EXECUTIVE SUMMARY

Introduction-
A car loan is an amount of money taken from a lending provider to purchase a new or used car.
Finance is provided for purchase of car or other vehicles either for personal or business
purposes.

Objectives-

 Understand the customer’s preference of banks for car loans.

 Identify the major government and private car financing banks.
 Study the problems faced by the customers in availing car loans.

Research Methodology-

Research type Descriptive research

Population size People having Car Loans in Jorhat

Sampling techniques Convenience sampling

Sampling area Jorhat

Sampling size 100

Data collection instrument Questionnaire.

Major Findings-

 From the analysis done we have come to know that the majority of the respondents prefer
using motor vehicle of Hyundai and Maruti Suzuki which are comparatively cheaper in
the market.
 Findings extracted from data and survey shows that public sector banks charges low
interest rate as compared to private sector banks.
 Credibility of bank plays a crucial role in psychology of the borrowers. Traditionally,
public sector banks are believed to be more credible than private sector banks by the
masses.
 CHAPTER-1
INTRODUCTION
 1.1 INTRODUCTION TO LOAN

1.1.1 LOANS

Banks have variety of schemes under Personal Finance to satisfy varying needs of the banking
public. Banks provide credit in the form of overdraft or loans. Overdraft facility is generally
provided on current account. Overdraft is a service provided by a bank to utilize money even
when there is no balance in the customer’s account. It is a form of credit and one has to pay
interest for the overdraft drawn. It is an arrangement made to cover the cash shortages. The rates
differ from bank to bank and depend on the time period also. It is not suitable for long period of
time. Bank loan is the money which one borrows from the bank for a specific purpose for
specific period with agreement for interest and repayment periods etc.

1.1.2Types of Loans

Following are some of the popular loan schemes offered by banks:

1. Housing Loans: Finance is provided for purchase of a new House. Loan is also given
for the purchase of land and constructions of house on the same. The rates of interest
to be charged depends on two factors firstly the amount of loan and secondly the time
period for which the loan is required. The rate of interest may be fixed or fluctuating.
In case of fixed rate of interest the interest rate remains the fixed throughout the
period of loan inspite of the fact that the current rate of interest may be different the
rate at which the loan was obtained. In case of fluctuating rate of interest the rate of
interest changes according to the current rate in the market.
2. Personal Loan: Finance is provided to meet out all personal needs like renovating
the house, purchasing a computer, marriage or medical expenses etc.
3. Travel Loan: Finance is provided to meet out the travel cost of the customers either
domestic or for international visits.
4. Car Loan/Vehicle Loan: Finance is provided for purchase of car or other vehicles
either for personal or business purposes.
5. Education Loan: Finance is provided to meet out the education cost of children of
the customers.
6. Festival Loans: Finance is also given to meet out the festival expenses.
A loan in which the amount of payment and the number of payments are predetermined, such as
an automobile loan.

 Fixed payment
 Set period of time
 Set or varying interest rates

Examples: Car loans and mortgages

1.2 CAR LOAN

1.2.1 Meaning

A car loan is an amount of money taken from a lending provider to purchase a new or used car.
The individuals agree to repay the total amount of the loan along with the lending interest rate
amount to the lender (often banks) as and when required.

Individuals can choose a car from a list of models and manufacturers in India according to their
annual income and budget. Presently, a common man can fulfill his dreams of purchasing a car
by getting an auto loan. According to your requirements and financial situations, you can get
auto loans from a variety of auto financing services such as Mahindra Finance, Tata Finance,
Bajaj Finance and State Bank of India loans.

For example, if you are thinking about financing options with Bajaj Finance, you must first give
your information regarding the type of loan to the company. The Bajaj Finance associates will
then get in touch with you to assist with the loan eligibility amount and the different offers and
schemes available with their bank.

These days, almost everyone has the desire to buy a car which best suits them according to their
requirements. If you are one that has the desire to have a car, then simply fill out our form on
BankandFinance.com to get free car loan quotes. You may also want to apply for car insurance
through our site.

