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    Car Loan Interest Rates 2019

    You can take a look at the following table that gives a general overview of car loan interest rates, processing fee, and other car loan features.

    Latest Car Loan Interest Rates for Top Banks 2018
    Bank name Car loan interest rates Tenure (Min-Max)
    Axis Bank 8.60% (1 year MCLR) Up to 36 months
    9.25% to 11.50% (Effective ROI) More than 36 months
    Dena Bank 9.25% Term loan
    9.15% (for women) Term loan
    Federal Bank 9.15% Up to 84 months
    HDFC Bank 9% to 10.25% (rack interest rate) based on vehicle segment 12 months to 84 months
    ICICI Bank 12.75% Up to 23 months
    12% 24 months to 35 months
    10% 36 months to 84 months
    Jammu and Kashmir Bank Fixed - 11.25% Floating - Base rate + 1% (0.25% rebate on interest rate may be offered to women borrowers) 12 months to 84 months
    Oriental Bank of Commerce For male borrowers - 9.15% For female borrowers - 9.05% *0.5% concession in interest rate is available to loyal and captive customers When loan amount is equal to or less than Rs.25 lakh - 100 EMIs When loan amount is more than Rs.25 lakh - 120 EMIs

    Have you always dreamt of purchasing a car in your own name? You can make this dream come true by taking an auto loan offered by several banks and NBFCs. You can choose a car that will suit your budget and then fix your loan amount accordingly. You will be required to repay your loan amount with an interest. The interest needs to be paid as the lender is offering the money to you to buy your car. This interest rate will be fixed by your lender according to your loan amount, tenure, type of automobile that you are interested in, and many other factors. We will now look into a few points to understand how car loan interest works.

    The table given above shows a broad range for the interest rates and fees of car loans provided by various banks and non-banking financial corporations (NBFCs) in India.

    Car Loan Interest Rates Details
    Car Loan Interest Rate Particulars Details
    Interest rate 8.25% - 15% p.a.
    Processing fee 0 to 2% of car loan amount + Applicable Service Tax (One-time fee)
    Type of interest rate Fixed or floating
    Loan amount Rs.25,000 to Rs.2 crore
    Loan tenure 1 to 7 years
    Preferred credit score 750 or above
    Pre-closure fee NIL to 6% of principal outstanding car loan amount
    Car Loan Interest Rate

    Key Factors that Play a Role in Determining the Interest Rates for Car Loans

    Have you wondered how banks and non-banking financial corporations fix your effective car loan interest rates? Your lender will decide your auto loan rate by taking many factors into consideration. It is very important for you to be aware of the aspects that determine your car loan interest rate. This will assist you in preparing properly before you apply for a car loan. This will help you get an attractive interest rate for your car loan. You can purchase your dream car at an affordable interest rate.

    Let us now understand the basis for arriving at the various effective interest rates as seen by lenders:

    • Your income: Your lender will check your monthly income in order to assess if you will be able to repay the loan or not. If you meet the minimum income criterion, your lender will be confident that you will be able to repay your loan without any problem. Hence, make sure you are earning a good salary while applying for your auto loan.
    • Your credit history: When you apply for a car loan, your lender will review your credit history to determine your interest rate. Your lender will check your repayment behaviour, your previous credits, and your promptness in repaying your loan or credit card bills. Hence, you should enhance your credit score before you actually apply for a loan. With a good credit score, you can request your lender to fix an affordable interest rate for you.
    • Your debt-to-income ratio: Your income should be proportionate to the debts that you obtain. The total money that you owe to others should be proportionate to the income that you earn. Your debt-to-income ratio indicates your financial condition. The lender will be able to assess if you can repay the entire loan with your current salary. In order to obtain a decent interest rate for your car loan, you should maintain a good debt-to-income ratio for a reasonably long period before you apply. If your outstanding debt amounts are very high, your debt-to-income ratio will be low and hence, you will be charged a high auto loan interest rate.
    • Age of the car that you are interested in: If you go for a brand new car, your loan interest rate will be decently priced. On the other hand, if you take a used car loan, your interest rate will be much higher. This is because your lender will consider the quality of your vehicle, the age of the used vehicle, and the age of the car’s parts. This is because, generally, under a car loan, if you fail to repay your car loan on time, your car will be seized by your lender. A lender associates a used car loan with a lot of risk. Even if it is seized, the value of the used car’s parts will reduce drastically in no time. Hence, in order to minimise risk later, lenders charge high-interest rates for used cars during the loan period so that they can earn higher amounts quickly.
    • Your loan tenure: You can take a car loan generally for up to 7 years. It depends on the tenure options offered by your lender. If you take a loan for a very short period, your interest rate will be very high. You can choose your tenure according to your repayment ability and your loan amount. Before you decide your loan amount, you can utilise any online EMI calculator to compute your loan EMIs for the entire tenure. You can choose your tenure according to your preference.
    • Your down payment amount: In the context of car loans, a down payment refers to the upfront payment, which is a part of the total outstanding amount. This payment is typically made when you enter into the loan agreement and the payment is generally made in cash. If you make a high down payment, your lender’s risk will be less as the amount to be lent to you will be low. Hence, your lender will provide you with a low-interest rate. Moreover, when you make a pretty high down payment, your lender will believe that your income and financial condition are good. Hence, your lender will be assured that you will be able to repay your full car loan on time.

