Major Research Project

On
Comparision of car loan schemes of HDFC and
SBI in Indore

A dissertation submitted in partial fulfillment of Masters

of business administration (2007-2009)

Guided by: Submitted By:

Mrs Vishakha kutumbale
Lecturer
SOE DAVV, Indore

SCHOOL OF ECONOMICS
DEVI AHILYA VISHWA VIDYALAYA, INDORE
 Declaration

I undersigned hereby declare that the project titled

‘Comparision of car loan schemes of HDFC and SBI in
Indore’ is based on my own authentic work.

The work done by others if referred has been properly

acknowledged.
 Certificate

To whomsoever it may concern.

This is to certify that Ms. Vibha Saboo has completed her Major
Research Project titled ‘Comparision of car loan schemes of
HDFC and SBI in Indore’ under my supervision.
This project is the original work of the candidate.

I am fully satisfied with the project work and recommend its

acceptance in the partial fulfillment of the award of the degree
of Masters Of Business Administration.

Mrs. Vishakha Kutumbale

Lecturer
SOE DAVV, Indore.
 Acknowledgement

The greatest gift of all is knowledge. A person cannot learn on his own but
requires constant support, encouragement and guidance, it has been said that
Gratitude is the most sincere expression from the heart. I take this opportunity
to express my gratitude to the many who have contributed to the successful
completion of this dissertation.

I have been very fortunate in having a knowledgeable astute and guide Mrs
Vishakha kutumbale (faculty, SOE, Indore) whose consecration, approbation
and encouragements made it possible for me to complete the project. Her
knowledge and instructions enabled me to develop a clear framework for the
study.

It is a great pleasure for me to express my deep sense of respect and gratitude

to Dr. Ganesh Kawadia (Head of the Department) for his timely
encouragement and constructive criticism during the entire project.

I would also like to thank the entire faculties without whose co-operation and
kind consideration this project would’ve been incomplete.

Words fail me as I thank my family members for their constant encouragement,

support and endeavors throughout the project.

Last but not the least I thank my friends whose strong support provided me this
diligent sense of achievement.

Vibha Saboo
MBA (FS) – IV sem

2007-2009
 Table of contents

Introduction

Literature Review

Research Objective

Research methodology

 Subject
 Sampling Method
 Data collection tools
 Data analysis tools

Customer Survey: Questionnaire

Findings and Suggestions

Bibliography
 Introduction

Car Loans – More Than Meets the Eye

With the income levels rising in India, many families have a high
disposable income these days. And with high disposable incomes comes
an urge to upgrade your lifestyle!
And what can be a better way of upgrading your lifestyle than buying a
car? This is especially true since you have so many lenders eager and
willing to extend a loan for your vehicle purchase, making the purchase of
your dream car so easy...

For most of the individuals cars are meant only for those who can afford it.
One chief reason is that most individuals do not have the finances
required to afford it. However now there are several loan plans available in
the financial market which is meant to provide adequate finances to the
individuals who are looking forward to buy their dream car. Personal car
loans are one such loan plan.

With these loans you have the requisite finance to purchase car of any
make or model available in the market today. Under these loans you can
obtain 80-90% of the total amount required to finance the car. The
amount can be paid back in easy instalments over a
Period of 5-7 years.

Almost 80 percent of the auto sales are financed by loans in India. The car
loan rate today is higher than ever before. The car loan rates are as high
as 13-14 percent per annum and are set to increase further. However, a
hard bargaining can cut the interest rates. Usually the buyer is routed to
the banks through the car dealer (new and old), from where a purchase is
imminent. The dealers even help in cutting down the interest rate for the
buyers’ sake.
Buyers are not aware that it is not the bank that is actually cutting down
the interest rates, but the manufacturers, dealers and agents who
contribute to lower the interest rate on behalf of them.

Public sector banks and private banks offer car loans at varying rates
(difference in a few basis points also count). But these points can help
save a lot of money in the long run. Mostly the bankers or dealers aid to
reduce the interest rates by 1 percent to 1.5 percent at the maximum. All
banks function under the same base rate that is applicable to each and
every loan. Apart from the base rates, banks have a facility where car
manufacturers, agents and dealers, can contribute while the buyer gets a
loan at apparently reduced rates. This is the benefit that a buyer gets in a
competitive market.

How the manufacturer, agents and dealers help to reduce the

interest rates.

The car manufacturer’s financial aid:

Financial incentives are offered by the car manufacturers to selected

lending institutions in order to push sales of their cars. The car
manufacturer selects banks that have a wide network and deep
penetration across the country. The bank charges fees for providing this
service to the manufacturer. In return the manufacturer pass on these
charges to the car buyer in the form of car loan.

The dealer discount:

Dealers are the retailers for car in the auto sector. Each of these dealers is
associated with different car manufacturer and retail products. Dealers
receive incentives on sales when they meet the target of the
manufacturers. Car dealers who achieve sales above the target offer
higher discounts than other dealer with the same manufacturer. The
lending institutions include the incentives in the pricing of the car loan.
The lending institution has the freedom to reduce the pricing of car loan.
This is done at the behest of the car dealer, who agrees to pay the
charges equal to the reduced rates.
The agent’s interest:

The agents are the key people who actually help a buyer to complete all
the formalities for a car loan. The agent is the person who negotiates with
the dealers for the discounts. The discounts depend upon the number of
cars sold from the dealership by the agents. The dealer negotiates the
discount based on the contribution made by the agent on the sales
performance of the dealership. The agent receives a commission from
both the bank and the dealer. Banks have two types of commissions - the
standard rate and the incentives on target achievement. When buyer gets
agents discounts it is mostly standard commission. By giving away the
standard commission, the agent helps to reduce the car loan amount,
which in turn affects the interest rates.

Car Loan Finance can be taken either singly or jointly, if there are more
than one persons looking for Car Finance. When more than one person
seeks Car Finance, they are called co-applicants.

Applying for personal car loans

In general, these loans are offered broadly in two categories of secured

and unsecured option. The secured option of the loan is preferable in case
you are looking for a bigger amount. To avail this option, you have to
pledge any valuable asset such as home, real estate etc as collateral. The
presence of the collateral assures the lender that the amount is safe and
will be duly returned. The approved amount depends mostly on the equity
value of the collateral. Since there is an asset to bank upon, lenders offer
these loans at comparatively low rates.

If you are thinking of availing a smaller amount, then you should go for
unsecured option of the loans. These loans can be obtained without
involving any collateral. Moreover the collateral free condition paves the
way for borrowers like tenants, non homeowners, and students etc to
obtain the finances.

As these loans are entirely crafted to help you purchase your dream car,
there are also some additional benefits that may come along such as free
insurance cover, discount on the accessories and upholsteries, accidental
cover etc.

