Policy: Car Loan Policy



|Policy: Car Loan Policy |Version: 1.3 |

|Effective from: 1st July 2014 |Next Revision Date: 1st July 2016 |

Objective

To facilitate employees to buy a car on loan for personal and official purpose

Scope

All employees of Grade F06 (Territory Manager)

Policy

3.1 Entitlement:

Grade F06 : Rs 2.00 Lacs

3.2 Disbursement of Loan:

1. Loan will be disbursed directly through a Financial Institution (FI) as per it’s rules

2. Loan will be sanctioned for a new car. However if an employee wants to purchase an old car, in that case difference in interest rate between purchasing an old car and new car as negotiated with designated FI shall be borne by the employee. The loan amount for old car will depend on Financial Institution (FI) policy/norms and the loan amount may vary from car to car depending on the year of manufacturing, condition of the car and assessment by FI’s valuer.

3. Loan will be sanctioned only if all deductions put together (inclusive of car loan) do not exceed 50% (excluding Income Tax and Provident Fund deduction) of the monthly gross salary.

3.3 Recovery of Loan:

1. In 48 EMIs. The deductions from monthly salary (in case if loan is sanctioned by a designated FI) will start from the month of disbursement of loan and will be paid to FI on employee’s behalf. If the loan is taken from some other FI (other then designated FI) employee has to make his/her own arrangements for repaying the same.

3.4 Rate of Interest:

1. As negotiated with designated FI from time to time. However the employee will be compensated against the interest paid to FI in the calendar year in shape of a special allowance in monthly salary. This special allowance will be calculated on the basis of average monthly interest that the employee will be paying to FI in a calendar year. However, this special allowance shall differ from calendar year to year and shall continue till the time whole loan with interest has been recovered or the date of leaving services by the employee, whichever is earlier. Income Tax, if any, will be to employee’s account.

3.5 Ownership:

1. The car will be in the employee’s name but hypothecated to FI till the time the entire loan amount with interest has been repaid to the FI.

3.6 Re-eligibility:

1. After repayment of existing loan amount in 48 EMIs an employee is entitled to apply for a new loan.

3.7 On Promotion:

1. Employee has the option of either to continue with the existing amount as applicable in previous RL or repay the existing loan amount as on date to FI and go in for a fresh loan as per new RL loan amount. Prepayment charges charged by FI if any, will be to employees’ account.

3.8 On Leaving:

In case an employee leaves the services of the company before repaying the loan amount, the company will inform FI about the same and the option of the continuing the loan will be with the employee and FI.

2 Process:

1. Car loan application form duly approved by Head of Department is to be filled up

2. Complete loan application form is to be forwarded to Corporate HR.

3. Corporate HR shall approve the loan through a sanction letter.

4. Employee shall get in touch with the FI for disbursement of loan.

5. After completion of the documentation, FI shall disburse the loan.

6. In case loan is sanctioned by some other FI (other then designated FI) employee shall intimate Corporate HR alongwith photocopy of following documents about sanctioning of the loan for availing interest subsidy benefit upto the interest rate as negotiated with designated FI.

1. Sanction letter/ Amortization table of FI.

2. RC book duly hypothecated to FI.

9. Insurance:

1. It is obligatory on employee to ensure that car is insured comprehensively. Such insurance cover must be renewed on time and the cost shall be borne by the employee.

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