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Introduction

Tamilnad Mercantile Bank is almost a century old bank and has grown rapidly from its humble roots to be considered as a leading private sector bank in the country. TMB boasts of many banking solutions for its customers within the country and overseas like loans, credit cards, corporate banking, NRI Banking, insurance, mutual funds and much more.

TMB provides a huge range of loan products (like personal loans, car loans, gold loans, corporate loans, MSME Loans, etc.) that are priced competitively to meet the needs of its customers. The details of car loans of the Bank are mentioned below.

What are the key features of car loans from TMB?

Tamilnad Mercantile Bank Car Loan Interest Rates

The key features of car loans of TMB are tabled below.

Particulars

Details

Maximum Amount of Loan

For new cars

  • Rs. 1,50,00,000

For Used cars

  • Rs. 15,00,000

Rate of Interest

For New Cars

  • 9.70% - 10.95%

For Used Cars

  • 10.90% - 14.20%

Tenure

Maximum 60 months (5 years)

Primary Security

Hypothecation of the vehicle to be purchased out of loan 

Guarantee

  • For HUF – Guarantee from male member
  • For individuals – Spouse or father or third party
  • Other cases – partners/Directors/Trustees (can be waived if sufficient repayment capacity)

Processing Charges

1% of the Loan amount

Margin

For New Cars

  • 15% of on-road price

For Used Cars

  • 30% of on-road price

Penal Interest

2% over interest rate on outstanding loan amount

Prepayment Charges

NIL in case loan paid through own funds

These features mentioned above are discussed further hereunder. 

Quantum of Loan

Tamilnad Mercantile Bank provides car loan to the extent of up to 85% of the value of the vehicle for loan taken to purchase new cars and 70% of the value of the vehicle for purchase of used cars. The maximum amount of loan that can be provided by the bank for new cars or used cars is tabled below.

Type of vehicle

Maximum Amount of Loan

New car

Rs. 1,50,00,000

Used cars

Rs. 15,00,000

Rate of Interest

Tamilnad Mercantile Bank Car Loans are based on the RLLR and are floating rates of interest. These rates vary for the loans to purchase of new cars or second hand cars. The current applicable rates levied by the Bank for its Car loans are tabled below.

Type of vehicle

Rate of Interest (Floating rates)

New Cars

9.70% - 10.95%

Used Cars

10.90% - 14.20%

The bank has different rates of interest in case of vehicle loans for educational Institutions or for Corporate. The details of the same can be available by contacting the bank through its nearest branch or through the customer care service of the bank.

Tenure

The repayment period of car loan of Tamilnad Mercantile Bank does not vary for the new car loans or used car loans. The maximum period of repayment or tenure of TMB car Loans is 5 years (60 monthly EMIs).

Margin

Margin money is to be mandatorily paid by a borrower for Tamilnad Mercantile Bank Car Loan. It is considered as a part of the loan application process. The bank has specified the quantum of margin money to be provided in case of purchase of new cars and used cars. The minimum margin money required by the Bank for its car loans is tabled below.

Type of Loan

Margin Money

New Cars

15% of the on road price of the car

Used Cars

30% of the purchase value of car or market value of car (whichever is lower)

Security

The primary security of the loan provided by the bank is the vehicle purchased out of loan. Bank has the hypothecation charge on vehicles which has to be duly registered with the Regional Transport Authority and recorded in the RC book.  A duplicate copy of the RC book and Keys have to be kept in record with the Bank.

TMB also requires an additional guarantee for its car loans apart from the primary security mentioned above. In case of the borrower being a HUF, the guarantee of male members is required. In case of individual borrowers, the guarantee of spouse or father of the borrower is required. In other cases, the guarantee of Partner/ Director/ Trustee is required which can be waived based on the sound repayment capacity of the borrower as ascertained by the concerning authority.

Processing fees

Tamilnad Mercantile Bank levies 1% of the loan amount as processing fees. These charges are levied at the time of sanction of loan and do not have any maximum ceiling on the amount that is charged as processing fees for the car loans.

Part payment or Foreclosure Charges

Tamilnad Mercantile Bank does not levy any prepayment charges in case of the car loan being pre-paid by borrowers. In case of takeover of loan by other banks, the applicable charges on prepayment of loan is 0.25% of amount prepaid.