1.2.2 Benefits of Car Loans

Auto loans have many benefits. Some of the benefits for applying for car financing loans in India
are given below:

1. People using a car for their business purpose can claim part of the interest and
depreciation charges as expenses against taxable income.

2. Monthly payments can be directly debited from your bank account.

 3. If you’re paying fixed payments, the terms of the agreement allow for more accurate
budgeting and protect you against any interest rate fluctuations.

1.2.3 Types of Car Loan

There are several different types of auto loans so that every individual will find at least one auto
loan that is able to meet their requirements.

1.2.3a New Car Loan

A new car loan is taken out to purchase new vehicles generally from dealerships. As citizens of
India are getting higher pay packages, many salaried and self-employed individuals are looking
to get their dream car.

Many individuals have the cash in hand and they prefer to purchase a new car on the spot. This
however does not apply to the majority of those falling under this category. Most people will
contact banks for information about their auto loans and look to proceed from there. At
BankandFinance.com, we provide you with this information along with the lowest lending
interest rate from various auto loans providers such as Bajaj Finance, Tata and Mahindra.

There are many banks which provide new car loans with low car loan rates in India. As the
financial market fluctuates in India, there may be an increase in the lending interest rate for new
car loans. Because of this situation, be careful when it comes to getting an auto loan and plan
according to your financial situations and position. Use our loans calculator to calculate the
amount which you will need to pay every month.

1.2.3b Used Car Loans

Used auto loans are taken by the borrower to purchase a used car from either a second hand car
dealer or an individual seller. There are a number of lending institutions which provide used car
loans in India. Before going for a car loan, check the various offers and schemes from Bajaj
Finance and other providers.

Sometimes people can’t afford to buy a new car and in such cases, going for a used car is the
best option. The amount of money that you can afford per month should also be taken into
consideration in order to take the right decision for auto loans from top banks and lenders such as
ICICI, AXIS, HDFC, SBI and Bajaj Finance.

To get used auto loans, banks usually charge a high lending interest rate. It’s always good to
check with banks about the lending interest rate because buying a used car in India will definitely
be cheaper than purchasing a new car. The depreciation of used cars is always less than that of a
new car. In most cases the owner of a car will apply for auto insurance for the used car and the
cost of insurance will be lower. Get car loan quotes instantly by filling in your personal details in
our form.
 1.3 CAR FINANCING COMPANIES IN INDIA

Some of the top most PSU car financing companies in India are:

a) State Bank of India

b) Bank of India
c) UCO Bank
d) Allahabad Bank
e) IDBI Bank
f) Punjab National Bank
g) United Bank of India (UBI)
And many more.

Some of the top most Private Sector car financing companies in India are:

a) Bank Of Baroda
b) HDFC Bank
c) ICICI Bank
d) Kotak Mahindra Prime Limited.
e) L & T Finance Limited
f) LIC Finance Limited
g) Mahindra Finance
h) Standard Chartered Bank
i) Tata Finance Ltd
And many more.

1.4 LITERATURE REVIEW

a) Car Market & Buying Behavior by Nikhil Monga, Dr. BhuvnenderChaudhury,

SaurabhTripathi(2012):

According to Nikhil Monga, Dr. BhuvnenderChaudhury&SaurabhTripathi, The concept of

“buying behavior” is of prime importance in marketing and has evolved over the years. It is
important to understand consumer buying behavior as it plays a vital role in creating an impact
on purchase of products. The human wants are unlimited and always expect more and more. Car
Models are no exception to this behavior. This lead to constant modifications of Car Models &
its features and today we see a new model coming into the market practically every quarter. The
market is a very important place to study the behavior of consumers and also provide useful
insights what a consumer requires in a product. It is only through research that a company will be
able to study the buying behavior of consumers.

b) A study on Brand Preference of 'B' Segment cars by Dr. P. Natarajan& U.

