Source - Rupee Times:
Indian citizens residing in foreign countries can now buy cars in India for their family, friends or for their personal use on visits to the country with the help of car loan schemes offered by banks especially for Non-resident Indians (NRI). Like home loan schemes for NRIs, the car loans products have also been specially designed keeping in mind the needs and requirements of the non residents. For those non residents who want to stay connected to their roots, NRI banking facilities are indeed proving to be a boon.
Car loan schemes for NRIs are a variation of the conventional car loan products provided by banks, with certain modifications which make it easier for the NRIs to avail loans from banks in India.
Any Indian citizen residing abroad, who is either salaried or self employed, in the country of his current residence, is eligible to apply for these loans. Some banks provide these loans to those individuals only who have resided in a foreign country for a certain minimum period of time and this requirement differs from bank to bank. Also, NRIs have to open and maintain an NRE account for availing an NRI car loan.
Non residents can take loans to buy new or used cars. Apart from this, there are various other car loan products also which NRIs can avail, such as loans against their current cars in India, or top up loans over and above the car loan, which can be used to increase the loan amount on the current car.
Banks have an approved list of countries and they provide car loans to non residents of those countries only. Every bank has its own list, but, Indians residing in countries like United States of America, United Kingdom, Singapore, Malaysia and certain countries of the Middle East can easily and quickly avail these loans as these countries are on the approved list of most banks.
There are some banks which advance car loans to NRIs only when they have an Indian co-applicant, mostly relatives of the NRI applicant such as parents or siblings. Others provide loans without the need for any co-applicant.
To avail these loans, an NRI's physical presence is not mandatory. Either, the non-residents applying for the loan can give a power of attorney (POA) to their co-applicant in the country, who can then take the loan process forward with the help of the POA. Alternatively, NRIs can request banks to send the loan forms to them. After filling the forms completely and attaching the necessary documents, they can courier it back to the bank.
Features of NRI Car Loan Schemes
Borrower/ Guarantor clause
If an NRI wants to buy a car in India by taking a car loan, he can do so by purchasing the car in the name of a relative (who should be an Indian resident). In this way, the resident relative becomes borrower of the car loan whereas the NRI becomes the guarantor. In simple terms, the car gets registered in the name of the relative though the loan is repaid by the NRI.
The maximum loan amount which can be availed by NRIs for buying a car is calculated on factors such as the income of the NRI, the NRI's repaying capacity and the cost of the car.
Banks charge interest rates on car loans for non residents in accordance with the guidelines issued by Reserve Bank of India. Just like interest rates on any other loan product, the rates on NRI car loans also vary from time to time. At present, they range from 10.50% to 15% depending on the bank.
The repayment of car loans for NRIs can be done in 1 to 7 years, depending on the repayment period offered by the bank from which the loan is availed. The repayment period together with the loan amount and interest rate is taken into consideration for arriving at the Equated Monthly Installments (EMI) which will payable by the NRI.
Car loans to NRIs are advanced with security. In case of defaults in loan repayment, the documents of car may be hypothecated. At times, banks waive off security requirements by taking into consideration a good loan track record of the NRI with the bank.
Documents needed for availing NRI car loans
Some general documents to be submitted:
- Loan application form
- Hypothecation agreement
- Guarantee agreement
- Power of Attorney (only if applicable)
The guarantor has to submit the following forms:
- Proof of identity and proof of residence
- A copy of passport or a valid work permit
- Original Salary certificate (salaried) or proof of income (self employed)
- Credit report from a credit information agency in the country of residence
The borrower has to submit the following forms:
- Proof of identity
- Proof of residence
Some banks offering NRI car loans
- State Bank of India - NRI Car loan scheme
- State Bank of Travancore - NRI car loan scheme
- State bank of Hyderabad - Car Loans to NRIs scheme
- Canara Bank - CanMobile Vehicle
- Federal Bank - Personal Car Loan Scheme
- Indian Overseas bank - Vehicle Loans Pushpaka