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    Best Car Loan Interest Rates with BankBazaar

    Lowest Car Loan Interest Rate for All Banks 2018
    Bank name Tenure (Min-Max) Car loan interest rates
    Axis Bank Up to 36 months 9.25% to 11.50% (Effective Rate Of Interest)
    More than 36 months 9.25% to 11.50% (Effective Rate Of Interest)
    Andhra Bank Up to 84 months 9.25%
    Bank of Maharashtra Up to 84 months When CIBIL score is 750 and above - 9.25% When the CIBIL score is between 700 and 749 - 9.50% When the CIBIL score is between 600 and 699 - 10% When CIBIL score is -1 or 0 - 9.50%
    Bank of India Up to 7 years 9.4%
    Bank of Baroda Up to 84 months From (One-year MCLR + 0.25% + Strategic Premium) to (One-year MCLR + 2% + Strategic Premium) based on the risk rating of the borrower
    Central Bank of India Up to 84 months For fixed and floating rates of interest - 8.90%
    Canara Bank Up to 84 months For women borrowers with vehicles registered in their names - 8.90% to 9.45% For other borrowers - 8.95% to 9.55%
    Corporation Bank Up to 84 months Vehicles used for personal purposes (up to Rs.50 lakh) - 9.50% Vehicles used for personal purposes (above Rs.50 lakh) - 10% State and Central government employees and defense personnel (up to Rs.50 lakh) - 8.85% (1-year MCLR)
    Federal Bank Up to 84 months for salaried borrowers 9.15%
    HDFC Bank 12 months to 84 months 9% to 10.25% (rack interest rate) based on vehicle segment
    Indian Bank Up to 84 EMIs with no holiday period 9.50%
    ICICI Bank Up to 23 months 12.85%
    24 months to 35 months 12.85%
    36 months to 84 months 9.30%
    Kotak Bank Between 12 months and 84 months Flexible interest rate based on 1-year MCLR (8.95%)
    IDBI Bank Up to 7 years For CIBIL score 801 and above - 8.90% For CIBIL score between 751 and 800 - 9% For CIBIL score between 701 and 750 - 9.10% For CIBIL score between 651 and 700 - 9.50%
    IndusInd Bank Between 1 year and 4 years. The tenure can be increased based on the customer’s relationship with the bank Based on 1-year MCLR (9.55%) and discounts offered by authorized dealers
    Punjab National Bank 84 EMIs For women borrowers, PNB PRIDE and Corporates (irrespective of CIC score) - 9.05% For other borrowers,
    • When CIC score is 750 and above - 9.05%
    • When CIC score is between 700 and 749 - 9.25%
    • When CIC score is below 700 - 9.50%
    Oriental Bank of Commerce When loan amount is equal to or less than Rs.25 lakh - 100 EMIs When loan amount is more than Rs.25 lakh - 120 EMIs For male borrowers - 9.15% For female borrowers - 9.05% *0.25% concession in interest rate is available to loyal and captive customers
    Syndicate Bank 84 months For salaried and non-salaried individuals when salary is not credited to the bank - 9.40% For salaried individuals when the minimum CIBIL score is 700 and salary is credited to the bank - 9.15%
    UCO Bank Up to 84 EMIs 8.95%
    Union Bank of India Up to 7 years For BSNL employees,
    • Up to 3 years - 8.65%
    • Between 3 years and 5 years - 8.90%
    For other borrowers - 9.05%
    SBI 84 months Between 9.20% and 9.70% There is a relaxation in the car loan interest rate for loyal customers
    Tamilnad Mercantile Bank 5 years Between 10.35% and 11.60%
    Dena Bank Term loan 9.25%
    Term loan 9.15% (for women)
    United Bank of India For pensioners - Maximum of 72 months For other borrowers - Maximum of 84 months For women borrowers - 9.05% For others - 9.10%