Time Duration or Tenure of the Loan: The time period in which the
Customer has to repay the loan to the Finance Company is called the
Tenure. The Customer has a choice to repay the loan. The options are
available from 1-7 years, depending on your capacity to repay loan.

EMI (Equated Monthly Instalments): An EMI comprises of a part of the

Principal and the interest, and it is a method of repaying the loan. The
amount of EMI is dependent on three factors: the loan term, the rate of
interest, and the amount of the loan.

Registration amount and Insurance: For an individual, the Registration

amount is 3.5% of the showroom price of the car. For a company, it is
10.5% of the showroom price. Insurance rate applicable for both
individuals and companies is at a flat rate of 3.6% of the showroom price.

In case of default, the options open for the Finance Company are:
It may be demanded by the Finance Company that the Vehicle is returned
to the company. Immediate possession can be taken by the authorized
official recruited by the Finance Company by entering the premises where
the Vehicle is kept.

After giving a notice to the Hirer, the Finance Company has the options of
selling, hiring, or using the Vehicle. If the Vehicle is resold, the Hirer has to
pay for the deficiency in case there is a shortfall. The Hirer also has to pay
for any damages caused to the Vehicle.

Margin Money Scheme / Regular Auto Loan (finance option)

This is the most basic, and the most popular option. Here, you pay your
share of the cost of car – called the Margin Money – and the bank gives the
rest as a loan. The margin money is usually 10 – 15% of the cost of the
car. Thus, the bank finances 85 – 90% of the cost of the car.
You repay the loan in the form of Equated Monthly Instalments (EMIs),
which you give in the form of Post Dated Cheques (PDCs).

Tenure: The tenure of this type of auto loan is usually 1 to 7 years.

As the tenure increases, the monthly EMI reduces for the same loan
amount. Thus, a higher tenure would enable you to opt for a higher loan
amount.

But since the tenure is long, you would pay many EMIs, and therefore
would end up paying a lot more in the form of interest compared to a
shorter duration loan.

Rate of Interest: The rate of interest on auto loans is higher than home
loans, but is normally lower than personal loans. The rate of interest for
loans of longer duration is usually higher than the rate of interest on
shorter duration loans.

Also, interest rate on loans for used cars is higher than the rate of interest
for new cars – it is higher by 2 – 4%.

The current rates of interest for car loans (for new cars) range from 10%
to 16%.

Prepayment Penalty: There is a heavy prepayment penalty in case you

want to pay back your car loan ahead of schedule – it ranges from 4% to
6% of the outstanding loan amount.

There can also be a limit to the amount you can prepay – for example, the
bank may stipulate that you would incur a fee if you prepay more than
10% of your outstanding loan amount.

Some banks do offer zero prepayment penalty – especially during special

promotions.

Processing / Administrative Charges: This is a fee to cover the

administrative expenses that the bank incurs to process your loan
application. It can be anywhere from 0% to 2.5% of the loan amount.
This fee has an effect of decreasing your loan amount (and therefore,
increasing the cost of your loan). For example, if you avail a loan of Rs. 3,
00,000 with a processing fee of 2%, you would end up getting only Rs. 2,
94,000.

Documentation Charges: Many banks charge documentation charge to

cover their expense of documentation of your loan – for example, the
amount they spend on stamp papers. This is usually a small amount (Rs.
200 to Rs. 1000), but should anyway be considered while comparing loans
from various banks.

Variants of Margin Money Scheme

Advance Equated Monthly Instalments (Advance EMI) Scheme:

Here, you get loan for 100% of the cost of the car. But the caveat is that
you have to pay 4 to 8 EMIs in advance. This means that you get a loan
that is less than 100% of the cost of the car, but still pay a higher EMI (and
higher interest) because the EMI is calculated on 100% of the amount.

Security Deposit Scheme:

In this scheme, you pay 10 to 30% of the loan amount to the bank as a
security deposit for the loan, and the bank finances 100% of the car value.
You earn an interest on this deposit, but this interest is lower than the
interest on your loan. The deposit, along with the interest, is returned to
you once you repay the entire loan.

Again, you get a loan that is only 70 – 90% of the cost of the car, but still
pay a higher EMI (and higher interest) because the EMI is calculated on
100% of the amount.

Auto / Car Loan Players

All the major banks and NBFCs offer auto / car loans. Some prominent
auto finance providers are:

• State Bank of India (SBI)

• HDFC Bank
• ICICI Bank
• Citi Bank
• Axis Bank (Formerly, UTI Bank)

PUBLIC OR PRIVATE BANK CAR LOANS

Bank is the easiest source to get a Car Loan Finance. If there is an

acquaintance with the Bank, it is viable. Some other Finance Companies
are providing better service than Banks. Processing paperwork takes
longer time in case of Banks.

The scenario of Car Loan Finance in India is quite eminent. Various

Banking as well as Non-Banking Financial Companies are offering Car Loan
Finance such as Citibank, HDFC Bank, ICICI Bank, Maruti Finance, Saraswat
Bank, SBI Car Loans, and Sundaram Finance etc.

Nationalised or Private Bank – which is better for car loans?

Almost 85 percent of auto sales in India are supported by loans. Nearly 40

percent of them are car buyers and the percentage is only growing. Most
buyers in India are first time car owners. They will easily choose to take a
loan from bank where they have an account, or private banks that
advertise aggressively, but the public sector banks are really bad while
offering car loans. We cannot say that one is definitely better than the
other, as each of them have their own advantages and disadvantages,
difference between them is striking.

Private Banks

First let us look at private banks, which are very popular in urban and
semi-urban areas. They are known for their customer friendly attitude and
little documentation. Loans get released in few days, sometimes within
two days. Their network ensures easy buying, registering and insuring a
car. The rate of interests for used cars is cheaper when compared to
nationalised banks, but the same for new cars is very high. Private Banks
have a complicated system of fines, in case of delay in re-payment, they
charge compound interest rates which can escalate the EMI by a huge
margin.

Nationalised Banks

The nationalised banks, being government agencies, go into a lot of

paperwork before passing an application. The lengthy processing time and
red-tapism force applicants to loose hope. But it is not the same in all
cases. Nationalised banks, offer low interest rates for new cars. But their
interest rate for purchase of used cars is very high. They do not charge
any fine for delay in re-payment. All their activities are accountable to the
higher authorities who can be approached for redressal of grievances, if
any.

Some of the draw backs are – such banks only entertain customers who
have large bank balances, and insufficient balance is enough ground for
rejecting a loan application. Loans are sanctioned against only if the
applicant is able to offer guarantors or collateral security of a higher value.
Even after all this the borrower cannot be sure that the required sum will
be sanctioned.

