If you are looking to buy a car on loan, there’s a new offering in the market which can be explored. In association with TranzLease, an automobile leasing & mobility solutions company, ICICI Bank has announced the launch of an innovative equated monthly installment (EMI) facility. Titled 'SMART EMI', it takes care of the insurance and maintenance requirement of the vehicle during the financing period. What is unique about the loan contract is that the amount of 'SMART EMI' is much lower than the regular car loan EMI as the estimated resale value of the car is deducted upfront.
Many car owners look forward to upgrading to a new model or owning a new model after driving the car for years. This offer suits them as it gives the users an option to either own the car at the end of the tenure by making payment of agreed resale value or simply return the car to the leasing company. There are provisions of guaranteed bonus and even Good Drive Bonus at the end of the financing tenure. Essentially, at the end of the financing tenure, there will be two options-Option 1-Surrender and get the bonus, Option 2-Buy the car.
Not just the monthly payouts in terms of lower EMI but also cost attached with insurance, maintenance etc are covered in the financing scheme. Currently, this offering is available for both corporates and salaried individuals and will soon be available for self-employed customers As a pilot, customers in Mumbai and Delhi-NCR can avail of this facility and take home cars of almost all leading makers. It will soon be available in Pune, Bengaluru, Hyderabad and Chennai. Post-delivery of the car, 'SMART EMI' provides customers with a personalised car portal through which the customer can manage the entire car life-cycle from the date of purchase to the date of disposal.
It is important for one to know that the Smart EMI comprises of EMI facility provided by the bank while the services like full tenure insurance, maintenance, risk protection, resale value, surrendering and buying of the vehicle at the end of service tenure and similar other services, are all being controlled, managed by the lease provider and are at the sole discretion of the lease provider.
In a leasing arrangement, the car is owned by the leasing company till the end of the tenure. Post that, the individual can buy by paying a certain amount of money. In a car loan, the EMI includes the principal payments along with interest, hence the car is owned by the individual from the day one, subject to hypothecation to the lending bank.
How 'SMART EMI' works for a car (Ex-showroom Rs 14.22 lakh)*
* Table is for illustrative purposes (Delhi) only
As per the information shared on the website of TranzLease, in the case of Smart EMI, the Cost of Usage will be more or less same as a regular loan. Only those who are car enthusiasts and wish to change the car model after a few years may consider the leasing option. What it brings in, is the ease of owning a car by keeping the cost of maintenance etc under control.