    Car loans are beneficial as they help you in buying your dream car. Without a car loan, you may have to struggle a lot to make the purchase on your own. Doing this will land you in deep financial trouble. Also, if you end up spending all your money on buying the car, you may not have any money for other purposes. Hence, taking a car loan makes perfect sense.

    However, you should check the interest rate of your car loan very carefully. Without proper research on the interest rates, your car loan may get very expensive. You may find your car loan monthly installments very affordable. However, your overall loan expenses can go up if you are not watchful, especially if you have chosen a floating interest rate. Therefore, you should have a clear understanding of how your car loan interest rate works and the other fees associated with it, before you make such a big financial decision.

    Points To Watch Out For When You Are Planning To Get a Car Loan

    When you think of getting a car loan, you are bound to get confused as to which car loan option to choose from the wide variety of options. By investing time in research, you can choose the perfect car loan option.

    • Choose between new car loans and used car loans: You will need to be sure if you want a new car loan or a used car loan. You can compare the interest rates between these 2 types of loans and then make a sensible decision. You will need to remember that the loan amounts and loan interest rates differ for these 2 categories of auto loans.
    • Be aware of your payment ability: When you take a car loan, you will need to make a down payment and your monthly payments in installments to fully repay your loan. Hence, you will need to consider your other expenses and then see how much you will be able to spend for your car loan on a monthly basis. Only if you are aware of your payment ability, you will be able to choose your car loan amount wisely.
    • Analyse the need for your car loan: Before you apply for a car loan from any lender, make sure you are clear about why you need the loan. You should also assess if you are financially ready to handle the loan. You must also consider the total car loan cost including the interest. You will also have to decide the car features that you want to take.
    • Compare multiple car loan options available in the market: You can check out the various car loan options available in the market by using third-party financial websites or the official websites of banks and NBFCs. This will help you get a clear picture of the various interest rates, processing fee, pre-payment fee, and EMIs of different car loans. You can accordingly make a decision.
    • Read the fine print of your car loan documents: Make sure you read everything in your car loan documents carefully and patiently. Do not miss reading the tiniest text of the fine print. If you find any discrepancy in the loan document, you can get it immediately clarified with your lender. You should be clearly informed about your loan’s terms and conditions in the beginning itself so that you do not face any issue later during your loan tenure.
    • Try getting a lender who wouldn’t charge pre-payment fees and other fees: If you do proper research, you may be able to find a lender who does not charge you for early repayments. This will enable you to repay your loan early when you have more than sufficient funds in your bank account. When your lender charges additional amounts for pre-payment, your loan expenses will unnecessarily increase.
    • Be careful about hidden fees and charges: When you apply for a car loan, you should make sure that you look for all hidden fees and charges. You might go for unrequired additional costs unknowingly such as car loan insurance, car protection, etc. You can avoid these costs if you are sure that you do not need them. Also, if you find alternative sources that provide these services, you can choose them instead of increasing your car loan expenses.
    • Make sure you find a lender who is transparent: When you are looking for a car loan, you should make sure that your lender is someone who does not mind talking about every term and condition. This will help you have a good relationship with your car loan provider. You will also be able to trust your lender properly.

    General Eligibility Conditions that are Good for Approval of Car Loan

    When you are interested in applying for a car loan from any bank or NBFC, you will need to meet certain eligibility criteria to get your loan application approved. Each bank and each NBFC will have different eligibility criteria for its car loan borrowers. The eligibility conditions that are common across all lenders include age, income, insurance proof, identity proof, car model, etc. Apart from individuals, a business firm or organisation can also apply for a car loan.