What are the common factors influencing the rate of interest of a car loan?

There are many external and internal factors that impact the final applicable interest rates levied on the car loan product of any bank. Some of such factors are discussed below.

Credit Profile of the Applicant 

Credit profile of the applicant is the credit score of the applicant long with their credit history and repaying capacity. A borrower with a sound credit history implies a good credit rating along with the good repayment capacity of such borrower. Such borrower is thereby considered to be a lower risk candidate as compared to others so the rate of interest applicable is lower as against an applicant having a lower credit rating.

Inflation

Inflation is a major external factor that directly impacts the rate of interest on any loan product. An increase in the rate of inflation results in a direct increase in the floating rate of interest on any loan product and vice versa. Also fixed rates may not change directly but does end up becoming cheaper or costlier based on the changes in the inflation rate.

Type of Vehicle

Type of vehicle or the dealer of the vehicle from whom the borrower buys the vehicle can also influence the rate of interest on such car finance.  Used cars carry a higher interest rate as compared to new cars. Another factor related to the dealer is that some dealers provide many schemes that offer concessions or discounts or festival bonuses in interest rate on certain occasions. This improves the product features and which can prove to be beneficial for the borrower.

Type of Interest

Tamilnad Mercantile Bank provides car loans on floating rate of interest which is generally lower as compared to the fixed rate of interest.

Tenure of Loan

Repayment period or tenure of a loan product is crucial in determining the rate of interest that is charged on such product. A longer tenure increases the risk of default for the lender and hence carries a higher interest rate and vice versa.

Margin Money

A borrower has to provide the margin money as per the guidelines of the Bank. The amount specified by the bank is the minimum margin money to be provided by the borrower. When the borrower provides increased margin money higher than the amount as specified by the bank, the need for external finance reduces thereby reducing the risk and eventually the interest rate on such loan.

FAQs – Tamilnad Mercantile Bank – Car Loan Interest Rates

1.Does the bank stipulate a minimum amount of loan for purchase of new or old cars?

No. The bank does not have any minimum loan amount criterion for purchase of new/old cars unlike its peers.

2. Does the bank provide the facility to calculate the proposed EMI before applying for the loan?

Yes. Customers can use the EMI calculator feature on the website of the bank that can help the customers to have a fair estimate of the proposed EMI on car loan.

3.What is the eligibility criteria set for TMB Car Loan?

The eligible persons for TMB car loan include,

  • Individuals
  • HUF
  • Partnership firm
  • Company
  • Trust

The minimum gross income has to be Rs. 1,20,000 to be eligible. Borrowers can include the income of the spouse to be eligible.

Furthermore, the bank also states that the proposed EMI cannot be less than 40% of the minimum take home pay for salaried persons. In other cases, the average debt service coverage ratio has to be maintained at minimum 1.50:1.

4. What are the documents required for TMB Car Loan?

The Bank states that usual car loan documents are required to be submitted for TMB Car Loans. This includes the following,

Identity Proof and Signature Proof

The identity proof of the applicant and co-applicant has to be provided in the form of any of the following documents

  • Aadhaar Card
  • PAN Card
  • Passport
  • Driving License

Address Proof

The address proof can be provided through any of the following documents

  • Aadhaar Card
  • PAN Card
  • Passport
  • Driving License
  • Latest Utility Bills
  • Registered Rent Agreement/ Sale Deed/ Lease Agreement

Loan Application Form

Duly filled and signed application form has to be signed by all the applicants (in case of more than one applicant)

Photographs

The applicant will have to provide two recent passport photographs of the applicant as well as co-applicants (if any)

Income Proof

The income proof has to be provided in case of both the salaried as well as self-employed persons. The salaried applicants can provide recent salary or Form 16. Self-employed persons can provide latest ITR and audited financial statements as required by the lender.

5. What is the offline process of loan application?

The offline process of loan application is where the borrower has to physically visit the nearest branch of the bank to apply for the loan.

6. What are the penalty charges for default in payment of EMI?

The default in payment of EMI attracts a penalty charge of 2% over and above the interest rate on the amount outstanding.

7. What is the underlying condition to get a loan for purchasing used cars?

The underlying condition to get a loan for purchasing used cars is that the vehicle cannot be older than 4 years old.

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