PUBLIC V/S PRIVATE BANKS:

A car loan can be availed for as low as 10% from a non-AC PSU bank, for
which your plush bank may well charge around 17.5%. The difference is all
the more gaping when it comes to used cars.

The interest rate charged by most PSU banks is usually the same for fresh
and used cars. However, private banks such as ICICI Bank, HDFC Bank
have varying rates based on the car you wish to buy, the model, and in
case of used cars, its age.

This is why no interest rate figure is revealed unless all the details are
provided to a private bank. You will not only be subject to a long list of
questions while opting for a loan from a private bank, but would also have
to pay through the nose for the same loan that would be cheaper
elsewhere.
In comparison, the only questions asked at the PSU banks would be the
amount of loan that you are seeking, the duration, and whether the car is
fresh or used. Questions such as whether the loan seeker has an account
with the bank, his salary and period of employment would, of course, be
common to all banks.

In case of used cars, the difference between public and private banks
would be in the margin for the loan rather than the interest rate. Margin is
the extent to which a bank would provide the loan. For instance, if a bank
has a margin of up to 20% for used car loans, then only 80% of the used
car value would be funded by the bank. So, for Rs 10 lakh car, the bank
would finance only to the extent of Rs 8 lakh (Rs 10 lakh - 20% of Rs 10
lakh).

But, don’t get lured by the lower margin provided by private banks for
used cars. The eligibility criterion for a used car loan is stricter there. Even
hidden charges may be levied under the name of a processing fee that
could run into thousands, which would not exceed Rs 225-300 per lakh in
case of public sector banks.

Remember that the loan is disbursed directly to the car dealer and you
would have to provide the contact details of the dealer. Apart from that,
your salary slip, income tax returns for three years, salary account
statement for at least a year would also be needed. Banks may ask for a
surety if the eligibility criteria in terms of age between 21 and 60 years
and others are not met. A surety is nothing but a person who would repay
the loan if the loan seeker is unable to pay back.

Banks, however, are stringent with the percentage of equated monthly

instalment (EMI) with respect to monthly salary of the loan seeker. Most
banks have an upper ceiling on the EMI that a salary holder can pay. For
example, Canara Bank says that after deducting the EMI, a person’s
monthly salary should not be reduced to less than 40%.

Another important aspect to enquire about at a bank is whether interest

would be charged on a reducing balance basis or on the total amount
sought as loan. This would have a huge impact on your EMI.
In the reducing balance method, interest is charged on the outstanding
loan amount alone. So, by the end of a month’s repayment, interest would
be charged on the total loan amount minus the amount repaid. As a result,
the effective rate of interest would come down.

In contrast, a flat interest rate would hit you harder because the total loan
amount is considered while calculating the interest rate. Interest is
charged on the entire Rs 10 lakh, irrespective of the amount repaid. It
should be noted that, 10% on Rs 10 lakh would be much higher than 10%
on Rs 9.9 lakh and then Rs 9.8 lakh and so on.

Loan interest - it could help in comparision

When you plan to buy a car, the first things you do is to go for a car loan.
But applying for a car loan is a huge task which requires a lot of research.
The basic thing you will have to ascertain is the rate of interest offered by
various banks. It is better to compare car loan rates, terms and read the
fine print of car loan offer.

There are loans with fixed interest rates - In this type; the rate of
interest does not vary based on market fluctuation. This is helpful when
you see that interest rates are going up and there is no likelihood of it
coming down. Most car buyers go for such loans, as they are assured that
a fixed sum of money will be paid towards the loan re-payment.

The next type of loan rate is the variable rate or floating rate of
interest. In this form of loan, the rate of interest varies during loan
duration. You could reap benefits if the rate of interest is lowered by
banks. People who like to take risk can certainly go for such loan rates.
The banks are careful to fix a range for each type of loan.

The third type of car loan is adjustable rate loan. In this type you pay a
lower interest rate at the beginning of the loan duration and the rate goes
up. The rate will go up to an agreed rate towards the end of loan. This
type of car loan is good for those who are not planning to repay the loan
amount sooner than the agreed duration.
Top Factors that affect the Interest Rates on Car Loans

Financial aids from banks and financial institutions always come with an
unseen price and not at free of cost. This is commonly called as the
interest rate or the loan rate.
In the recent times we have seen the CRR (Cash Reserve Ratio) and the
Repo rates being slashed. This has brought wind of relief for potential car
buyers who have been postponing their plan to buy car for a long time.

Several factors that affect the interest rate on loans:

Prime Lending Rate (PLR):

PLR is the rate of interest based on which the banks lend money to their
credit-worthy customers. This rate is considered as the standard rate for
most of the loans. Though this rate is not set by the RBI but broadly they
denote the interest rates in the economy.

Apart from the bank’s policy, RBI’s policy, liquidity in the market along
with the demand for credit by consumers (both retail and industrial)
decides the PLR. Additionally, the PLR rates are influenced by both the
repo rate and cash reserve ratio rates. PLR is necessary to pull out the
excessive money in the economy. PLR are utilized by the government to
control inflation by increasing or decreasing its rates. This directly impacts
the interest rate on loans offered by different banks putting extra burden
on car buyers.

Cash Reserve Ratio (CRR)

CRR primarily used to regulate the lending capacity of banks which further
controls the money supply in the economy. CRR is entirely controlled by
the RBI. When there is enormous money supply causing an upward
pressure on inflation, the RBI increase the CRR which causes the short of
deposits with banks that in turn elevate the interest rates on loans.

Recently due to credit crunch in the market RBI has made CRR cuts to
bring liquidity into the financial system. This was expected to impact the
interest rates on loans.

Despite the cut in the CRR, the Indian car industry is still experiencing
credit crisis and as result many car financiers in the country have either
hiked the interest rates by 100 basis points (1%) or are planning to do so
very soon.

Repo rate

In case of credit crisis, the banks take the financial support from the RBI
and this is where the Repo rate falls in. It is rate fixed by the RBI for the
banks. A reduction in the repo rate will be beneficial for the banks to get
the money at a cheaper rate. And the loans become expensive whenever
the repo rate increases.
Reverse Repo Rate

Reverse repo rate is the rate at which the banks deposit their money to
the RBI. So when Reverse Repo Rate increases, the cost of borrowing
funds of the banks rise this is then passed to the public as higher interest
rates on loans.

SLR (Statutory Liquidity Ratio) Rate

Before offering credit to the customers it is necessary for the banks to

maintain a repository of funds. It can be in any form like cash, gold,
government bonds, etc. This step is taken so that RBI will have a hold over
the bank's credit expansion. These rates will further enhance the liquidity
in the financial system resulting in increase or decrease in PLR, therefore
influencing the car loan Interest rates.