    Car Loan Eligibility Conditions
    Particulars Details
    Minimum age 18 to 21 years
    Maximum age 70 to 75 years
    Employment status Salaried or self-employed
    Minimum income Rs.10,000 per month
    Type of car Old or new. The loan interest rate will be determined according to the type of car.
    Number of years of work experience for loan applicant Total of 3 years of experience in company or business and at least 2 years in present profession or business or position
    Value of car This has an impact on the loan amount that will be approved and the loan interest rate.
    Area of residence Urban or semi-urban or rural. Your car loan interest rate will be fixed accordingly.
    Car model Only approved car models
    Income eligibility proof Latest salary slips, Form 16, or latest income returns
    Insurance proof Your bank or NBFC may ask you to show your car insurance policy before approving your car loan.
    Credit report and credit score Your lender will review your credit report thoroughly to understand your previous credit behaviour. If you have a good credit score, you will be eligible for your car loan.
    Co-applicant If your credit score is very low, your lender may require you to have a reliable co-applicant to approve your car loan application.
    Identity proof In order to prevent fraud or theft, you will need to furnish accurate proof of identity while applying for a car loan.

    How to Apply for a Car Loan Online

    • You can apply for a car loan online or by visiting the office of a bank or an NBFC. When you choose the online mode of applying, you can enjoy speed, convenience, and clarity. You can obtain a number of benefits when you apply for a car loan online.
    • You can apply either through third-party financial web portals or through the official websites of banks and NBFCs.
    • When you apply online, you can compare the various interest rates of different car loan options offered by multiple banking institutions and NBFCs.

    Applying for a car loan on BankBazaar

    • The website of BankBazaar has several advanced tables that show the clear comparison between various car loan options offered by different lenders.
    • The main car loan table on the website shows the name of the bank, interest rate range, loan amount range, processing fee range, and tenure range. You can view any of the loan options and get full details about it on the site itself.
    • You can click on ‘Explore’ to get extensive information for each loan product.
    • If you click on ‘Get Quote’, you will get accurate details about interest rate and fees for different loan amounts and loan tenures.
    • For most banks’ car loan products, you will get a response for your queries from the BankBazaar site within 30 minutes.
    • Moreover, you can also enjoy ‘Paperless Approval’ for most car loans when you apply online on the BankBazaar website. With the ‘Paperless Approval’ feature, you will not be required to submit any hard copy of your documents for proof. This will make your loan application and loan approval process quick without any wastage of time.

    Online car loan eligibility

    Apart from comparing the various car loan products and their features (interest rates, processing fee, pre-payment fee, time taken for disbursal, etc.), you can also check your car loan eligibility when you apply online.

    All you need to do is key in your basic personal details such as name, age, residential address, contact number, date of birth, income details, employment details, make and model of the car that you are interested in, your car loan tenure, bank account details, ex-showroom price of car, etc. After you enter every detail, you will need to click on check eligibility. The online tool will provide you with exact details about your car loan eligibility. It will specify if you are eligible or not and will also explain the reasons for your result appropriately.

    When you are aware if you are eligible or not, you can take the next step accordingly. If you get to know that you are not eligible, you can take necessary steps to enhance your eligibility or you can also approach another lender. If you get to know that you are eligible, then you can decide your loan amount, your lender, and your loan tenure by utilising the EMI calculator which is available online.

    Online car loan EMI calculator

    When you apply for a car loan online, you will also be able to enjoy the advantages of the online car loan EMI calculator. In India, most third-party financial websites and official banking websites have an online car loan EMI calculator. It can be used by anybody and does not need the user to have any specific technical knowledge. You only need to know your car loan amount, car loan tenure, interest rate, processing fee, which is a certain percentage of your loan amount, and your pre-payment details.

    You can check out the advanced BankBazaar car loan EMI calculator in order to arrive at your installment amounts for different months. You will be able to find it under the Main Menu under the ‘Finance Tools’ section. Here, you can click on the drop-down feature and select the EMI Calculator. Under this calculator, you will need to drag a particular slider to enter different car loan details.

    First, you will need to drag the slider to choose your loan amount. Next, you have to select the loan tenure by dragging the slider. You can then key in the interest rate in the box in the form of percentage. Next, you will need to key in the processing fee in percentage. Next, you will need to specify if you want to make a pre-payment or not. You can click on ‘Yes’ or ‘No’. If you click ‘Yes’, you will be required to key in the pre-payment frequency, pre-payment fee, and the pre-payment amount. You will also have to click on ‘Pre-payment applies to’. Here, you will have to choose ‘Final pre-payment made’, ‘Sum of pre-payment made during the previous loan year’, and ‘Sum of every pre-payment’.

