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.
|Overnight MCLR||8.75% (p.a)|
|One Month MCLR||8.85% (p.a)|
|Three Months MCLR||9.0% (p.a)|
|Six Months MCLR||9.1% (p.a)|
|One Year MCLR||9.2% (p.a)|
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 installments.
Before we take a look at the interest rate for car loans, let’s take a look at the Marginal Cost of Funds Based Lending Rate (MCLR) for various retail loans offered by the Federal Bank:
The interest rate for new and used cars are given as follows:
|Loan scheme||Range of Spread over MCLR(% p.a)*|
|Loan for brand new car||8.65% to 9.20%|
|Loan for used cars||13.75%|
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. 1,00,000 at an interest rate of 12% with a loan tenure of 1 year, the total amount to be paid would tentatively be Rs.1,06,619 with the EMI being Rs.8,885.
Illustrated below is the amortization table for a car loan of Rs. 8,00,000 for a period of 3 years at an interest rate of 12% from Federal Bank (starting from August 2015).
|Year||Total Payment||Balance||Principal Portion||Interest Portion|
|2015||Rs. 78,925||Rs. 7,36,363||Rs. 63,637||Rs. 15,288|
|2016||Rs. 3,15,700||Rs. 4,96,096||Rs. 2,40,267||Rs. 75,434|
|2017||Rs. 3,15,700||Rs. 2,25,358||Rs. 2,70,738||Rs. 44,962|
|2018||Rs. 2,36,755||0||Rs. 2,25,358||Rs. 11,417|
The principal portion increases with the the loan repayment time period and the interest rate reduces until the loan is completely repaid.
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 -
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.
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.
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.
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.
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.
No, there are no additional fees charged.
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