City Union Bank car loan is a product offered for the middle-class Indian population. Keeping this in mind, the bank offers a highly affordable car loan interest rate to its borrowers. The interest rate is applicable on the principal amount on the basis of monthly reducing balance.
|Maximum Loan Amount||Rs. 5,00,000|
|Minimum & Maximum Car Loan Tenure||Minimum Tenure - 12 months Maximum Tenure - 60 Months (5 years)|
|Processing Fees/Charge||1.25% of the loan amount or a minimum amount of Rs. 600, whichever is highest|
|Foreclosure/ Pre-payment Charges||2% of preclosure amount|
|EMI per Lakh (for 5 year loan tenure)||Rs. 2337*|
City Union Bank offers car loan to individuals as well as corporates for the purpose of purchase of new cars, under its “CUB Yoha Vahana” car loan scheme. A loan quantum of up to RS.5, 00,000/- is provided to the borrower, who earns more than Rs. 1.50 lakhs annually. City Union Bank was known as 'The Kumbakonam Bank Limited' at the time of its inception in 1904. In 1945, the Bank was included in the Schedule as per the Reserve Bank of India Act, 1934. The Bank assumed control over Common Wealth Bank Limited in 1957 and extended its network across the country.
With the flexibility of paying back your car loan in the form of Equated Monthly Installments(EMIs), customers can easily own a car without having to bear the brunt of a lumpsum expense. By paying nominal rates of interest for a tenure of your choice, you can get your dream car. When the loan tenure increases there would be an increase in the loan amount and a reduction in the rate of interest to paid.
If you wish to know how EMI on your car loan is calculated, here is the basic formula that is applicable:
EMI (E) = [P x r x (1+r)^n]/[(1+r)^n-1]
P stands for the principal or the loan quantum,
R is the rate of interest applicable per month [ Therefore, for an annual interest rate of 14.75%, the rate of interest will be 14.75/(12 x 100)],
N is the number of monthly installments made/ no. of months taken for car loan repayment.
For example: If you take a car loan for Rs. 3,00,000 at an interest rate of 14.75% with a loan tenure of two years, an estimate of the total interest payable would be Rs. 44,021, and the total payment made by you at the end of the tenure will amount up to Rs. 3,44,021.
In the following illustration, for a car loan amount of Rs. 5,00,000 to be repaid in 2 years at an interest rate of 14.75% from City Union Bank (Calculations based on EMIs paid in advance), the EMI per month from Oct 2016:
|EMI||Principal||Interest Amount||Total Payment||Balance Due|
|Oct 2016||Rs. 23,890||Rs. 0||Rs. 23,890||Rs. 4,76,110|
|Nov 2016||Rs. 18,038||Rs. 5,852||Rs. 23,890||Rs. 4,58,072|
|Dec 2016||Rs. 18,260||Rs. 5,630||Rs. 23,890||Rs. 4,39,812|
|Year||Principal||Interest Amount||Total Payment||Balance Due|
|2015||Rs. 60,188||Rs. 11,483||Rs. 71,671||Rs. 4,39,812|
|2016||Rs. 2,37,439||Rs. 49,245||Rs. 2,86,684||Rs. 2,02,373|
|2017||Rs. 2,02,373||Rs. 12,640||Rs. 2,15,013||Rs. 0|
Total interest amount to be paid for a City Union Bank Car Loan amount of Rs. 5,00,000 for 2 years would be Rs.73,368. Therefore, the total payment made by the end of the tenure is Rs.5,73,368. The interest rate decreases until the loan is repaid and the principal loan amount repayment increases with the tenure.
Although the interest rate stipulated by the bank remains the same in most cases, there are various factors that can influence a City Union Bank car loan interest rate. This could also affect the loan amount offered to a borrower as well as the amount of EMI to be paid per month. These in turn determines the amount that is given as a loan to the prospective customer, along with the EMI to be paid. Few of these factors are given below.
The CIBIL TransUnion Score is a 3 digit number which ranges from 300 up to 900 and this score reflects an individual's credit history. This is evaluated by banks in order to decide whether he/she is eligible for a loan or any other credit and what his/her repayment capacity is. A high CIBIL Score ensures that the applicant will get a positive response from the Bank with regards to his/her car loan application and also empowers the applicant to be in a position of power while negotiating for a lower rate of interest. Most banks and NBFCs conduct this initial check while processing their applicant’s creditworthiness for the loan. Higher scores ensure greater probability of procuring car loans at an attractive rate of interest. Those with higher CIBIL scores are also seen as a lower risk category and hence can avail loans more easily as compared to those with low CIBIL scores.
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