Thiripurasundari (2010):

According to Dr. P. Natarajan& U. Thiripurasundari, consumer brand perceptions have

substantial implications in Marketing. The customers’ preference towards local and global
brands is studied by administering structured interview schedule with 150 customers in
Puducherry city. The findings of the study advised that the consumers who possessed global car
brands, preferred their car brands due to factors such as global presence, worldwide reputation
and quality of being a foreign made. Consumers made favorable perceptions the country,
wherein they tend to associate factors such as superior quality, technical advancements,
modernization etc. to the country from which the brand had taken its origin. Consumers who
owned a local brand evaluated the local brand in a favorable manner, wherein they tend to
associate the brand to India’s strong automobile sector that makes quality and technically
efficient cars.

c) The State of Lending in America & its Impact on U.S. Households by Delvin Davis
(2012):

According to Delvin Davis, automobiles are one of the largest purchases American households
will make, only behind the purchase of a home. For most households car ownership is not a
luxury but a prerequisite to economic opportunity. Car ownership affects where people can live
and significantly expands Americans’ options for jobs. As a result, both the affordability and
sustainability of auto financing are central concerns for most American families. As noted in
America’s Household Balance Sheet, in the last decade deleveraging of auto loans began as early
as 2005. Many households relied on home equity to finance car purchases, and as that market
disappeared, those families chose not to purchase a car at all or purchased cheaper vehicles.
Households responded to deteriorating income situations by buying used cars instead of new
ones and holding onto their cars for longer periods of time. These choices, however, have made
families who did enter the market even more vulnerable to abusive auto lending practices as the
pressure to increase revenue per sale grew.
 CHAPTER-2
RESEARCHOBJECTIVES
2.1 SCOPE OF THE STUDY

The scope of this particular research is based on the perception of the relevant customers towards
car loan which is limited to the area of Jorhat, Assam. The study helps to understand the
comparison between private & public sector banks and how much the parameters can influence
the customer in their decision of applying car loan.

 It helps us in gaining independent knowledge about customer perception towards car

loan.
 It helps in evaluating the effects of several parameters while choosing a car financing
company.
 It can provide prospective information to potential customers.

2.2 NEED FOR THE STUDY

 Presently all car financing companies are giving very attractive schemes to their
customers and this study is aimed at, what is in the mind of customers with reference to
the applying for car loans in Jorhat.
 At several Banks, they realize that owning a car has increasingly become a necessity. But
they also realize that the price tag of the dream car may be just outside the immediate
grasp. Car Loans are just to give what customers need to bridge the gap.

2.3 OBJECTIVES OF THE STUDY

 Understand the customer’s preference of banks for car loans.

 Identify the major government and private car financing banks.
 Study the problems faced by the customers in availing car loans.

2.4 LIMITATION OF THE STUDY

 Since the survey has been conducted to the customers of Jorhat only.
 The period of the study is only 60days.
 Most of the customers show hesitations to respond.
 Only 100 customers are taken as sample for the study.
 CHAPTER-3
RESEARCH
METHODOLOGY
3.1 OVERVIEW OF RESEARCH METHODOLOGY

Research type Descriptive research

Population size People having Car Loans in Jorhat

Sampling techniques Convenience sampling

Sampling area Jorhat

Sampling size 100

Data collection instrument Questionnaire

Data collection

Primary Questionnaire

Secondary Journals, Websites & Books

Statistical tool Pie charts, Bar diagram.

3.2 Descriptive Research

Descriptive Research is the process of finding solutions for a problem after a tough study and
analysis of situational factors. It tries to solve a complex and complicated problems through uses
of various tools and techniques. These tools and techniques try to bring out a logical accurate and
scientific solution for a given problem.

3.3 Research Design

The proposed study will be exploratory as well as descriptive in nature.