    You will arrive at the monthly car loan EMI. For all-inclusive information about your car loan, you can check your amortisation details which give a debt repayment schedule for fixed intervals. It will be represented in a bar diagram and you can view the principal paid, unsettled loan balance, and interest paid.

    You can also view the break-up of the full amount that you need to pay for your car loan by checking out the pictorial graph that will be visible on your screen.

    Online Car Loan Application Process

    After you complete checking your loan eligibility and calculating your car loan EMIs, you can fix your loan amount and loan tenure as per your interest rate and processing fee. Depending on your financial requirement, prevailing financial condition, existing debts, car’s price, and other monthly expenses, you can finalise your car loan amount.

    You will need to choose your lender, enter your details, and submit documents for proof online. If the website that you have chosen requires hard copies of documents, you can take a printout of the online application acknowledgement and then submit only the documents at the nearest bank branch. With this, your online car loan application process will be completed in a jiffy.

    Key Questions that You Must Ask Your Car Loan Lenders

    Are you planning to finance your car purchase? Before you approach a lender for a car loan, you should prepare a checklist. This checklist is very important so that you do not miss out on any significant queries while applying for the loan. It helps you avoid having any regrets after you finish meeting your car loan lender. Some of the key questions include:

    • Will there be any penalty for my car loan? You will need to find out that if you pay your car loan early, will there be any charge? You should also ask your lender if there will be any additional charges later during your loan tenure. You can also ask your lender to be open about any ‘hidden charges’.
    • What supporting documentation will I need to arrange for my car loan application? Ask your lender to give a proper list of all the documents that you will have to make ready before you actually apply for the loan. Confirm what documents will be accepted as proof of identity, income, and address. You will need to bear in mind that different banks and NBFCs have varied documentation requirements. The main documentation is common for all lenders. However, for special cases, each lender will have different regulations for documentation.
    • How much will I need to pay you as my down-payment? Do you have any minimum down-payment amount? You can find out this from your lender in order to avoid any confusion in the future. Typically, you can fix your down-payment amount and then make the payment immediately. You will have to repay the remaining loan amount in installments over several months. However, if your lender does have a certain prescribed down-payment amount for all car loans, then you can pay that amount. If you think that the prescribed amount is above your budget, you can negotiate with your lender in the initial stage itself.
    • How long will it take for my car loan application to be processed and approved? You can ask your lender to specify the approximate period of time that will be taken for getting your loan application processed and approved. This will help you plan your car purchase.
    • What will my actual car loan interest be? You can enquire about the accurate interest rate that you will be paying for your entire car loan. You can do this by finding out your annual percentage rate (APR). It is the exact interest rate that you will be repaying the outstanding amount of your car loan.
    • What is the exact amount that you will be financing for my car purchase? Your lender will not be financing your entire car purchase. Only a part of your car purchase will be funded by your lender. A bank or an NBFC finances usually only up to 70 to 90% of the car’s market price. You will need to find out this from your lender before you finalise the loan deal.
    • What are the interest rate options that you will offer for my car loan? You can enquire about the type of interest rate offered for your car loan by your lender. Generally, fixed interest rates and floating interest rates are the 2 options available for car loans. Some lenders offer both, while some offer only 1 of them. You can then pick your lender accordingly.
    • Can my interest rates be negotiated? You can ask your lender if you can negotiate with him or her to get a better interest rate. You can explain your current financial condition to your lender and then back up your request by showing your excellent credit score, your previous repayment behaviour, and your promptness in paying your EMIs. This will help you in securing a good interest rate. If you have a bad credit history, you can arrange for a guarantor or a co-applicant to make sure that your lender is confident that the loan will be fully repaid on time. You can then negotiate for a more affordable interest rate by mentioning that you have a co-applicant. Moreover, since a car loan is a secured loan, you can negotiate for an economical interest rate.
    • Will the interest rate for my car loan change? You need to find out from your lender if your car loan interest rate will change after a certain period of time. You should also enquire if this is the best interest rate that you can get. If you have selected a floating interest rate for your car loan, your interest rate and EMIs will fluctuate on a regular basis.
    • What are the various fees that I will need to pay for my car loan? You will need to enquire with your lender about the multiple fees that you will have to pay for your car loan. Each lender will have different fees and each fee will vary according to the lender. The common fees and charges that you will need to pay for car loans include processing fee, bounce charges, prepayment statement charges, CIBIL report charges, stamp duty, documentation charges, registration certificate collection charges, swap charges, No Objection Certificate (NOC) charges, NOC for shifting from petrol to CNG or LPG, loan cancellation charges, etc.
    • Will my I need to take insurance for my car loan? This is not very common in India. You can still ask your lender if you will need to take insurance for the credit. If your lender says yes, you will need to check the expenses of this car loan insurance.
    • Will I have to pay a high-interest rate for a used car loan? You should consult with your lender about the interest rate that you need to pay for a used car loan. If the used car that you are interested in, has high-quality parts with modified features, you can negotiate for a reasonable interest rate.