Benchmark Prime Lending Rate (BPLR)

Some time ago, those who had been subjected to steep interest hikes
eagerly looked forward to see the interest rate cuts from their banks.
Some banks were planning to pass on the benefits to the existing
customers while others were cutting down interest rates only for their new
customers. Finally, the interest rate was fixed with certain low or high
percentage depending upon the BPLR. The percentage is decided by the
banks focussing on the factors like loan eligibility and credit profile of a
loan seeker.

The banks are required to make necessary changes in existing car loans.
As the banks are given the right to set the percentage for the BPLR, they
offer attractive values to their new customers but continue to charge
higher interest rate for older customers.

According to bank policies, this change or floating interest can come into
effect on a quarterly or yearly basis or with immediate effect. Thus the
interest rates on loans are largely depends on the BPLR.

SBI State Bank of India is the largest Bank in India and in the entire
Indian Sub-continent with far flung Branches. In fact, in regards to its
employees and branches, the State Bank of India is the largest bank in the
world. Founded in 1806, SBI has evolved to be a major Bank in India to
provide financial assistance, with the most extensive Networking all over
the world and many leading SBI Associate Banks. Not Just the SBI
Branches but also the SBI ATMs are found in the nook and corner of India.

The State Bank of India has been instrumental in carrying out innovations
in personal banking to make the transactions easy for its customers. The
extensive reach of SBI Branches in the rural areas in India has made it
touch the lives of the millions. In fact, The State Bank of India is a leading
Bank that introduced the facility of ATM Cards and Internet Banking to all
its Branches in the interiors of India. In the true sense of the term, the
State Bank of India has been a visionary Bank with the incorporation of all
the modern and contemporary trends.

At the same time, The State Bank of India has been instrumental in
facilitating Finance for Agriculture by dedicating special Rural Branches.
Not just Financial Services, but Counselling on the SBI-State Bank of India
Interest Rates and various SBI Loans meant for labourers is provided. In
fact, SBI Card has been provided to all the rural clients so to enable them
to enjoy the fruits of Globalization.

Today, State Bank of India (SBI) has spread its arms around the world and
has a network of branches spanning all time zones. SBI's International
Banking Group delivers the full range of cross-border finance solutions
through its four wings - the Domestic division, the Foreign Offices division,
the Foreign Department and the International Services division.

SBI CAR LOAN

PURPOSE:-

 Term loan for purchase of: new passenger cars, multi utility and small
utility vehicles.
 Used cars, Multi utility vehicles, and small utility vehicles, up to 5
yrs old. No financing of old vehicles on the basis of duplicate
registration books.

ELIGIBLITY:-

• Individual between the age of 21-65 years of age.

• A Permanent employee of State / Central Government, Public Sector
Undertaking, Private company or a reputed establishment or
• A Professionals or self-employed individual who is an income tax
assessee or
• A Person engaged in agriculture and allied activities.
• Net Annual Income Rs. 100,000/- and above.

LOAN AMOUNT
There is no upper limit for the amount of a car loan. A maximum loan
amount of 2.5 times the net annual income can be sanctioned. If married,
your spouse's income could also be considered provided the spouse
becomes a co-borrower in the loan. Loan amount for used car is subject to
a maximum limit of Rs. 15 lacs.

MARGIN PAYMENT:-

 15% of ‘on road’ price.

REPAYMENT PERIOD:-
 Max 7 yrs

INSURANCE:-

The vehicle to be kept comprehensively insured in the name of

borrower for the market price or at least 10 % above the loan amount
outstanding, whichever is higher.

INTEREST:- Calculation method: Daily reducing method.

Used Vehicles

Tenure Rate of Interest

Up to 3 years 3.00% above SBAR i.e.
15.25% p.a.
Above 3 yrs up to 7 yrs 3.25% above SBAR i.e.
15.50% p.a.

New Car

Tenure Rate of Interest

Up to 3 years (for loans Rs. 7.5 lac 0.25% below SBAR i.e.
& above) 12.00% p.a.
Up to 3 years (for loans below Rs. At SBAR i.e. 12.00% p.a.
7.5 lac)
Above 3 yrs up to 5 yrs (for all
At SBAR i.e. 12.00% p.a.
loans)
Above 5 yrs up to 7 yrs (for all 0.25% above SBAR i.e.
loans) 12.50% p.a.

SECURITY:-

 Hypothecation of vehicle and noting of hypothecation charge in the

books of R.T.O.
 Guarantee of spouse, if his/her income has been taken into account
for computing eligibility of loan.
 No other security to be obtained.

PROCESSING FEES:

 0.50% of Loan amount and to be paid upfront.

 Minimum: Rs. 500/-
 Maximum Rs. 10,000
 25% of processing fee will be retained if application is rejected after
pre-sanction survey.

DOCUMENTS REQUIRED:

1. Statement of Bank account of the borrower for last 12 months.

2. 2 passport size photographs of borrower(s).
3. Signature identification from bankers of borrower(s).
4. A copy of passport /voters ID card/PAN card.
5. Proof of residence.
6. Latest salary-slip showing all deductions
7. I.T. Returns/Form 16: 2 years for salaried employees and 3 years for
professional/self-employed/businessmen duly accepted by the ITO.
8. Proof of official address for non-salaried individuals.
HDFC was found out nearly three decades ago, in 1977, the solution for
success is customer satisfaction. All required is the courage to innovate,
the skill to understand the clientele and the desire to give them your best.
Today, nearly three million satisfied customers whose dream HDFC helped
realise, stand testimony to our success.

HDFC objective, from the beginning, has been to enhance residential

housing stock and promote home ownership. Now, HDFC offerings range
from hassle-free home loans and deposit products, to property related
services and a training facility.HDFC also offer specialised financial
services to their customer base through partnerships with some of the
best financial institutions worldwide.

OBJECTIVES AND BACKGROUND

Housing finance sector

Against the milieu of rapid urbanisation and a changing socio-economic

scenario, the demand for housing has grown explosively. The importance
of the housing sector in the economy can be illustrated by a few key
statistics. According to the National Building Organisation (NBO), the total
demand for housing is estimated at 2 million units per year and the total
housing shortfall is estimated to be 19.4 million units, of which 12.76
million units is from rural areas and 6.64 million units from urban areas.
The housing industry is the second largest employment generator in the
country. Having identified housing as a priority area in the Ninth Five Year
Plan (1997-2002), the National Housing Policy has envisaged an
investment target of Rs. 1,500 billion for this sector.

