Towards the end of November, ICICI Bank launched a new car loan facility, in association with TranzLease, an automobile leasing and mobility solutions company. The auto loan facility is called the 'Smart EMI' which besides allowing the customer to own a new car at a lower cost, also takes care of insurance and maintenance requirement of the vehicle.
How does the Smart EMI work?
Under ICICI Bank's Smart EMI programme, one will have to pay the Equated Monthly Installment (EMI) which will be inclusive of full tenure insurance, maintenance and risk protection.
The lender will be deducting the estimated resale value of the car up front, which would lower the EMI. At the end of the tenure, car owners have to choose whether they wish to buy or surrender the car to the leasing company. If you choose to return it, you will be rewarded with a bonus amount.
The offer is available for both corporates and salaried individuals and will soon be available for self-employed customers.
- As per ICICI Bank's website, the EMI is lower in the Smart EMI facility when compared to a regular car loan EMI.
- EMI includes insurance and maintenance charges for the whole tenure.
- No re-sale hassle.
Things to note
- While ICICI Bank provides the credit facility, 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.
- The Smart EMI facility is available in select Indian cities only.
How to apply for Smart EMI?
- Those interested can avail the facility by simply visiting ICICI Bank's website. The link on the bank's website will lead you to a third-party site run by Tranzlease called https://smartemi.tranzlease.in
- On the page, select a car of your choice and look at various EMI options available including comparisons with traditional auto loans.
- On selecting the car, you can call the 'Smart EMI' phone number +91-8130680080.
- If you want a particular car which is not directly available through the car search facility on the website, you can send an email to email@example.com.
- Once the car is delivered to the 'Smart EMI' customer, they will be provided 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. The portal includes cloud repository of all car documents, insurance, maintenance & accident management, referral and points programme.
Should you opt for it?
Cars or any vehicle has high depreciating value. This means that for whatever price you buy, you will be selling at a lower rate even if you have used it for a short period of time.
The Smart EMI facility covers the risk of fluctuation in re-sale value and also maintenance cost. In a traditional car loan, you will have to incur insurance and vehicle servicing charges separately even as your tenure of the loan payment will be almost same in both the systems.
The choice of whether or not to opt for the loan scheme depends on individual preference. If you are someone who likes to upgrade to new cars after a period of time, it should serve well. It will also work for those that are looking to re-locate after a while.
However, before you decide, look at similar schemes that are being offered by major car companies like Hyundai in association with car rental service providers like Zoomcar, Revv and Myles. These are generally called car subscription plans and you could compare the cost of opting for those with the Smart EMI plan offered by ICICI Bank.
Apart from Hyundai, many car markers have been running the car subscription facility which allows you to own a car for as less as 6 months. The decision to acquire the car (at a pre-determined rate) at the end of the tenure is up to the customer.