J&K Bank is a leading private sector bank in Jammu & Kashmir, nominated by the RBI to provide affordable banking services in the state. J&K Bank was incorporated in 1938 and has been listed on the National Stock Exchange and the Bombay Stock Exchange. The bank provides an array of retail banking solutions inclusive of loans, insurance, mutual funds, investments products, cards, deposits, savings accounts and NRI banking services. J&K Bank strives to empower the society by providing innovative banking solutions, leveraging the latest technology for individual customers and small and medium enterprises. J&K Bank also has an established presence across India and offers niche products and solutions according to the geography it services.
J&K Bank provides automobile financing for vehicles bought only for private usage. Customers can take loans based on the ex-showroom prices of new cars, jeeps, vans, MUVs and SUVs. Borrowers can also opt for car loans on the on-road price of the new vehicle. The finance for the on-road price of the new vehicle will be provided if the customer chooses to self-fund the insurance premium. The interest rates offered for a J&K Bank car loan is very affordable, with the bank also charging a low processing fee of 0.5% of the loan amount or a minimum of Rs 500. Borrowers can choose to repay the J&K car loan with flexible payment options and choose from tenures ranging between 12 and 84 months. Individuals are expected to bring in a loan margin of around 10% to 15%, depending on their employment criteria or the type of account held with J&K Bank.
J&K Bank finances all types of private vehicle models at competitive interest rates. Individual customers like Government employees, Private organisation employees, Professionals, entrepreneurs, agriculturists, retired Government employees and proprietary firms are eligible to avail a J&K Bank Car loan. Customers can choose to take car loans either at floating interest rates or fixed interest rates. J&K Bank offers different interest rates for individual customers and corporate companies and firms. The bank also gives an additional concession of 0.25% on the interest rate for women borrowers for car loans.
|New Car Interest Rates - FIXED||New Car Interest Rates - FLOATING|
|Individuals||11.25%||Base Rate + 1.00%|
|Companies and Firms||11.75%||Base Rate + 1.50%|
|Loan Processing Charges||0.5% of the loan amount / Minimum of Rs 500|
|Loan Tenure||Minimum Tenure - 12 months Maximum Tenure - 84 Months|
|Quantum of Loan||For loans on ex-showroom prices : Individuals - 3 times their net annual income or 36 months’ net salary. Firms / Pensioners/ Contractors - 2 times their net annual income or 24 months’ net salary. Up to a maximum of Rs 50 lakhs.|
|Loan Margin||10% for Government Employees and Platinum / Gold Current Account holders. 15% for all other applicants.|
A borrower can easily repay a J&K Bank car loan through equated monthly installments or EMIs, taken according to their convenience. EMI is the total amount that has to be paid by the customer, every month to J&K Bank after availing a car loan. The EMI amount is a combination of the principal amount and the fixed or floating interest rate. When the loan starts, customers will have to pay higher portions of the monthly installment as interest charges, with a trivial portion dedicated to the principal amount. As the car loan tenure progresses, the principal amount to be repaid increases, with the interest rate amount sufficiently reduced.
The EMI for a J&K Bank car loan can be calculated as follows -
EMI (E) = [P x r x (1+r) ^n]/ [(1+r) ^n-1]
P = The Principal Loan Amount
R = The Interest rate charged per month. J&K Bank charges a fixed interest rate of up to 11.25% for individual customers and 11.75% for companies. Car loans are also offered as floating interest rates, which is calculated as the base rate plus 1% to 1.5%.
N = Number of monthly installments i.e. the number of years opted for the repayment of loan.
For a principal amount of Rs. 1, 00,000 given at an interest rate of 11.25% and a loan tenure of one year, an estimate of the total sum of EMIs that has to be paid by the borrower is Rs. 1, 05, 212, out of which the interest will be around Rs. 5212.
In the following example, for a car loan amount of Rs. 4,00,000 to be repaid in 48 months at an interest rate of 11.25% from J&K Bank (Calculations based on EMIs paid in advance):
|Year||EMI Amount||Interest Amount||Principal Amount||Balance Due|
|2015||Rs. 30,871||Rs. 7,245||Rs. 23,626||Rs. 3,76,374|
|2016||Rs. 1,23,484||Rs. 38,025||Rs. 85,460||Rs. 2,90,914|
|2017||Rs. 1,23,484||Rs. 27,899||Rs. 95,586||Rs. 1,95,328|
|2018||Rs. 1,23,484||Rs. 16,573||Rs. 1,06,911||Rs. 88,417|
|2019||Rs. 92,613||Rs. 4,196||Rs. 88,417||Rs. 0|
The total interest to be paid towards a J&K Bank Car Loan for an amount of Rs. 4, 00,000 would be Rs. 93938.
Interest rates for a J&K Bank car loan might be decided based on various factors and also on the customer’s profile. Some of the key factors which might affect the rates are as follows -
Debt-to-Income Ratio - Banks decide the interest rate also depending on the number of debts carried by the customer. The lender will also look into the previous debt repayments and card payments done by the applicant to zero in on an affordable interest rate. If the debt-to-income ratio is high, then the bank will mostly offer a higher interest rate to the customer.
Income - The income of an applicant plays a major role in determining the interest rate. The bank requires that applicants’ take home incomes should be sufficient to easily repay the loan. Having a steady income with the good financial planning always ensures that customers get the best interest rates on their car loans. Additionally, having a co-applicant also improves the income criteria, enabling the applicant to get lower interest rates.
Loan Tenure - The loan tenure opted by the borrower also helps determine the interest rate offered by the lending institution. Longer tenures require the customer to pay higher interest rates, which also increase the risk factor. A shorter loan tenure with smaller loan amounts also gets customers the best interest rates, as long as the down payment made by the applicant is quite high.
Down Payment - Individuals are always advised to make a higher down payment towards their car loans to make sure that the loan amount availed is also lesser. When the down payment amount is high, banks get the confidence that the applicant has planned his finances well and is capable to repaying the car loan comfortably. The interest rate offered will also be quite low, which will profit the customer at the end of the loan tenure.
CIBIL Score plays a very important role when applications are done by a customer for a car loan. It is always better to carry a clean credit history with a good score to ensure that car loans are processed and approved without any hassles. A low credit score does not reflect well for an applicant and the bank might either reject the application or might offer the car loan at higher interest rates. This will cost the customer more, than the actual planned amount. Every applicant should make sure that he presents a good credit score along with an acceptable amount of liabilities to get the best interest rate deals from lenders.