    Must-Know Car Loan Jargon While Comparing Car Loans Offered By Different Lenders

    When you are planning to take a car loan, it is essential that you are aware of the different car loan jargon in order to make a sensible decision. Knowledge about the car loan lingo will help you stay conscious and help you avoid getting cheated or scammed. Let us take a look at some of the car loan terminologies that you must know:

    • Balloon payment: It refers to the lump sum payment that you pay for your car loan. It is typically paid at the end of your car loan period. The amount for this lump sum payment will most likely be higher than the payments that you would make on a monthly basis.
    • Principal: Your car loan principal refers to the original cost of your automobile. This cost is the amount that you would pay if you were buying the car on your own, without a car loan.
    • Co-signer: A co-signer refers to an individual who takes the responsibility of repaying the car loan on time along with the actual borrower.
    • APR: APR stands for Annual Percentage Rate. It is the annual rate that a car loan borrower will need to pay for borrowing. It indicates the precise annual cost of funds over the period of the car loan. It is expressed in the form of a percentage.
    • Interest rate: An interest rate is a rate that you will need to pay your lender as he or she is letting you borrow funds for purchasing your car. In the context of car loans, interest rates are generally known as APRs. You can choose a fixed interest rate or a variable (floating) interest rate.
    • Pre-payment penalty: A pre-payment penalty refers to the additional fee that will need to be paid if you prepay your loan before the official due date of the car loan.
    • Term: This refers to the car loan period. You will need to repay your entire car loan during this period.
    • Down payment: Down payment is described as the up-front amount of money that you will need to pay to your car loan provider at the initial stage. The rest of the loan amount will need to be repaid over the entire loan tenure in monthly installments. The higher amount you pay up front (at the beginning), the lower amount you will need to pay during the rest of your loan tenure on a monthly basis.
    • Creditworthiness: This refers to the ability or competency of an individual to repay his or her car loan. It also explains a borrower’s reliability in terms of promptness and discipline for repaying the loan.
    • Guarantor: In the context of car loans, a guarantor is an individual who enters into an agreement to be accountable for the actual borrower’s car loan repayment on time. If the actual borrower misses any payment deadlines, the guarantor will be held responsible. The guarantor may be required to pay off the loan on behalf of the actual borrower. Hence, it is vital to remember that taking the support of a guarantor is not only for acquiring a loan from a lender. A guarantor has a huge responsibility of making sure the loan is repaid on time, either by him or by the actual borrower.
    • Amortisation: This term refers to the total of interest and principal that should be paid on a loan. Your car loan EMI chiefly consists of principal and interest. The amortisation details will show the breakup of the interest and the principal for each month in your EMI amount. During the beginning of your loan tenure, your amortisation table will show that the interest is higher than your principal. Towards the end of your car loan tenure, your principal will increase.
    • Disclosure: This refers to the details that are provided to you when you finalise everything. This disclosure will consist details of the full loan agreement and terms and conditions of the car loan.
    • Repossession: This refers to the process of taking back your automobile if you fail to repay your car loan on time. Each lender will have different rules about late payments. If you fail to repay your car loan entirely beyond a particular due date, your lender will seize your asset (your car) from you. The ownership of your car will be taken away from you. Your lender will then sell it anywhere else.

    Car Loan Interest Rate FAQs

    1. Can I avail a car loan to buy a second hand car?

      Yes, car loans can be availed for the purchase of second hand cars, and the interest rate offered for such a loan shall depend upon the car you wish to purchase. The loan amount offered to you will only cover the cost of the vehicle itself. Other costs such as registration or transfer will have to be borne by the customer.

