If you really think about it, it's easier getting a loan for a car than a loan for bus fare!
  • Car Loan BYTES FROM OUR KITCHEN

    Federal Bank Car Loan Interest Rates 27 May 2019

    Federal Bank Car loans are easy to procure and are can be completed with hassle-free repayments. These loans are available for a variety of cars with a flexible loan repayment tenure of up to 84 months. Customers can procure car loans based on their occupation and subsequent income. Here are some of the key features of the Federal Bank car loan:

    Particulars Rates
    Interest Rate 9.20% p.a.
    Tenure Up to 84 months
    Pre-closure charges Nil
    Quantum of loan Up to 100% of the ex-showroom price

    Headquartered in Kochi, Kerala, Federal Bank provides customers with affordable loans that are easy to avail. With low interest rates and guaranteed transparency, Federal Bank offers loans for those desiring a car but are unable to pay for it with a lump sum amount. Customers can avail loans at some of the best interest rates available in the market. Loans are available for a variety of cars and these loans can be paid back in easy instalments

    How do you Calculate Interest Rate for a Federal Bank Car Loan?

    Customers after procuring a car loan from Federal Bank can repay the loan in easy installments known as EMIs or Equated Monthly Installments. Most cannot afford to repay the entire amount in a lump sum payment and this is where EMIs come into the picture. EMIs consist of the principal amount as well as the interest amount. This interest amount is based on the rate of interest determined by the bank. As the tenure to repay the loan gradually ends, the principal portion increases with a reduction in the amount of interest. Customers can also calculate the amount of EMI that is to be paid by using a simple formula.

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

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

    Where E is the Monthly EMI, P is the principal amount, r is the rate of interest per month, n is the number of years.

    For an amount of Rs.1 lakh at an interest rate of 9.20% and a loan tenure of 1 year, the total amount to be paid would tentatively be Rs.1,04,254 with the EMI being Rs.8,688.

    Illustrated below is the amortization table for a car loan of Rs.8 lakh for a period of 3 years at an interest rate of 9.20% from Federal Bank (starting from February 2019).

    Year Principal Interest Total Payment Balance
    2019 Rs.2,25,955 Rs.52,567 Rs.2,78,522 Rs.5,74,045
    2020 Rs.2,61,891 Rs.41,952 Rs.3,03,842 Rs.3,12,154
    2021 Rs.2,87,027 Rs.16,815 Rs.3,03,842 Rs.25,128
    2022 Rs.25,128 Rs.193 Rs.25,320 Rs.0

    The total amount that would be paid during the loan tenure would be Rs.9,11,527, with the interest on the loan amounting to Rs.1,11,527, and the monthly EMIs amounting to Rs.25,320.

    Factors Affecting Federal Bank Car Loan Interest Rates

    Federal Bank Car Loan interest rates are dependent on a number of factors which in turn decides the loan amount that is given and the EMI amount. Some of these factors include -

    • Down Payment - Higher the down payment provided by the customer, lower the amount to be availed as a loan therefore a lower rate of interest is charged by the bank. A smaller down payment increases the risk of loan repayment hence there is a lesser chance of receiving good interest rates from the bank.
    • Income - Banks mandate a certain minimum income requirement when it comes to providing loans. If a person earns a lot more than the minimum requirement, he/she stands a high chance of availing loans with a good rate of interest as the risk of default is minimal here. The minimum income amount required by banks varies based on the type of employment of the applicant. Salaried professionals get a different interest rate compared to self-employed personnel.
    • Loan Tenure - Commonly, customers opt for longer tenures so that the EMI amount to be paid each month is less. However, they will end up paying a lot more in terms of the interest rate. Also banks consider longer tenures to be financially risky and may charge may also charge a higher interest rate.This is the main reason why shorter tenures are advised.
    • Prior relationship with the bank - Federal Bank provide loans to those who are already customers or have an account with the bank, more easily and at better rates.
    • Car model and make - Cars are a depreciating asset hence in the event that loans cannot be repaid and they have to be seized and sold, they need to fetch a good value. Expensive or high-end cars with additional features may invite higher interest rates.

    How does CIBIL Score affect Federal Car Loan Interest Rates 2019

    Banks and financial institutions prefer to provide loans to those who they believe will repay loans on time with the due interest amount. One of the important methods of deciding a person’s eligibility to procure a car loan is the CIBIL TransUnion Score provided by CIBIL or Credit Information Bureau India Limited. CIBIL summarizes and provides information regarding a customer’s credit history, payments, loans availed, minimum balance maintained and so on. This score consists of a 3 digit number between 300 and 900. Scores above 750 are considered positive by lenders and creditors. Therefore, customers with CIBIL scores above 750 stand a higher chance of procuring loans of their choice at a good interest rate as compared to those with lower scores who stand to procure loans with higher interest rates.

    FAQ’s about Federal Car Loan Interest Rates

    • What are the documents required to avail a car loan from Federal Bank?

      The documents required are as follows -

      ~ Address and Identity proof of the borrower

      ~ Passport size photographs

      ~Proof of business/employment

      ~ Indicative Income documents

      Certain other documents are required on the basis of the applicant’s occupation -

      For salaried individuals, in addition to the above, 3 months’ salary slip, ITR/Form 16 for 2 years and Bank statement for 6 months is required.

      Customers who are self employed are required to provide their P&L statement, Balance Sheet and tax paid challans.

    • What is the minimum income of the individual required in order to procure a car loan from Federal bank?

      Minimum monthly income after meeting all monthly EMI related commitments including the proposed one should not be less than Rs.20,000. Applicants can also meet this requirement by clubbing in the income of their spouse.

    • How can an application for a Federal Bank car loan be made?

      Individuals and corporates can apply for a Federal Bank car loan by visiting the Federal Bank website and applying online by providing a few basic details.

    • Is there a penalty charged on late repayment?

      In case the repayment has not been made for over 30 days, then 2% of the overdue amount per month will be charged as penalty.

    • Is there an additional fee charged for procuring a CIBIL report?

      No, there are no additional fees charged.

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