Oriental Bank of Commerce (OBC) Car Loan Interest Rates

Factors affecting Oriental Bank of Commerce Car Loan Interest Rates

There are many different factors that have an impact on the car loan interest rates decided by Oriental Bank of Commerce. Some of the most important factors are given below -

1. Income - The minimum income required is a criterion set by most banks in order to decide the suitability of a customer availing a loan. The minimum amount is decided based on the occupation of the customer such as if he/she is salaried or self-employed or if he/she is a non-resident Indian, etc. Based on the income, collaterals that are required also vary. Sometimes having a co-applicant may also help.
2. Loan repayment tenure - Generally, it is believed that longer tenures are suitable and preferred as the EMI that is paid each month will be lesser, however customers may end up paying a lot more interest. Apart from this, longer tenures also signify more risk to the bank as there is a higher chance of loan payments getting hampered or interrupted due to unforeseen circumstances like accidents and such or even inflation. Therefore, higher rates of interest may be charged on longer tenures, which is why a shorter tenure is advisable.
3. CIBIL Scores - Credit scores and the resultant CIBIL score are taken into account by banks. These credit scores are maintained by the Credit Information Bureau of India Limited. Having good credit scores is akin to a reassurance to banks that the customer can repay loans without much hassle. Therefore, maintaining a good CIBIL score is important. In addition to this, having good CIBIL scores may also result in the bank providing better interest rates.
4. Relationship with the lender - A prior relationship with the bank is another benefit that can be availed by borrowers as the process of procuring loans becomes a lot simpler and is more convenient. Customers who already have a working relationship with the bank can also avail certain concessions on their interest rates.
5. Down Payment - Down payment is mandated by certain banks while availing a loan. The higher the amount provided as down payment, the lower is the interest rate charged on the loan as the amount to be repaid to the bank is less. A higher down payment is seen as less risky by the bank while providing loans and is therefore advised.
6. Car model - Cars are depreciating assets, as in their value decreases over time and this is seen more clearly in some models as compared to others. Also, certain cars come with additional features that make them all the more expensive. These factors may result in the bank charging additional interest rates as the risk for the bank increases. Banks need assurance that the customer will repay the availed loan with the applicable interest rate. Hence, the type of car they are financing plays a role in the interest rate that is charged.

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