    2. Should I have to place a collateral when availing a car loan?

      There is no need to place another asset as collateral when availing a car loan. Since the money is being borrowed to purchase a car, it is a secured loan and the car acts as the collateral in this case. However, the registration certificate of the car will have to be endorsed with the bank, and the endorsement will be cancelled once you have fully repaid the loan. The bank has the option to cease the car if you do not pay the EMIs towards the car loan.

    3. What is the most that I can borrow as a car loan?

      The maximum amount of money that is sanctioned to customers who seek car loans ranges from 80% to 90% of the on-road cost of the car. There are banks that also lend 100% of the showroom price of the car. The interest rate offered on the car loan will depend upon the financial history of the borrower and whether you wish to purchase a new car or going in for a second hand vehicle.

    4. What is the tenure for a car loan?

      Car loans are usually granted for tenures ranging from one year to five year. The interest rate payable will depend upon the tenure, as the shorter the tenure, the higher the interest rate applicable to the loan and vice versa. There are certain banks that offer car loans for tenures ranging up to seven years as well.

    5. Should I earn a minimum income to qualify for a car loan?

      Most banks and financial institutions that offer car loans to their customers do not have a minimum salary requirement. However, there are chances that your loan application may be rejected if you earn a salary that is lower than the predetermined threshold level specified by the lender. In cases like these, you can apply with a co-borrower as it will increase your chances of qualifying for the loan.

    6. In what cases can I apply for a car loan along with a co-borrower or guarantor?

      Co-borrowers or loan guarantors are only needed in case an individual cannot meet the eligibility requirements of the bank, such as credit score, age or monthly income. If an individual meets all the eligibility criteria, there is no need for a co-borrower or guarantor.

    7. Will I be eligible for tax benefits if I avail a car loan?

      Car loans, unlike home loans, do not offer any tax benefits.

    8. How do you differentiate between a floating rate and a fixed rate car loan?

      In case of a floating rate car loan, the rate of interest applicable to the loan will vary based on the decision of the lender, whereas the rate of interest remains unchanged for the entire tenure of the loan under a fixed rate car loan. While one option guarantees a stable EMI payment for the customer, the payments in the other option can change from time to time.

    9. Can I negotiate the interest rate with the lender?

      Yes, customers may negotiate the rate of interest applicable to their car loan. To do so, you will have to have a good credit history and ensure that you enjoy a strong relationship with the institution from which you wish to borrow. If you have taken loans previously and ensured that your EMI payments were made on time and have cleared your loan within the tenure, you can ask the bank to lower the interest rate it charges you for a car loan.

    10. Will the car loan also cover registration and insurance?

      No. Car loans will only cover the cost of purchase of the vehicle, and not registration or insurance of the car. Since car insurance is compulsory for all cars, you will have to buy it separately and pay for it out of your own pocket. The same applies to the registration of the car. However, you can find a few banks that will cover the registration as well as insurance of your vehicle.

    11. What if I intend on selling my vehicle before the tenure of the loan is complete?

      You will not be allowed to sell your car unless you have repaid the loan in full. The bank will have to give you a No Objection Certificate if you are to sell the car, and the same will be given to you only once you have completed the repayment in full.

    12. What happens in case I fail to make EMI payments on time?

      In case you fail to make EMI payments on time, the bank shall consider you as a defaulter and charge you a penalty fee for late payment. You will be asked to be more regular with your payments and after several warnings if you still find it hard to pay your EMIs on time, you are at risk of losing your vehicle as the bank or lender can legally repossess the car. Moreover, your credit score will be negatively affected, leaving you with complications with future loan applications.

    13. How does zero percent financing work?

      Zero percent financing is an option that is made available by very few lenders. Under this concept, the manufacturer of the vehicle and the bank from which you borrow collaborate and the customer will only have to pay the amount borrowed in EMIs. The interest rate applicable to the loan will be paid by the manufacturer.

    14. Which banks offer the best interest rates for car loans in India?

      Some of the banks with the lowest rate of interest on car loans include Axis Bank, Federal Bank, Dena Bank, ICICI Bank, HDFC Bank, Jammu and Kashmir Bank, Oriental Bank of Commerce, Sundaram Finance, etc.

