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Terms and conditions
Security and Insurance
- Borrower must be the car owner.
- The car is pledged to the Bank until the full repayment of the loan.
- Borrower must provide car insurance opting from suggested list of Insurers.1 The insurance police should be reissued every year within the whole term of the agreement. Should the borrower fail to arrange the insurance, the Bank will arrange an insurance at the borrower’s cost.
- The insurance amount must be equal to the market value of the car.
- The Bank reserves the right to demand early repayment of the loan, if the borrower breaks insurance terms specified in the Pledge Agreement.
Important notes
- The Bank makes the decision on provision of loans at its discretion taking into consideration the conformity of the loan application to the announced requirements of the given loan type as well as evaluating such essential factors as the creditworthiness of the applicant, any overdue payments and other factors.
- Loan is provided for buying cars intended for personal use only.
- Car loan is not being provided for motorcycles and cars manufactured before 1990.
- Loan drawdown will be done after submission of pledge and insurance agreement/ policy.
- The loan will be transferred to customer’s bank account.
- Valuation and security pledge expenses are born by the customer2.
- Customers can apply for a loan at any of the Bank branches/offices.
Calculation of interest amount and interest rate
Loan interest amount is being calculated based on the nominal rate, whereas the annual percentage rate indicates how much would loan cost to borrower in case of repayment of interest amount and other payments under the defined timeline and terms.
Interest amount is calculated on a daily basis by using the following formula:
I = R*L/365, where
I = one day interest amount
R = current interest rate
L = outstanding amount of loan
Annual percentage rate value depends on loan terms (amount, length, regular payment amount and number of repayments)
Annual percentage rate is calculated by using the following formula:
Where,
i - is the annual percentage rate, which shows the total expenditure of the loan expressed in annual rate of provided loan, which includes all the interests and payments which should be made by borrower while obtaining the loan as well as during the whole term of the loan
A - is the initial amount of provided loan
n - is the consecutive number of the loan repayment
N - is the number of repayments
CFn - the payment received upon the receipt of the loan and/or regular n-th payment received during the operation of the loan
Dn - is the number that indicates how many days are passed from the moment the loan has been granted till the loan n-th payment date (inclusive)
Note. For the calculation examples of annual percentage rate and other details please refer to respective brochure on interest rates.
Warning
- If the customer fails or regularly delays the loan repayment or any of obligations specified in loan agreement, the Bank reserves the right to repossess the pledged car, without recourse to the court and use the sales proceeds for full repayment of the loan outstanding amount.
- In case if the value of the pledged car is not sufficient to cover the customer’s obligations, the obligations may be paid-off at the expense of the creditor’s other property, in accordance with the RA legislation.
- If the borrower does not pay the interest and loan principal amounts in time, information about credit history will be submitted to the Central Bank of Armenia credit register and ACRA Credit Reporting cjsc.
Default interest rate and penalties
- In case of overdue/default on loan principal and/or interest the Bank will apply default interest rate - 15% plus the loan nominal interest rate per annum, on the overdue amount.
- The Bank will apply AMD 10,000 one-off penalty for each case of loan and/or interest overdue exceeding 3 working days.
- No early repayment fee is applicable.
Required documents
- Valid passport
- Social Security Card (when required)
- For the Bank payroll customers: a letter from the employer undertaking to process the applicant’s remuneration through HSBC Bank Armenia cjsc (in the form acceptable by the Bank)
- For the Bank non-payroll customers: any official evidence and/or documentation on source/size of income, e.g. dividend certificate, lease agreement, banks statements, etc.
- If the applicant is other bank customer: the applicant’s bank statements proving salary transfers for the last 12 months, an official advice on source / size of income, advice on account average balance for the last 12 months (for non-payroll customers).
- Ownership Certificate (the original certificate registered in the name of the buyer is kept in the Bank until full repayment of the loan).
- Valuation report of the car securing the loan. Evaluation is to be conducted by an independent valuator authorized by the Bank.
- Letter provided by respective registration examination subdivision of Road Police Services of RoA Police concerning the limitations applied on the car, car registration certificate copy, buyer’s, seller’s and coowners’ passport copies.
- For new cars purchased from official dealers, Sell and Purchase agreement, relevant invoice and customs clearance.
- Other documents that may be required during loan application process.
The deadlines for decision making of loan application and loan provision/drawdown
- The maximum period for preliminary decision on loan application - within 7 working days after the submission of necessary documents on income as requested by the Bank.
- The maximum period for making final decision and informing the applicant about the decision- within 5 working days after the submission of all other necessary documentation as requested by the Bank.
- The maximum period for loan provision/drawdown within 4-6 working days after the signing of loan agreement, proper verification and registration of the security agreement, submission of security insurance and necessary payments stipulated in the loan agreement.
1 Cost of car insurance may vary from 1.4% to 4% of the car market value.
2 Property valuation costs may vary from AMD 6,000 to AMD 8,000. Property pledging costs may vary from AMD 23,000 to AMD 28,000.