Background
HDFC was incorporated in 1977 with the primary objective of meeting a
social need - that of promoting home ownership by providing long-term
finance to households for their housing needs. HDFC was promoted with
an initial share capital of Rs. 100 million.
Business Objectives - The primary objective of HDFC is to enhance
residential housing stock in the country through the provision of housing
finance in a systematic and professional manner, and to promote home
ownership. Another objective is to increase the flow of resources to the
housing sector by integrating the housing finance sector with the overall
domestic financial markets.

Organisational Goals
HDFC's main goals are to a) develop close relationships with individual
households, b) maintain its position as the premier housing finance
institution in the country, c) transform ideas into viable and creative
solutions, d) provide consistently high returns to shareholders, and e) to
grow through diversification by leveraging off the existing client base.

Organization and management

HDFC is a professionally managed organisation with a board of directors
consisting of eminent persons who represent various fields including
finance, taxation, construction and urban policy & development. The board
primarily focuses on strategy formulation, policy and control, designed to
deliver increasing value to shareholders.

HDFC CAR LOAN:

NEW CAR LOANS

Features:

 Covers the widest range of cars and multi-utility vehicles in India.

 Avail 100% finance on your favourite car.
 Flexible repayment options, ranging from 12 to 84 months.
 Borrow up to 3 times your annual salary
 Speedy processing - within 48 hours.

Benefits:

 Repay with easy EMIs.

  Attractive car loan plans - To Fastrack your loan.
 Attractive Interest rates
 Hassle-free documentation.

Customer Privileges

 If you are an HDFC Bank account holder, we have special rates for
you.
 If you have had a Preferred Account or a Corporate Salary Account
with HDFC Bank for more than six months, you can get fast
approvals on your loans with minimal documentation.
 If you are an existing HDFC Bank Car Loan customer with a clear
repayment of 12 months or more we can Top-Up your car loan to
the extent of the original loan value.

Eligibility Criteria:

 Minimum age of Applicant: 21 years

 Maximum age of Applicant at loan maturity: 58 years
 Minimum employment: 1 year in current employment and
minimum 2 years of employment
 Minimum Annual Income: Rs 100000 net annual income
 Telephone: Must at residence

LOAN AMOUNT: Up to 90% of the invoice value of the car.

TENURE OPTIONS: 12-84 months.

LOAN PROCESSING TIME: 48 hrs.

LOAN SLAB:

Min. Max. Min. Max. Interest Max.

Amount Amount Period Period Rate Finance
(Rs.) (Rs.) (Yrs) (Yrs) (%) (%)
1 Depends 1 7 13.25 -- 100
on the car 16.25
 price

Documents required:

 Proof of Identity:- Passport copy, PAN Card, Voters Id car, driving

licence( Laminated, Recent, Legible)
 Income Proof: - Latest salary slip with form 16.
 Address Proof: - Ration card/Driving licence/Voters card/passport
copy/telephone bill/ electricity bill/Life insurance policy PAN
Card.
 Bank Statement:- Not mandatory

USED CAR LOANS:

Features and benefits

 Choose any car manufactured in India within a certain age.

 Borrow up to 80% of the value of the car.
 Flexible repayment options, ranging from 12 to 60 months.
 Borrow up to 3 times your annual salary.
 Available for almost all car models at attractive interest rates.
 Repay with easy EMIs.
 Attractive car loan plans - To Fastrack your loan, just choose the
plan that is right for you.
 Additional loan on existing loan - If you are a existing HDFC Bank
Auto loan customer with a clear track record of 12 months or more,
then you can get an additional loan to the extent of your existing
loan amount at attractive rate of interest.

Customer Privileges

 Special benefits for HDFC Bank account holders.

  If you have had a Preferred Account or a Corporate Salary Account
with HDFC Bank for more than six months, you can get fast
approvals on your loans with minimal documentation.

Eligibility Criteria

 Minimum age of Applicant: 21 years

 Maximum age of Applicant at loan maturity: 60 years
 Minimum employment: 1 year in current employment and
minimum 2 years of employment
 Gross household income i.e. including income of the spouse: Rs
100000 net annual income
 Telephone: Necessary at residence

LOAN AMOUNT: Up to 80% of the invoice value of the car.

TENURE OPTIONS: 12,24,36,48 or 60 months.

De FEES AND CHARGES FOR CAR LOANS n of charges

Cheque bouncing charges Rs. 450
FC Charges
Stamp Duty
Late Payment Penalty
Processing fees
Agri /PSL Charges
Cheque swapping charges
Loan cancellation / re-booking
charges
Bounce Cheque Charges
6% of POS for preclosures within 1 year from 1st EMI
5% of POS for preclosures within 13-24 months from
1st EMI
3% of POS for preclosures post 24 months from 1st
EMI
No foreclosure allowed within 6 months from date of
availing the car loan.
At actuals
2% per month
Used cars -2% of loan amount or Rs.5000/-,
whichever is lower
Car-n-cash / Balance Transfer - 2% of Loan amount or
Rs.4000/-, whichever is lower
NEW CAR- Upto 2.5 Lacs : Rs.2000/-
2.51 to 4 lacs : Rs.3000/-
> 4 Lacs :Rs. 3500/-
Rs 2000
Rs 500/-
Rs 1000/-
Rs 450/-
Statement Charges (per
Rs 500/-
statement)
Duplicate Repayment Schedule
Rs 500/-
charges
Legal, Repossession & Incidental
At actuals
charges
Duplicate no due certificate /
Rs 500/-
NOC
Transaction fees for Suraksha
Rs 500/- per case
Kavach
Documents required:

 Age Proof: Any one of Passport copy, PAN Card, Voters ID card,
Photo driving licence with birth date (laminated, recent, legible),
Photo ration card with DOB, Employer certificate/ID,
School/College Leaving certificate.
 Proof of Identity: Any one of Passport copy, PAN Card, Voters
ID card, Photo driving licence with birth date, Photo ration card
with DOB.
 Income Proof: Latest salary slip with latest form 16/latest ITR.
HDFC bank corporate salary account statement for salary credits
of above Rs 8000 for three months.
 Address Proof: Any one of Photo Ration card with DOB, Photo
Driving licence with DOB, Passport copy, Telephone bill,
Electricity bill, Credit Card statement with credit card copy,
Employer certificate/ID.
 Sign Verification Proof: Any one of Passport copy, Photo
driving licence with birth date (laminated, recent, legible), Credit
Card statement with credit card copy, Banker's verification, Copy
of margin money paid to bank.
 LITERATURE REVIEW

Several studies and researches have been done on this topic in

which they have suggested various ways of choosing car loans,
Features, interest rates on car loans, their effect on customers and
comparison of various car loan providers on various basis.