3.4 Sampling Technique
The sampling technique which was used is convenience sampling.
Sources of Data
The two main sources of data for the present study been used are primary and secondary data.
Primary Data
This data was collected from the respondents with the help of questionnaire.
Secondary Data
Under this, the sources were taken from books, company brochures and internet for this study.
Sampling Plan:
As all the possible items will consider for research, the sampling method adopt will be
convenience sampling.
Sample Population
My sample population is the people having Car Loans in Jorhat.
Sample Population
Considering the nature and extent of the study and with the time constraint a sample size of
“100” respondents have been taken.
 CHAPTER-4
DATA ANALYSIS AND
FRAMEWORK
4.1 Statistical tools used for data analysis

 Bar Diagram-
a method of presenting data in which frequencies are displayed along one axis and catego
ries of the variable along the other, thefrequencies being represented by the bar lengths.
Chart 4.1.1

77
80
70
60
50
40
30 23
20
10
0

Male
Female

Gender

In the above diagram, out of 100 respondents 77 respondents are male and 23 respondents are
female.
 Chart 4.1.2

Age Group
Age Group

40

20
24
16

20-30
30-40
40-50
50 above

Majority (40 respondents out of 100 respondents) is of age group 40-50 years who applied Car
Loan and the least is 16 respondents whose age group is 30-40 years.
 Chart 4.1.3

Occupation
Occupation

52

25

19

4
Service
Business
Professional
Others

In the above diagram, 52 out of 100 respondents are from service sector which is the highest
followed by business and then professional.
 Chart 4.1.4

40
36
35

30

25

20 17 18
15 14
15

10

0
Below 2.5 lakhs Between 2.5-5 lakhs Between 5-7.5 lakhs Between 7.5-10 Above 10 lakhs
lakhs

Annual Income

From the survey, 36 respondents out of 100 respondent’s annual income are between 5-7.5 lakhs
which is the majority from others.
 Chart 4.1.5

30 27

25 23

20

15
11 11
10 8
5 5
5 3
2 2 2
1
0

Car Company

In the above diagram, 27 respondents out of 100 respondents own cars of Hyundai which is the
highest amongst all followed by Maruti Suzuki which is 23 respondents and then cars owned of
Fiat is the least.
 Chart 4.1.6

Car Finance Companies

30

18

7 7
6
5 5 5 5
4
2 2 2
1 1

From the survey it is evident that the majority i.e. 30 respondents out of 100 respondents took
loan from SBI followed by HDFC which is 18 respondents and the least are Yes Bank & Tata
Finance i.e. 1 respondent each.
 Chart 4.1.7

67
70
60 52
50 40
40 29 29 28 26
30
20
10
0

Parameters

In the above diagram, respondents are asked to rank the parameters where the maximum
respondents ranked Interest Rate the highest parameter evaluated before choosing the car finance
companies i.e. 67 respondents followed by Fast Processing i.e. 52 respondents ranked the 2nd
highest parameter evaluated before choosing car finance companies and then Easy
Documentation after that Previous Association, Credibility, Lower Fees (Like Processing Fee,
Penalty etc.) & Reference.
 Chart 4.1.8

100 92
80
60
40
13 16 22
20
0 2 1 10
1 1 14
1
1 1 1

Car Finance Companies (Govt)

From the survey, maximum respondents those who are aware of Government Car Financing
companies are SBI i.e. 92 respondents followed by UCO bank.
 Chart 4.1.9

Car Finance Companies (Pvt)

44 46
40

13
6 9
1 3 1

From the survey, it is evident that highest respondents are aware of ICICI as the private car
finance companies i.e. 46 respondents followed by HDFC & Axis Bank.
 Chart 4.1.10

47
50
45
40
33
35
30
25
17
20
15
10
3
5 0
0
SA A CS D SD

Statement 1

From the survey, 47 respondents out of 100 respondents are agreeing with the statement that
‘The Government financiers’ charges low interest rate’.
 Chart 4.1.11

30 30
27
25 23

20
15
15

10

5
5
0
SA
A
CS
D
SD

Statement 2

In the statement ‘The Government Financiers provide faster loan processing’, majority of the
respondents i.e. 30 respondents disagreed the statement, followed by can’t say and then only 23
respondents agreed with the statement.
 Chart 4.1.12

