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Should you go for new auto loan SMART EMI from ICICI Bank?

The amount of 'SMART EMI' is much lower than regular car loan EMI as the estimated resale value of the car is deducted upfront

Should you go for new auto loan SMART EMI from ICICI Bank?

This auto loan takes care of the insurance and maintenance requirement of the vehicle during the financing period (Image: PTI)

ICICI Bank has launched a new auto loan product 'SMART EMI' in association with TranzLease, an automobile leasing & mobility solutions company. This auto loan takes care of the insurance and maintenance requirement of the vehicle during the financing period.

The amount of 'SMART EMI' is much lower than regular car loan EMI as the estimated resale value of the car is deducted upfront. This gives users an option to either own the car at the end of the tenure by making payment of an agreed resale value or simply return the car to the leasing company. In case of such return, customers are rewarded with special bonus.

This auto loan offers lower EMI in comparison to a regular car loan EMI and covers unbudgeted and unforeseen expenses and unknown resale value.

Ravi Narayanan, Head - Secured Assets, ICICI Bank said, "We are pleased to offer this specialised and unique experience to the car enthusiasts and are happy to introduce 'SMART EMI' facility.

A first-of-its-kind innovative financing option developed for the car enthusiasts to help them take home a car of their choice on lease without having to worry about financing, insurance and maintenance. The choice of car ranges from an array of entry level hatchback to the luxury segment sedans and SUVs. We believe, with introduction of this new proposition, customers will have a unique and hassle-free vehicle purchase experience."

How 'SMART EMI' works for a car (ex-showroom Rs14.22 lakh)*

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Currently, this offering is available for both corporates and salaried individuals and will soon be available for self-employed customers. Anindya Chakraborty, MD & CEO, TranzLease said, "In today's age where consumers want a car but are uneasy about the associated hassles, risks, costs of ownership, 'SMART EMI' comes as a solution that allows the love of car without the chaos."

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.

To avail this facility, you will need to visit the link: https://www.icicibank.com/Personal-Banking/loans/car-loan/cl-smart-emi.page?#toptitle .

You can select a car of your choice and look at various EMI options available including comparing with traditional auto loans. After selecting the car, you can call on the 'SMART EMI' phone number +91-8130680080.

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.

Should you go for this new auto loan?

The major difference between the traditional loan and the SMART EMI by ICICI Bank is ownership of the car and subsequent resale value. If you own the car, the resale value belongs to you (for which you pay extra EMI) that you can get if you sell the car.

For instance, if you consider a depreciation of 40 per cent after three years, the resale value of the car shown in the illustration could be around Rs 8.5 lakh. So, you have created an asset by paying extra EMI.

In case of SMART EMI if you wish to own the car after three years, you will have to pay the resale value of the car. As you do not own the car, you save the money by paying the lower EMI.

You should take a call on selecting your loan option based on your preferences with regards to owning the car. If you wish to own your car for the long-term, go for traditional loan as you will have the flexibility to select insurance and maintenance as per your choice and usage pattern.

However, if you prefer changing your car frequently and are likely to go for another car after three years, the SMART EMI may be a good option to consider as your funds are not locked in the asset.

Also read: How much money do you need for 25 years of retired life

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