Mr. Harshvardhan Roongta, CEO, Apnaloan.com (1994),

studied on “car loan analysis” that the first thing that consumers
look for is the interest rate. However what most consumers don’t
realize is that the lender should not be chosen on interest rates
alone. The other factors which are equally if not more important are
as follows:
1. Lender calculates loan eligibility differently.
2. Familiarity of the lender with legal procedures can be another
important consideration.
3. Cost factor.
4. Upfront fees payable.
5. Certain value added features.
6. Prepayment charges, charged by the lender.
 Mr. Rajeev Mitra personalfn.com expert (1997) studied on
“car loan market in India” that the car loan market has grown at
a compounded rate of over 40% over the last 4 years. Key factors
for this are:
1. Declining interest rates.
2. Tax benefits
3. Entry of more players

Mr. Prashant Joshi, head of retail assets at IDBI bank

researched on “Floating rate of car Loan” in 1998 that floating
rate interest would continue to be the dominant preference of the
customer.

Mr. Suresh Menon, GM (Mumbai Region), HDFC Ltd.

researched on “Floating rate on car Loans” in 2002 that in the
last one year, there was a trend of floating rate car loans being
more popular as compared to the fixed rate loan. As of now, this
trend is continuing,” says Mr. Menon points out that the attraction of
a floating rate car loan is that it does not attract a part prepayment
charge. This could appeal to individuals who get lump sum bonuses,
which they can use to reduce their loan exposure.

Mr. V.S. Ranjan, General Manager (Corporate Planning and Finance), HDFC in
1999 researched on “Factors effecting hike in interest rates of car Loans” that a
hike in rates depends on each lender's funding composition and timing when the
liabilities have to be re-priced. We increased our retail prime-lending rate (RPLR) by
50 basis points last December. If the existing scenario of the hardening in bond yields
continues, then the rates may have to be revisited".

Leo Puri; Director, McKinsey & Company (1999) researched on

“Competitive market of car Loan” that emerging markets are
following developed markets in a consumer revolution that has intensified over the
past 10 years. In East Asia, for instance, governments have turned to the consumer for
growth after decades of export-led economics that held consumerism in check. The
consumer is being leveraged through mortgages, auto loans, credit cards and other
forms of consumer finance. This has become the focus of all rapidly growing financial
institutions across markets.
Consumer finance in a market evolves over time, typically following
an "S curve" of rising consumer finance penetration relative to per
capita income. Banks that enter this arena without having built their
risk management processes will face increased credit losses over
time and could trigger mini-crises.

Mr. V.S.R. Murthy, General Manager (Retail), Union Bank of

India researched on Current Scenario on car Loan Rates in year
2001 that given the current market and economic scenario, there
will be pressure on car loan rates. In the medium term there will be
an upward trend, but the rise will be around 25-50 basis points and
not alarmingly high.

Research Objective

The main object of the study is to assess strengths and weakness of Public and
Private sector banks in providing car loan schemes based on certain criteria’s.
Other major objective is to assess present scenario of car finance.

Objectives can be listed as:

 To develop questionnaire for comparing car loan schemes of

HDFC & SBI.

 To analyse factors that affect decision of selecting car loan

services.
  Find out best car loan service provider from HDFC and SBI in

Indore region.

 Open new vistas for further research.

 To compare the role of public sector and private sector in car loan.

Research Methodology

Research design method to be in the study is of primary in nature and includes the
following:

• Research done for collecting various details about subject matter using internet
and related research work done earlier.
• Questionnaire designed on the basis of learning, and is used to collect data
from respondents. This method is used in order to make reference to
phenomena as the existing real life and it is relatively economical in terms of
time and recourses.
• The questionnaires so designed that it not only reveal the customers preference
but on the basis of collected data it is also tried to find out the acceptance of
customers that is the market penetration of the technology in last few months.
 • The data so collected through these tools are analysed on statistics using
frequency and chi square testing methods to reach the result.

Subject
Subject for the study were 1 hundred respondents of Indore, These subjects were
drawn randomly from the different socio-economic class for sample. The sample
random sampling is a basic sampling design, which allows equal representation and
selection of samples.
The selection of the subject was done in such a way to include all categories of people
keeping the focus on educated as well as uneducated and, this was done in
anticipation that such a sampling of subject will provide the necessary variety of
information required for the study.

Sampling Method
Population – Customers of Car Loans in Indore region.

Sample Frame – the data was collected through personal contacts and consist of
customers who have taken Car Loans.

Sample Size – hundred customers.

Sampling Technique – The technique used to collect data is simple random

sampling.

Tools Used for data collection

For collection of primary data, selected numbers of persons (who have presently
availed Car Loan) were personally interviewed using a structured questionnaire. As
such questionnaire was only technique used for collection of primary data. During the
formulation of the questionnaire, certain factors were identified which could have a
probable effect on the choice of Car loan providers.

Tools Used for data Analysis

In this I have used the SPSS software for finding the frequencies, applying chi square
method to calculate from the collected primary data and survey also. Different factors
are analysed which have impact on selection of public and private sector banks.
From the findings and methods applied it is clear that all the factors are significant for
the research study.

Customer Survey
Questionnaire on Car Loan

PERSONAL DETAILS:-

NAME: ____________________________________________________________

AGE:

 20-35 yrs.  35-45 yrs.

 45-55 yrs.  55-65 yrs.

GENDER:  Male  Female

BACKGROUND:
  Rural  Semi urban  Urban

EMPLOYMENT STATUS:

 Employed (full time)  Employed (part time)

 Unemployed  Retired

PROFESSION:

 Academics  Bank employee

 Private firms  Government Organization
 Any other

YOUR INCOME CATEGORY (per annum)

 1-2.5 lakh  2.5-3.5 lakh

 3.5-4.5 lakh  More than 4.5

CAR LOAN DETAILS:

FROM WHICH BANK CAR LOAN IS TAKEN:

 HDFC  SBI

HOW LONG YOU HAVE BEEN ASSOCIATED WITH THIS BANK:

 Less than 1 Yr.  1-2 Yr.

 2-3 Yr.  3-4 Yr  More than 4 Yrs.

Purpose of taking loan:

 New car  Used car

LOAN TENURE:

 1-3 year  3-5 year  5-7 year

INTEREST TYPE:

 Fixed  Floating

METHOD OF CALCULATING INTEREST:

 Daily reducing balance method

 Annual reducing balance method

HOW DO YOU COME TO KNOW ABOUT CAR LOAN OF THIS BANK:

 Newspaper
 T.V commercial
  Internet
 Magazine/ hoarding
 Verbal communication
 Any other then specify________________________

TIME TAKEN FOE THE LOAN PROCEDURE TO COMPLETE

 1-2 days  2-3 days  more than 3 days

PREPAYMENT FEES

 Yes  No

PROCESSING FEES:

 Yes  No

WHY DO YOU CHOOSE THIS BANK FOR TAKING CAR LOAN:

 Nearness of the bank

 Charges of providing loan
 Amicable staff
 Query solution
 Interest rates
 Trustworthiness
 On other’s advice
 Comparative analysis
 Flexibility in payment

ARE YOU SATISFIED WITH THE LOAN SERVICES PROVIDED BY THIS BANK:

 Yes  No

DATA ANALYSIS
The data collected from different residents of Indore is categorised as follows
(frequency and percentage showing the details of customer profile).