40 37
35
35

30
24
25

20

15

10
4
5 0
0
SA A CS D SD

Statement 3

In the above graph it shows that 37 respondents agreed with the statement that ‘The Government
financiers are more credible’ followed by respondents chosen strongly agree.
 Chart 4.1.13

Statement 4
Statement 4

32
28

21

11
8

SA A CS D SD

Majority of the respondents (32 respondents) agreed the statement ‘The Government financiers
have lot of hidden costs’.
 Chart 4.1.14

60 55

50

40

30

20 15
15
15
10

0
SA 0
A
CS
D
SD

Statement 5

In the statement, ‘The Government financiers have lower fees (Like Processing fee, penalty
etc.)’, maximum respondents agreed.
 Chart 4.1.15

Statement 6
Statement 6

46

21
14

11

SA
A
CS
D
SD

From the survey, out of 100 respondents, 46 respondents disagreed with the statement that ‘The
Private financiers’ charges low interest rate’ which is the highest.
 Chart 4.1.16

60
51
50

40
31
30

20

10 8
5
0 5
SA
A
CS
D
SD

Statement 7

From the survey, out of 100 respondents, 51 respondents strongly agreed with the statement that
‘The Private financiers ‘provide faster processing of loans’ which is the highest respond.
 Chart 4.1.17

Statement 8
Statement 8

31

24

20
17

SD A CS D SD

In the statement ‘The Private financiers are more credible’, majority of the respondents are
neither agree nor disagree i.e. 31 respondents followed by disagreeing respondents i.e. 24
respondents.
 Chart 4.1.18

38
40

35

30 26

25

20 16 15
15

10
5
5

0
SD A CS D SD

Statement 9

From the survey, out of 100 respondents, 38 respondents agreed the statement that ‘The Private
financiers have a lot of hidden costs’ followed by the respondents who can’t say about the
statement.
 Chart 4.1.19

Statement 10
Statement 10

32
28

21

14
5

SD
A
CS
D
SD

In the statement ‘The Private financiers have lower fees (Like Processing fee, penalty etc.)’
majority of the respondents i.e. 32 respondents disagreed followed by 28 agreeing respondents.
CHAPTER-5
FINDINGS
 5.1 FINDINGS

1. From the analysis done we have come to know that the majority of the respondents prefer
using motor vehicle of Hyundai and Maruti Suzuki which are comparatively cheaper in
the market.
2. As per the study, mostly respondents prefer to take loan from public car financing
companies like SBI and secondly they prefer HDFC which is private finance company.
3. Lower interest rate, is the most important economical parameter which can influence the
buyer (borrower) choice or in another words decision for opting for banks.
Findings extracted from data and survey shows that public sector banks charges low
interest rate as compared to private sector banks.
4. The time period for processing and sanction of loan is important non economical
parameters in choosing banks for car loan. Factors like urgency of loan, proper
documentation and verification plays crucial role.
The study through survey shows that in private sector banks the process of loans is fast,
efficient & less rigorous as compared to public sector banks.
5. Credibility of bank plays a crucial role in psychology of the borrowers. Traditionally,
public sector banks are believed to be more credible than private sector banks by the
masses.
The factors like more hidden cost & low processing efficiency in loan sanction.
6. Consumers are aware enough and they know that low interest rate is not the only
economical parameter which adds upto their total return. Private sector banks as per as
study shows that they have more hidden cost as compared to public sector banks.
7. Penalty rates can influence the buyer’s choice towards financing agency. In case of
uncertainty like delaying in monthly installment of the loan private sector banks charges
more penalties as compared to public sector banks.
CHAPTER-6
CONCLUSION
 CONCLUSION

In my 60 days study on the car loan and the comparison between public and private car finance
companies within the Jorhat city, I conclude the following.

