The rate of interest chargeable on State Bank of Patiala Car Loans are determined by the base rate + the floating interest rate.
|Type of vehicle||Loan tenure||Term loan||Overdraft|
|New car||1 - 3 years||10.25%||10.75%|
|3 - 7 years||10.40%||10.90%|
|Type of vehicle||Loan tenure||Base Rate||Floating interest||Effective Interest|
|Used cars||Up to 3 years||9.95%||6.50%||16.45%|
|3 - 7 years||9.95%||6.75%||16.70%|
Buying a car can be burdensome, but with the right car loan, it can be a much easier affair. Owning a car is a dream out of reach for many, but the State Bank of Patiala helps customers realize that dream. Customers can get a car loan at appealing rates of interest together with easy terms and conditions. Repaying the loan over tenures of up to 84 months also lowers the monthly financial stress. SBP also has a wide range of eligible customers who can avail of concessional interest rates on their car loans.
The State Bank of Patiala offers a concession on the interest rate for loans taken to buy new cars. Eligible customers can avail of 0.15% concession. Customers who can avail of the special concessionary interest rates are:
|Loan tenure||Concession on interest||Term loan||Overdraft|
|1 - 3 years||1.15%||10.10%||10.60%|
|3 - 7 years||1.15%||10.25%||10.75%|
|Type of Charge||Fee|
|Processing charges||0.51% of the principal amount subject to a minimum of Rs. 1020 and a maximum of Rs. 10200. SBP imposes Rs. 5,100 on Mercedes cars.|
|Processing charges concession rate||For online applicants, 0.50% concession is offered on the processing fees.|
|Prepayment charges||2% of the loan amount prepaid will be charged in the case of loan takeovers, or before half the loan tenure is completed, or prepayment made in the first year. No charges in case the loan is foreclosed to avail of a new loan from the bank.|
|Delayed payments||2% p.a. on the overdue amount for the default period if the delay exceeds 30 days.|
|Bounced cheque||Rs. 281 + Service tax. Customers are liable to penalties as deemed fit by the bank and also an enhanced interest rate.|
|Accident insurance||Free. Applicable to group personal accident insurance for cover in case of death only. Available to new car loan borrowers.|
|Vehicle insurance||Comprehensive insurance cover for at least 10% over the loan amount or market value, whichever is higher.|
It’s wise to calculate your EMI and interest on your loan before you apply for one. This way, you will know if you can afford the loan and whether the tenure and loan amount suit you. To get all the details of your SBP car loan, you can use the EMI and eligibility calculators available on BankBazaar.com. Follow these easy steps to use the calculator.
Alternatively, if you wish to calculate your State Bank of Patiala Car Loan EMI manually, you can use the formula below:
(Principal) X (Interest rate per month) X (1+Interest rate per month) to the power of loan tenure
[(1+Interest rate per month) to the power of loan tenure – 1]
The condensed formula would be:
E = P*r*[(1+r)^n/(1+r)^n-1)]
E = EMI
P = Principal amount
R = Rate of interest per month
N = Number of years
For example, you take a car loan sanctioned in October 2016 under the Term Loan scheme of State Bank of Patiala. Let’s assume your principal amount is Rs. 5 lakhs for a period of 5 years at the floating rate of interest of 10.40%. Your loan details will be:
EMI = Rs. 10,624
Interest payable = Rs. 1,37,411
Processing charges = Rs. 2,550
Total amount payable = Rs. 6,39,961
An amortization schedule gives you a complete table of each EMI you pay through the loan. Each EMI is then divided into the interest and principal components. The following amortization schedule depicts the annual breakdown. A full schedule will be available when you use the calculator on BankBazaar.com.
|Year||Principal Paid||Interest Paid||Total Payment||Outstanding loan balance|
|2015||Rs. 19,553||Rs. 12,339||Rs.31,872||Rs. 4,80,468|
|2016||Rs. 83,179||Rs. 44,302||Rs. 1,27,481||Rs. 3,97,288|
|2017||Rs. 91,891||Rs. 35,593||Rs. 1,27,484||Rs. 3,05,399|
|2018||Rs.1,01,513||Rs. 25,972||Rs. 1,27,485||Rs. 2,03,888|
|2019||Rs. 1,12,141||Rs. 15,341||Rs. 1,27,482||Rs. 91,747|
|2020||Rs. 91,748||Rs. 3,866||Rs. 95,614||Rs. 0|
CIBIL score - Your credit score will have an impact on your car loan interest rates. If you have a good score, you will be in a position to request for lower interest rates. This is simply because you have proved in the past that you are a good customer and will repay the loan on time. On the other hand, a low score presents a negative picture of your credibility. It could mean that you have defaulted on EMIs in the past and have not managed your credit well. Banks are wary of customers who have a bad credit record. Therefore they may increase their interest rates if they decide to lend you money.
Relationship with the bank - Your business dealings with the bank could have an effect on your car loan. If you hold a savings or current account with the bank, you are already an existing customer and banks have a record of the type of customer you are. A corporate salary account also crosses milestones of trust when it comes to taking loans. The average quarterly balance you maintain with the bank is also considered to determine loan approval. If you already have a home loan with SBP, you can get subsidized rates of interest.
Down Payment - Down payments are made upfront before you take the car home. So it’s a payment already made towards the ownership of the car. This means the banks will only have to recover the remainder amount from you. This could work well in your favour for reasonable interest rates. A smaller down payment means a larger recovery amount. Plus, in case you are unable to repay the loan, the banks have a larger amount to get back through the resale of the vehicle. This means the banks take on a heavier risk when they sanction your loan. Therefore, they could increase your interest rates.
Car segment - Your interest rates also depend on the car segment you choose. There’s a difference in the interest rates between sedans and hatchbacks, premium and regular cars, MUVs and SUVs. A loan from the State Bank of Patiala attracts a high processing fee on Mercedes cars. The car model you choose also has an impact on your interest rates. Some car models depreciate faster than others. If the bank has to sell and recover the loan amount in the event you are unable to clear the loan, the resale value of the car will factor into how much the bank can recover. So car models that retain their value for a longer time will fetch you better interest rates
Age of pre-owned cars - For pre-owned cars, the interest is generally much higher than new cars. Selling a pre-owned car will fetch you a much lesser price. So the age and working condition of the car are very important. The older the car, the lesser the market value. With the older cars, your interest rates could take a step up simply because the risk is more for banks.
CIBIL is the Credit Information Bureau of India Limited. The Bureau collates and maintains all the information submitted by banks regarding credit consumers. Banks will regularly report customers’ behaviour, spending patterns, over credit limit usage, repayment behaviour, defaults and so on. They will also report good behaviour such as timely repayments, full credit card clearances, spending rationally and so on. Your history directly translates to a credit score. This score comes in handy for the banks and the customers when it comes to loans, credit cards and any other kind of credit. Banks and financial institutions can be assured that you are a good customer if you have a high CIBIL score. They can put more trust in you to repay your EMIs on time. However, if you have a low CIBIL score, it means that your credibility is currently low. They might increase interest rates on your car loan because it’s a bigger risk.
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