FREQUENCY TABLES

AGE:

Frequency Percent Valid Percent Cumulative Percent

20-35 41 53.9 53.9 53.9

35-45 24 31.6 31.6 85.5
Valid 45-55 8 10.5 10.5 96.1
55-65 3 3.9 3.9 100.0
Total 76 100.0 100.0
GENDER:

Frequency Percent Valid Percent Cumulative Percent

male 55 72.4 72.4 72.4

Valid female 21 27.6 27.6 100.0
Total 76 100.0 100.0

BACKGROUND:

Frequency Percent Valid Percent Cumulative Percent

rural 2 2.6 2.6 2.6

semiurban 9 11.8 11.8 14.5
Valid
urban 65 85.5 85.5 100.0
Total 76 100.0 100.0

EMPLOYMENT:

Valid Cumulative
Frequency Percent
Percent Percent
employed (full
63 82.9 82.9 82.9
time)
Valid employed (part
13 17.1 17.1 100.0
time)
Total 76 100.0 100.0

PROFFESION:

Valid Cumulative
Frequency Percent
Percent Percent
Valid academics 17 22.4 22.4 22.4
bank employee 15 19.7 19.7 42.1
private firms 21 27.6 27.6 69.7
government 23 30.3 30.3 100.0
 organisation
Total 76 100.0 100.0

INCOME:

Frequency Percent Valid Percent Cumulative Percent

1-2.5 lakh 13 17.1 17.1 17.1

2.5-3.5 lakh 32 42.1 42.1 59.2
Valid 3.5-4.5 lakh 21 27.6 27.6 86.8
above 4.5 10 13.2 13.2 100.0
Total 76 100.0 100.0

Thus the above tables depict the detail analysis of respondents from whom the data is
collected.
 1. EFFECTS OF SOURCES ON TAKING LOAN

BANK*SOURCE CROSS TABULATION

Source Total
verbal
newspaper internet magazine/hoarding newspaper
communication
hdfc 14 5 14 5 38
bank
sbi 6 7 7 18 38
Total 20 12 21 23 76

Chi-Square Tests

Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square 13.214(a) 3 .004

From the above table it can be seen that the chi square value is .004 which shows that
there is a significant relation between bank selection and sources of car loan. It means
different sources have significant effect on selection of bank. It can be concluded that
verbal communications have higher impact on bank selection.

2. SHOWS THE SATISFACTION LEVEL OF LOAN SEEKERS

BANK*SATISFIED
 Satisfied Total
no Yes no
Hdfc 13 25 38
Bank
sbi 3 35 38
Total 16 60 76

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 7.917(b) 1 .005

From the above table it can be seen that the chi square value is .005 which shows that
there is a significant relation between bank selection for car loan and satisfaction level
of the loan seekers. It can be concluded that SBI loan seekers are more satisfied with
their bank services as compared to HDFC.

3. EFFECT OF AGE ON BANK SELECTION

BANK*AGE

Age Total
20-35 35-45 45-55 55-65 20-35
hdfc 26 11 1 0 38
Bank
sbi 15 13 7 3 38
Total 41 24 8 3 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 10.618(a) 3 .014

From the above table it can be seen that the chi square value is .014 which shows that
there is a significant relation between bank selection and age of the car loan seeker. It
can be concluded that that people between the age group of 20-35 prefer HDFC for taking
loans.

4. EFFECT OF PROFESSION ON BANK SELECTION

BANK*PROFESSION

Profession Total
bank private government
academics Academics
employee firms organisation
hdfc 7 5 13 13 38
bank
sbi 10 10 8 10 38
Total 17 15 21 23 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 3.778(a) 3 .286

Here chi square value is .286 which shows statistically that the relation between
profession of the loan seeker and selection of the bank is insignificant. It means that
profession of the people does not produce significant effect on selection of the bank
for taking car loan.

5. MOST PREFFERED SOURCES ACCORDING TO PROFESSION

PROFESSION*SOURCE

Source Total
verbal
newspaper internet magazine/hoarding newspaper
communication
academics 4 5 5 3 17
bank employee 5 2 4 4 15
profession private firms 5 4 5 7 21
government
6 1 7 9 23
organisation
Total 20 12 21 23 76
 Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 6.307(a) 9 .709

Here chi square value is .709 which shows statistically that the relation between the
profession of the loan seeker and the sources available for loan is insignificant.

6. EFFECT ON INTEREST TYPE ACCORDING TO INCOME

INCOME*INTEREST TYPE

Interest type Total

fixed floating fixed
1-2.5 lakh 2 11 13
2.5-3.5 lakh 5 27 32
Income
3.5-4.5 lakh 7 14 21
above 4.5 3 7 10
Total 17 59 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 2.992(a) 3 .393

Here chi square value is .393 which shows statistically that the relation between
income of the loan seekers and selection of interest type for car loan is insignificant.
Means income does not produce significant effect on the interest type of the loan.

7. EFFECT OF INCOME ON TENURE

INCOME*TENURE

tenure Total
1-3 year 3-5 year 5-7 years 1-3 year
income 1-2.5 lakh 3 5 5 13
2.5-3.5 lakh 9 15 8 32
3.5-4.5 lakh 4 12 5 21
 above 4.5 4 2 4 10
Total 20 34 22 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 4.654(a) 6 .589

Here chi square value is .589 which shows statistically that the relation between the
income of the loan seeker and tenure of the car loan is insignificant.

8. EFFECT OF INCOME ON PURPOSE OF TAKING LOAN

INCOME*PURPOSE

purpose Total
new car used car new car
1-2.5 lakh 8 5 13
2.5-3.5 lakh 30 2 32
Income
3.5-4.5 lakh 18 3 21
above 4.5 9 1 10
Total 65 11 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 7.953(a) 3 .047

From the above table it can be seen that the chi square value is .047 which shows that
there is a significant relation between income of the loan seekers and purpose of
taking car loan. It can be concluded that persons in the income group of 2.5-3.5 and
3.5-4.5 lakh mostly prefer to take loan for new cars.

9. EFFECT OF AGE ON PURPOSE

AGE*PURPOSE

Purpose Total
 New car used car new car
20-35 35 6 41
35-45 20 4 24
age
45-55 7 1 8
55-65 3 0 3
Total 65 11 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square .627(a) 3 .890

Here chi square value is .890 which shows statistically that the relation between the
age of the loan seekers and their purpose of taking car loan is insignificant.

