Overview About Central Bank of India Car Loan

“Cent Vehicle” auto loan scheme is offered by Central Bank, one of India’s leading public sector banks. Central Bank was founded in 1911 and is headquartered at Mumbai, India. The Bank currently has a strong presence in around 29 States and 6 Union Territories with over 4700 branch network across India, with 4 Extension Counters and 29 satellite offices. This car loan scheme can be used for the purpose of purchasing new or used vehicles, for personal use only.

Central Bank of India Car Loan Interest Rates

Central Bank of India Car Loan Interest Rates are affordable and along with flexible repayment options, this product is highly desirable compared to car loans offered by other banks. It “Cent Vehicle” car loan scheme to suit the requirements of Self-employed individuals, Salaried employees, Independent Entrepreneurs, agriculturists, NRIs, Companies, firms etc. who have a stable source of income. Central Bank of India Car Loan Interest Rate 2015 can be either fixed or floating.

Central Bank of India Car Loan Interest Rate 2015

How to Calculate Interest Rate on my Central Bank of India Car Loan

You can repay your car loan amount within the chosen loan tenure through Equated Monthly Installments or EMIs. This, basically is the amount that is to be paid back to Central Bank of India after availing the car loan and includes the principal amount as well as the interest amount. There will be an increase in the principal amount repaid and a reduction in the amount of interest that is paid out, as the loan tenure progresses.

The formula for calculating the EMI on a car loan is -

EMI (E) = [P x r x (1+r) ^n]/ [(1+r) ^n-1]

In this formula,

P = the loan amount or principal,

R = interest rate per month [for an annual interest rate of 10.1%, the rate of interest will be 10.1/ (12 x 100)],

N = the number of monthly instalments made during the tenure, i.e., no. of years or months taken for the repayment of loan.

For an amount of Rs. 20, 00,000 at an interest rate of 10.10% with a loan tenure of 4 years, an estimate of the total interest to be paid-out would be Rs. 4, 39,421. Therefore the total amount repaid would be Rs. 24,39,421.

In the following illustration, for a car loan amount of Rs. 14,00,000 to be repaid in 3 years at an interest rate of 10.1% from Central Bank of India (Calculations based on EMIs paid in advance):

EMI per Month from Oct 2015:

EMI per year for 3 years (starting from October 2015 - September 2018):

Total interest amount to be paid for a Central Bank Car Loan amount of Rs. 14,00,000 for 3 years would be Rs. 2,28,634. Therefore, the total payment made by the end of the tenure is Rs.16,28,634. The principal amount that is paid back in each EMI increases with the tenure and the interest rate paid out in the EMI decreases until the loan is repaid completely.

Factors Affecting Central Bank of India Car Loan Interest Rates

The following factors affect Central Bank of India car loan interest rate:

• Co-Obligor- Having a guarantor back up your loan application and vouch for your creditworthiness increases your chances of having a better car loan package at lower interest rates.
• Tenure of Loan - the loan tenure that you choose for your auto loan also has a great impact on the interest rates levied on it. If the payback period is longer, the interest rate will be higher and shorter the loan tenure higher the chances of getting a lower interest rate on your car loan. Generally, in order to reduce the burden on a higher EMI, borrowers prefer to avail a longer tenure. However, this actually does not work in your favor since longer tenures means higher rate of interest rate and thus higher loan expenses.
• Debt-to-Income Ratio - If your debt-to-income ratio is in a healthy balance then your chances of claiming an attractive rate of interest is higher, since the Bank will be assured that the borrower has a good repayment capacity. Banks are willing to negotiate a lower rate of interest on the loan amount to a creditworthy applicant since there will be minimal risk of defaulting on the loan.
• Down payment - The amount of money you pay as down payment towards the value of the car, has a great impact on the borrower's car loan interest rate. Down payment is inversely proportional to interest rate, i.e., higher the down payment the lower is your interest rate on the car loan.
• CIBIL Scores - Banks analyze an individual’s credit history through his/her credit score. CIBIL score is one of the most popular credit rating measures observed by banks. Credit Information Report is used to evaluate and generate an individual’s CIBIL Score. Individuals with higher CIBIL score is considered highly creditworthy and poses less risk. Therefore, his/her chances of getting the car loan sanctioned is very high. This will also influence the bank to lower the rate of interest that is applicable on the amount of loan you have applied for. A CIBIL score of 750 or above, is considered eligible for a car loan by most banks and NBFCs.
• Existing Customers - Those who are existing customers of Central Bank of India have a higher probability of getting a car loan quickly, at lower rates of interest. Central Bank of India offers various car loan benefits for established customers of the Bank and for those who have any deposits in Central Bank of India who apply for a car loan.

How CIBIL scores affect Central Bank of India Car Loan Interest Rates

The Credit Information Bureau of India Limited generates the CIBIL TransUnion Score based on an individual’s credit history such as loan payments, credit dues, credit accumulated, secured and unsecured loans, etc. The CIBIL Score is a 3 digit number ranging between values 300 to 900. Banks scrutinize an applicant’s CIBIL Score to ensure whether he/she is eligible or creditworthy. This is weighed against other factors before a decision is made regarding whether or not to sanction the loan amount to the applicant.

An individual with a higher CIBIL Score has greater probability of procuring car loans at an attractively lower rate of interest, since this places the applicant in a position of power to negotiate interest on car loan. Those who have a low CIBIL score have a very limited chance of getting a car loan approved by Central Bank of India. If the loan amount is sanctioned, a higher interest rate might be levied on the same to balance the risk involved in lending out to borrowers with a low credit rating.

Key Points

• Car Loan that is sanctioned to an applicant includes the On-Road Price of the car consisting of Invoice value + Registration Fee + Road Tax + Insurance.
• The Loan margin specified by the bank is at least 10% for a loan amount up to Rs.20 lakh, 20% for a loan amount which is above Rs.20 lakh and 25% for used vehicles.
• If the borrower chooses a fixed interest rate, then repayment of car loan has to be made within 36 months.
• Current Base Rate is 9.70%