ADVANCE AGAINST MOTOR VEHICLES
1) Advances shall be made as under : a) New Vehicles – not exceeding 75% of the Quotation or Invoice b) Used Vehicles not older than 6 months – 75% of valuation c) Used Vehicles not older than 12 months – 70% of valuation d) Used Vehicles not older than 24 months – 60% of valuation e) Used Vehicles not older than 60 months – 50% of valuation
2) The borrower should have a valid licence. The borrower should produce, alongwith loan application, original quotation /invoice, copy of driving licence and project report if the vehicle is for commercial purpose or vehicle valuation report by competent person in case of second hand vehicles.
3) The borrower should execute a deed hypothecating the vehicle in favour of the Bank. In case of new vehicle, the borrower should deposit margin money (25%) in his account opened in the Bank. The loan amount sanctioned should be credited to borrower’s account. The Bank should issue a draft or banker’s cheque for the full amount of quotation /invoice in favour of the concerned company of vehicle. A letter should also be sent with draft/banker’s cheque to the company asking to endorse all the receipts documents, insurance policy in favour of the Bank.
4) The vehicle should be comprehensively insured and policy should be assigned in Bank’s favour.
5) The vehicle should be registered with RTO within one month of its delivery from the company. In case of second hand vehicle, borrowers name should be entered in R.C. Book as a owner and then Bank’s lien shall be registered in R.C. Book. It shall be the duty of the borrower to get the vehicle registered with RTO and hypothecation noted in R.C. Book. True copy of the R.C. Book should be produced by the borrower to the Bank for record.
6) Documents : The following are the documents to be obtained. i. Demand Promissory Note ii. Hypothecation Deed iii. Registration Certificate with Bank’s lien iv. Letter of Lien and Set Off v. Comprehensive Insurance Policy vi. Project Report if for commercial use vii. Blank transfer forms signed by the borrower viii. Income and Expenditure Statements of borrower ix. PAN card copy and assessment order
7) The Bank should preferably get the collateral security of land, building or site etc., if the advance is for vehicles excluding two wheelers.
8) In case of default in payment of instalments/interest within the prescribed time, the Bank shall be liberty to seize the vehicle hypothecated to it. If necessary the Bank should take step to dispose off the vehicle with due intimation to the borrower and RTO.