There are different commercial banks who supplies car loan like SBI, HDFC, IDBI, Allahabad
Bank etc. different banks have different Rate of Interest. Some of those are Public banks and
some are private banks. Majority of the respondents prefer using motor vehicle of Hyundai and
Maruti Suzuki which are comparatively cheaper in the market.

The respondents feel that government financier’s charges low interest rate whereas private
financiers charges high interest rate. So on that notes they prefer government banks to take loan.
But on the other hand, government financiers are slow while processing of loan whereas private
financiers are faster loan processor so people who have no issue with the interest rate but need
the process to be faster, they will prefer private financiers to apply loan. Factors like urgency of
loan, proper documentation and verification plays crucial role.

Consumers think that government financiers are more credible in comparison to private
financiers. The factors like more hidden cost & low processing efficiency in loan sanction. The
government financiers have less hidden cost as compared to private financiers. Hidden cost can
be the beyond estimated cost.

The private financiers have lower fees as compared to government financiers. Lower fees can be
the processing fees, penalty etc. Penalty rates can influence the buyer’s choice towards financing
agency.
 ANNEXURE

QUESTIONNAIRE

1. Name: _______________________________________
2. Gender
o. Male o. Female
3. Age
o. 20-30 years o. 30-40 years
o. 40-50 years o. Above 50 years
4. Occupation
o. Service o. Business
o. Professional o. Other, specify__________
5. Annual Income
o. Below 2.5 lakhs o. Between 2.5 to 5 lakhs
o. Between 5 to 7.5 lakhs o. Between 7.5 to 10 lakhs
o. Above 10 lakhs
6. Which car do you own?

__________________________
7. Did you take a car loan?
o. Yes o. No
8. If yes, mention the name of your car financing company.

______________________________
9. Rank the following parameters that you have evaluated before choosing the car finance
company?
o. Interest Rate
o. Fast Processing
o. Credibility
o. Previous Association
o. Lower Fees (Like Processing Fee, Penalty etc.)
o. Easy Documentation
o. Reference
 10. List various Government & Private Car Finance Companies you know, according to your
preference.
Government Private
1) __________________ 1) __________________
2) __________________ 2) __________________
3) __________________ 3) __________________
4) __________________ 4) __________________
5) __________________ 5) __________________

11. Tick the option that you think is most appropriate for the following statements-

Sl. Statements Strongly Agree Can’t Disagree Strongly

No Agree Say Disagree
1 The Government financiers’
charges low interest rate
2 The Government financiers
provide faster loan processing
3 The Government financiers
are more credible
4 The Government financiers
have lot of hidden costs
5 The Government financiers
have lower fees (Like
Processing fee, penalty etc.)
6 The Private financiers’
charges low interest rate.
7 The Private financiers
‘provide faster processing of
loans.
8 The Private financiers are
more credible.
9 The Private financiers have a
lot of hidden costs.
10 The Private financiers have
lower fees (Like Processing
fee, penalty etc.)

-----------------------------------------------THANK YOU---------------------------------------------------
 REFERENCES

 Nikhil Monga, Dr. BhuvnenderChaudhury&SaurabhTripathi, Car Market and Buying

Behavior – A Study of Customer Behavior: Volume 2 Issue 2 (February 2012)
 AnnammaOommen, Auto Finance (2009).
 Anonymous, Comparative Study of Customer’s Satisfaction Towards HDFC Bank and
State Bank of India
 Bhuwan Gupta &NishaAgarwal, Consumer Perceptions and Behavior: A Study with
Special Reference to Car Owners in Alwar District (Rajasthan) (April- May 2013)
 Choy Johnn Yee, Annie Ng Cheng San, Ch’ng Huck Khoon, A Study on Malaysia
Consumer Perceptions towards Buying an Automobile.

Websites

 http://www.mahindrafinance.com/car-loans.aspx
 http://www.aufin.in/index.php?option=com_content&view=article&id=52&Itemid=62
 http://www.bankofbaroda.co.in/pfs/carloans.asp
 http://carloan.kotak.com/aboutus/kpml_pro.htm