10. EFFECT OF AGE ON SELECTION OF THE BANK ON THE BASIS OF

PROCEDURE TIME

AGE*PROCEDURE TIME

Procedure time Total

1-2 days 2-3 days more than 3 days 1-2 days
20-35 22 4 15 41
35-45 8 3 13 24
age
45-55 1 0 7 8
55-65 0 0 3 3
Total 31 7 38 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 11.402(a) 6 .077

Here chi square value is .077 which shows statistically that the relation between the
age of the loan seekers and selection of the bank on the basis of procedure time is
insignificant. It means age does not produce significant effect on bank selection on the
basis of procedure time.

11. EFFECT OF AGE ON TENURE

AGE*TENURE

Tenure Total
1-3 year 3-5 year 5-7 years 1-3 year
20-35 11 16 14 41
35-45 6 13 5 24
Age
45-55 3 4 1 8
55-65 0 1 2 3
Total 20 34 22 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 5.253(a) 6 .512

Here chi square value is .512 which shows statistically that the relation between the
age of the loan seeker and tenure of the car loan is insignificant. Means age does not
produce significant effect on the tenure of the car loan.

12. EFFECT OF AGE ON SELECTION OF THE BANK ON THE BASIS OF

NEARNESS OF THE BANK

AGE*NEARNESS

nearness Total
no yes no
20-35 29 12 41
35-45 18 6 24
Age
45-55 4 4 8
55-65 0 3 3
Total 51 25 76
 Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 8.102(a) 3 .044

From the above table it can be seen that the chi square value is .044 which shows that
there is a significant relation between the age and selection of the bank on the basis of
nearness of the bank. It means age have significant effect on selection of bank on the
basis of nearness. It can be concluded that persons between the age group of 45-55
give more importance to nearness as one of the factor in bank selection.

13. IMPORTANCE OF TRUSTWORTHINESS AS ONE OF THE FACTOR

IN BANK SELECTION

ASSOCIATED*TRUSTWORTHINESS

trustworthiness Total
no yes No
less than 1 year 0 1 1
1-2 year 5 12 17
Associated 2-3 year 8 13 21
3-4 year 5 13 18
more than 4 year 4 15 19
Total 22 54 76

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 1.851(a) 4 .763

Here chi square value is .763 which shows statistically that the relation between the
trustworthiness of the bank and getting associated with it is insignificant. Means being
 associated with the bank does not produce significant effect on the trustworthiness as
one of the factor in bank selection for taking car loan.

Though it can be inferred from the above table that persons associated with the bank
for more than 4 years have more trust on that bank and they select the bank for taking
car loan on this basis as well.

14. FREQUENCY TABLE OF DIFFERENT FACTORS AVAILABLE FOR

TAKING CAR LOAN

Compa Repay
trustw rative ment
nearne Loan Amicable Query Interest orthine Others analysi flexibilit
ss charges staff solution rates ss advice s y
N Valid
76 76 76 76 76 76 76 76 76
Missi
ng 0 0 0 0 0 0 0 0 0
Sum
25.00 40.00 48.00 52.00 46.00 54.00 45.00 45.00 39.00

From the above table we can conclude that surveyed customers give more
importance to trustworthiness and query solution as the factors for selecting bank
for taking car loans. Trustworthiness and query solution implies certain features of
bank like no hidden costs, satisfying the customer’s needs, solving the customers
queries through e-banking and various modes.
 Findings and results

 As there is marginal propensity to consume and service class people have

Lesser Disposable Income ,so they require maximum amount of different
types of loans and thus maximum Car Loan availability is made to them .

 Indian Consumer has a mentality of entrusting upon his/her relative,friend

for most of Financial Sevices Product. On taking a feedback, they draw
conclusions that this Car loan scheme is better. Carrying on with the same,
maximum Car Loan Drawers are influenced by Verbal Communcation in
comparision to other means of Advertisements.

 HDFC is more popular in segment of age group 25-34 which speaks of

Young Earning Population’s Inclination toward Private Sector.As the
maturity factor increases i.e. age, the population is coming towards SBI, a
PSU.

 HDFC Loans are preferred by Clientile base of people who are having
Annual Compensation close to 3.5L and more.As 3.5Lacs Anuual
Compensation bears a closer relationship with HNI clinets so they prefer
HDFC or Private Sector on account of Services and Privileges being offered.

 As SBI is the largest bank of India so it is least affected by Market

Fluctutaions which comes as a major influencer when Floating Interest rate
 is taken and as Interest rate is the First major concern so maximum
feedbacks are given on the basis of it.On account of services, HDFC stand a
bit better than SBI.

 Youngsters between the age group of 20-35 prefer taking loan for new car
with their loan processing time completed within 1-2 days. As SBI provides
processing time of 7-8 days and HDFC provides customer’s with the loan
processing done within 48 hrs. So youngsters prefer HDFC.

 Persons in the age group of 45-55 have reached the maturity stage and health
problems also set out. So at this stage they prefer nearness as one of the
major influences, so that the person can have quick access to the banking
resources.

 In SBI the method followed for interest calculation is daily reducing balance
method while in HDFC it is annual reducing balance method. In daily
reducing, interest is calculated only on the outstanding loan amount, which
reduces every time you pay off your EMIs or make any prepayments. This in
essence lowers your effective rate of interest significantly.

 Interest rate charged by SBI for providing car loan is 11.75%-12.25% while
of HDFC is 13.25-16.25%, which is more beneficial to the customers.

 In all we can say that SBI has better car loan scheme than HDFC. As in SBI
there are no charges for processing, documentation and prepayment and
even it provides complete transparency to its customers. While HDFC
charges for all such things and even there are some hidden charges. So it
does not provide complete transparency to its customers.
 Limitations

 Time constraint has become a big constraint.

 The sample size being taken for drawing a conclusion was too
small to get an accurate result.

 Study this topic in the time period of few months was not
sufficient hence due to time constraint there may be other
aspects also which may not have come up.

 Customers may be biased while filling questionnaires.

 Bibliography

 www.statebankofindia.com

 www.hdfcbank.com

 www.apnaloan.com

 www.carwale.com

 www.sbi.co.in

 www.sify.com

 www.personalcarloans.info.com

 www.blog.carazoo.com

 www.raagvamdatt.com

 www.scribd.com

 www.content4reprint.com

 www.economywatch.com

 www.financesays.com

 www.rupeetimes.com

 www.loanbazaar.com

 www.motorcarloans.com
 www.moneytoride.com

 www.insidehighered.com

 www.bankrate.com

 www.autoindia.com

 www.anythingaboutcars.com