t

12

10

8

6

4

2

0

Wo u l d y o u b u y a n e w

New car

Pre owned car

Dont Want Cars

Interpretation

Out of 3 engineers 2 says new car, and 1 say pre owned car.

Out of 4 doctors 2 says new car, and 1 say pre owned car.

Out of 17 lecturers 6 say new car and 10 say pre owned car.

Page | 86

Out of 15 Business men 4 says new car, and 10 say pre owned car.

Out of 13 advocates 3 say new car, and 10 say pre owned car.

Out of 16 bank employees, 5 say new car, and 4 say pre owned car.

Crosstab of Income and Buying a New Car or a Pre-Owned

I ncome of Respondent * Woul d you buy a new car or pre-ow ned car Crosst abul at i on

Count

3 13 3 199 27 1 379 3 12

21 43 4 68

Rs 50, 000- Rs 1, 00, 000Rs 1, 00, 000- Rs 1, 50, 000Rs 1, 50, 000- Rs, 2, 00, 000

I ncome ofRespondent

Tot al

New carPr e owned

carDont Want

Car s

Would you buy a new car orpr e- owned car

Tot al

Interpretation-

Out 19 respondents falling in the income category of 50, 000- 1, 00, 000, 13 prefer₹

pre- owned car.

Out 37 respondents falling in the income category of 1, 00 000- 1, 50, 00 27 prefer₹

pre- owned car.

Out 12 respondents falling in the income category of 1, 50, 000- 2, 00, 000 3 prefer₹

pre- owned car.

Page | 87

Crosstab

Count

33 10 4330 9 3916 2 1879 21 100

25-3535-4545-60

Age

Total

no yes

aware of Used car loanValue

Total

Awareness of USED CAR LOAN-

i) Age wise

Interpretation-

Out 43 respondents falling in the age category of 25- 35, 10 have heard of USED CAR

LOAN.

Out 39 respondents falling in the age category of 35- 45, 9 have heard of USED CAR

LOAN.

Page | 88

Out 18 respondents falling in the age category of 45- 60, 2 have heard of USED CAR

LOAN.

FINDINGS & OBSERVATIONS:

Professionals:

36 % of Respondents are of age 25-35, 37 % of Respondents are of age 35-45, 23 %

of Respondents are of age 45-55, 4 % of Respondents are of age greater than 55

88 % of Respondents are male, 12 % of Respondents are Female

42 % of Respondents are under income Rs.1,00,000-Rs.1,50,000 and 36 % of

Respondents are under income Rs.1,50,000-Rs.2,00,000

81 % of Respondents are Married

31 % of Respondents have one child and 38 % of Respondents have two children

68 % of Respondents don’t have their own car

Out of remaining 32% of sample size 54 % of Respondents have Pre owned cars

54 % of Respondents came to know about uncertified dealers through Advertisements

and33 % of Respondents came to know about uncertified dealers through Friends &

Neighbours

Page | 89

Out of 68% of sampling who don’t own car, 31 % of Respondents wants to go for

new car and 63 % of Respondents wants to buy pre owned car and 63% would buy it

from uncertified dealers.

50 % of Respondents considers budget while buying pre-owned car and 40 % of

Respondents considers mileage while buying pre-owned car, 40 % of Respondents

heard about “used car loan”

Remaining 60% heard it from Advertisements, friends/neighbours

Sample of Dealers-

• 20 % are established in the market since 5-10 years and 50 % are since from 10-15

years

• 50% use middlemen for sales.

• Promotion activities-

60%- use news papers

40% - pamphlets

25%- Melas

• 70% consider festive season as peak point for sales.

• The average sales per year is- 60% said- 25-125 cars

• 30% said- 425- 525 cars

• 67% say customers look for budget

• 68% say customers look for age of the car

• 90% say customers look for mileage

Page | 90

Page | 91

Recommendations and Suggestions

For the Professionals-

Target Segment - the target customers whom I suggest SBI should concentrate is the

advocates, lecturers and petty business men, because they are the respondents who are

keen in buying pre owned cars.

The target can also be segmented age wise, 25-45 are the most interested segment in

buying a pre-owned car.

SBI as a bank is very well known and well positioned in the Lucknow city , but the

concept of ‘used car loan’ is not known to most of the localities. Therefore SBI

should make an effort to advertise and promote ‘used car loan’ through various

mediums like newspapers, melas and pamphlets.

Mostly the age group of 25-35 is aware of the used car loan concept.

Family size influences in buying a car is proved through the Chi Square Test,

therefore respondents of the lower income category can also be looked at, for the

sales of the pre-owned cars.

‘Pre-Owned’ is more of a sophisticated word for the localities; the other petty

dealers have an upper hand on this front, as they use a much simpler and an easily

understood word ‘second hand’. Therefore I suggest that considers this point, as

this was the insight got from the personal interaction with the respondents.

