Car Loan Foreclosure charges in case of stolen Vehicle

Our Toyota Innova was stolen in June 2015. It was insured by ICICI Lombard and financed by Kotak Mahindra Prime Ltd. All paper work has been completed and ICICI shall soon release the payment. As per Kotak's contract they will charge loan foreclosure charges and when we requested for waiver they denied.

We are intentionally not pre-paying the loan. Due to payment from financer loan is getting closed before the due date. Then why should we be penalised with pre-payment charges. Is there any RBI policy to waive-off foreclosure charges in case of stolen vehicle?? Thanks in advance. more  

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I can say that you people have gone to the NBFCs and private sector banks for getting better service then they will charge as per your requirement you are not gone to a public sector bank and taken any loan because the process are delayed hence you went to NBFC and Private Banks and you are complaining now. Always we want everything instantly but we don't want to pay for it how it is possible and the pre closure charges are waived only you pre pay the term loan out of you own funds not from insurance funds or loan from other banks. more  
RBI does not do anything even though you ask them what is the rule or guidelines under such circumstances. They simply not bothered to control banks and NBFCs. I have made a complaint to RBI about the abnormal service charges of a NBFC but they have instead of replying to me forwarded my complaint to the concerned NBFC. Wonder how RBI is functioning under the great leadership of world renowned economist. more  
In fact the PSU general insurance companies are not providing the good services to the public.In real sense it is better to sale the four PSU gen.insurance companies in private sector by the Govt. more  
RBI/2013-14/582
DBOD. Dir.BC.No.110/13.03.00/2013-14
May 7, 2014
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir/Madam
Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans
Please refer to our circular DBOD. No. Dir.BC.107/13.03.00/2011-12 dated June 5, 2012 on ‘Home Loans- Levy of Fore-closure Charges/ Pre-payment Penalty’.
2. A reference is invited to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014 proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.
Yours faithfully,
(Prakash Chandra Sahoo)
Chief General Manager more  
Normally such vehicles have Banker's interest covered in the motor insurance policy and as such the payment of the claim woud go to the Banker under that clause. Since it is not a payment done by you there is a protection available to the lonee not to get penalized for foreclosure of loan. Otherwise you can ask the bank to discharge the voucher of insurance claim so that the payment can be made to you. In that case you can use this money to buy another vehicle and keep on paying the loan installment to Kotak as has been done in the past. more  
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