    15. Will I be allowed to pre-pay my car loan?

      Yes, most of the banks and financial institutions that offer car loans allows customers to pre-pay the same. However, there will be some terms and conditions for pre-payment of car loans. For instance, you will have to have completed a certain part of the tenure before you will be allowed to pre-pay the loan. There are prepayment charges applicable as well. Usually, the bank charges 1% to 4% of the loan amount as prepayment charges. Make sure you confirm all the charges applicable to prepayment before taking out the loan.

    16. How to get a car loan?
    17. You can apply for a car loan online through the bank’s website or through a third party comparison portal in no time. Later, the baking executive will get in touch with you to process the loan depending on your eligibility.

    18. What is the loan amount that is sanctioned?
    19. Most banks offer up to 90% of your car’s ex-showroom price. Some banks even finance up to 100% of the vehicle’s ex-showroom price.

    20. What are the documents required for a car loan application?
    21. You would be asked by your lender to submit the following documents:

      • A properly filled application form
      • Proof of identity
      • Address proof
      • Income proof
  • What are the different types of interest rates offered by banks?

    Just like a home loan, you can avail either fixed rate of interest or floating rates of interest on your car loan.

  • Do banks offer loans for used cars?

    Banks also provide loans for pre-owned vehicles and the interest rates would be comparably higher than loans for new vehicles. Other factors such as repayment capacity, car value, loan tenure, etc. remain the same.

  • How to Beat Car Loan Interest Rates and Manage your Car Finances

    • How to transfer a car loan?

      Banks allow borrowers to transfer their existing car loan to a new lender for better an interest rate or loan tenure. Transferring a car loan from an existing lender to a new one is called balance transfer. Banks charge a balance transfer fee for such an allowance. So, before making a balance transfer, it is important to find out if it is worth it to transfer your car loan. Find out how to make a car loan balance transfer and how to find out if it is beneficial to you. Using an online car loan EMI calculator, you can find out if a balance transfer reduces or increases your interest savings. Balance transfer is allowed for almost all types of loans including car loans but not many borrowers take advantage of such an option. Here you can find out how to transfer your car loan to get the maximum benefits. Read More...

    • Top 5 Fastest Cars in India - 2018

      When it comes to cars, majority of the car enthusiasts believe that the faster the car, the better. The top speed of a car is one of the most significant aspects that an auto lover looks at while purchasing a car. Even though most of the Indian customers prefer an affordable car with the best-in-class performance and features, the continued rise of the disposable income has led many people to buy high-end cars that can attain top speeds in a matter of seconds. In order to cater to this increasing demand for high-speed cars, auto manufacturers are also pushing their limits by inventing new technologies and launching new products every now and then to beat the previous benchmark for speed and surpass their competition in terms of performance and handling. If you are one of those people who give priority to the speed aspect the most while buying a car then read further to learn about the 5 fastest cars that are going to make way to the Indian market in 2018. Read More...

    • Vehicle Registration Process

      Everyone who buys a car has to go through the inevitable and time-consuming process of getting their vehicle registered. As mandated by the Central Government of India, all vehicles running on the roads of the country must have a valid registration according to the Motor Vehicles Act, 1988. However, due to the complex process of vehicle registration, many a car buyers often ask their car dealers or an agent to complete this work for them for a predetermined price. While opting for either of these options might save you some time, the dealers and agents usually charge a hefty amount of money for this service. By arming yourself with the knowledge of the vehicle registration process, you will not only be able to navigate the system with ease, but will also able to save money on an unnecessary expenditure. Learn about the steps you should follow along with the documents that you have to carry to the Regional Transport Office (RTO) in order to get your car registered. Read More...

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    • SBI Car Loan
      "Excellent"
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    • HDFC Bank Car Loan
      "Its Excellent"
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      "Good service"
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      "Very Good Service"
      0.5 4.0/5 "Great!"
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    • HDFC Bank Car Loan
      "Average Loan Service"
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      "Average service"
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      "Good service"
      0.5 4.0/5 "Great!"
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    • HDFC Bank Car Loan
      "Nice offer and nice loan"
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    • HDFC Bank Car Loan
      "Looking for less interest rate"
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    • ICICI Bank Car Loan
      "Excellent service"
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      "Excellent service"
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    • HDFC Bank Car Loan
      "Good loan experience with HDFC"
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