Another drawback of “used car loan” is that a bigger board or a hoarding can be

placed in a most strategic location of the bank and showroom.Page | 92

Customer awareness programme is required so that more people should attract

towards used car loan

If there are any kind of hidden charges than that must disclose to customer before

giving loan to them.

SBI must take some steps so that customers can get their loan in time. Like phone

verification by customer care that one customer is got their loan on time or not .It

must be before a certain date so necessary steps can be taken.

SBI should more concern about physical verification rather than phone verification so

it will avoid fraud or cheating.

For the better service new offers would be require.

The bank should decrease the rate of interest for used car loan almost we can say SBI

having the highest rate of interest for used car or certified pre owned car loan.

SBI should more focus on Retaining existing customers.

SBI must focus on Segmentation based on customer knowledge Product offering

based on customer demand.

SBI must take feedbacks of customers regarding features & services.

Page | 93

CONCLUSION:

The study helped me gain valuable insights in Opportunity Analysis and Consumer

Behavior, towards buying a pre-owned car. This project titled “, has been a knowledge

gaining experience for me. By interacting with the respondents and making visits to the

Uncertified Dealers. I have understood that understanding customers is an art and it takes

a very strong brand image for a company to retain & grow its market share. The results of

the survey proved to be both encouraging and partly discouraging too. The respondents

were not very positive about used car loan, which was quite discouraging sign for the

company. The segment for which sbi should cater to is a interest sensitive segment, so as

the organization should focus on highlighting the additional perquisites that they would

provide with the car loan, it is going to bond well with the targeted market and even grow

their market to all the geographical areas. But I believe that Sbi in used car loan has what

it takes to become a name to reckon with in the market and I offer my best wishes for the

same and hope that my work will be of some use for the company.   

The majority of the Indian population is of the middle class segment which demand for the

low cost and low maintaince cars this very reason has given birth to the pre-owned car

segment which is growing at the accelerating growth rate.

Page | 94

BIBLIOGRAPHY:

WWW.STATEBANKTIMES.COM

WWW.WIKIPEDIA.ORG

WWW.GOOGLE.CO.IN

WWW.SLIDESHARE.NET

WWW.SBI.CO.IN

Books:-

MARKETING RESEARCH -PAUL. E .GREEN

MARKETING RESEARCH- DR. PAURAV SHUKLA

MARKETING MANAGEMENT - PHILIP KOTLER

Page | 95

QUESTIONNAIRE

For Customer Point of View

Name :

Gender : M F

Date of birth :

No of dependents :

Address :

Marital status :

…………………………………………………………………………………………………………………….....................

1. Do you have a vehicle?

Yes

No

*. If Yes,

Four wheeler

Two wheeler

None

*. Is your vehicle

Financed

Owned

Please do mention the Vehicle make (model name)…………………..

Page | 96

2. Your Occupation

Engineer

advocate

doctor

banker

Other (please specific)

Income please mention ……………………………………………….

3. By which source you got the information of used car loan.

BY ADVERTISEMENT

BY CAR BAZAR

BY BANK

BY INDIVIDUAL

Other please specific

4. Are you planning for purchase a vehicle?

New car

Used car

Pre-owned certified car

5. Will you avail used car loan facilities from any bank?

Yes

Page | 97

No

6. Have you heard about “Sbi Used Car Loan"?

Yes

No

7. Which bank will you prefer for the used car loan?

STATE BANK OF INDIA

HDFC

NBFC

FOREIGN BANKS

PUBLIC SECTOR BANKS

Other

8. What facilities you required after the loan?

Mobile banking

Internet banking

Ecs /direct debit facility

Check off facility

9. If you want to give, any feedback /suggestion for bank in loan section .Please give us. We shall highly oblige.

……………………………………………………………………………………………………………………………………………………………………………………………………

Page | 98

…………………………………………………………………………………………………………………………………………………………………………………………

Date: Signature of the customer:

QUESTIONNAIRE

For dealer Point of View

Name :

Gender : M F

Date of birth :

No of dependents :

Address :

Marital status :

…………………………………………………………………………………………………………………….....................

1. Since when is your organization established?

2. Does your organization use middlemen?

Yes

Page | 99

0-5

5-10

10-15

Other please specific

No

3. What kind of promotional activities do you use?

Yes

No

4. Festive season is the peak time for the Maximum Sales?

Yes

No

5. What is the average sales per year?

25-125

125-225

225-325

Other (please specific)

6. By which source you circulate the information of used car loan.

LOAN MELA

CAR BAZAR

BY BANK

BY INDIVIDUAL

Other please specific

7. What facilities you required in the loan process?

Page | 100

Less turnaround time

Less rate of interest

Better ambience of the bank

Easy availability of the loan

8. What facilities you required after the loan?

Mobile banking

Internet banking

Ecs /direct debit facility

Check off facility

9. What rating will you give to SBI for used car loan?

Excellent

Good

Satisfactory

Average

Poor

10. If you want to give, any feedback /suggestion for bank in loan section .Please give us. We shall highly oblige.

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

Page | 101

Date: Signature of the customer

Page | 102