State Bank of Travancore is a public sector bank in India which is a subsidiary of the State Bank Group. It was incorporated in 1945 and through the State Bank of Travancore subsidiary Banks Act of 1959 it became a part of State Bank Group. The Bank is headquartered in Thiruvananthapuram, Kerala, India.
The Bank offers attractive car loan options to prospective borrowers who wish to purchase new cars, SUVs or MUVs. This car loan scheme offered by SBT is a highly sought after car loan choice because of its features such as: higher loan tenure, faster processing, lower interest rates, and so on. You can apply for a car loan individually or jointly and the purchased vehicle can be registered in any one of the borrower's’ name.
State Bank of Travancore offers highly affordable interest rates on auto loans with flexibility on repayment options. The interest rate is applicable on the principal amount on the basis of monthly reducing balance.
|Interest Rate||For a loan amount up to Rs 10 lakhs = 10.70 % (Base Rate + 0.75%) For a loan amount of Rs 10 lakh or more = 10.45 % (Base Rate + 0.50%)|
|Maximum Loan Amount||Loan amount offered is 4 times of Net Annual Income or 48 times the net monthly income for salaried individuals Loan amount offered is 4 times the Net Profit or Gross Taxable income for other customers.|
|Minimum & Maximum Car Loan Tenure||Minimum Tenure - 12 months Maximum Tenure - 60 Months (5 years)|
|Processing Fees/Charge||No charges on loan amounts up to Rs. 25, 000 For loan amount ranging from Rs. 25,000 - Rs. 2 Lakhs the processing charge is Rs. 500. For a loan amount above Rs. 2 Lacs, processing charges are 0.50% of the loan sanctioned + Service tax, capped at a maximum amount of Rs. 10,000.|
|EMI per Lakh (for a 5 year loan tenure at 9.85% interest)||Rs. 1,652*|
*Estimated value of EMI, when paid in advance.
EMI on car loans ensure easy and quick repayment of loan in a systematic and efficient manner, within the specified loan tenure. In order to better understand how your car loan EMI is calculated, you can use the following formula:
EMI (E) = [P x r x (1+r)^n]/[(1+r)^n-1]
In this formula, the value “E” stands for EMI, “P” stands for the principal amount of the loan, “R” stands for the rate of interest and “n” stands for the loan tenure. “R” is the rate of interest applicable per month. Therefore, in order to get the monthly interest rate (in percentage), the formula used on the annual interest rate is 10.45/ (12 x 100).
For example: If you take a car loan for Rs. 8,00,000 at an interest rate of 10.45% with a loan tenure of 5 years, an estimate of the total interest payable would be Rs. 2,30,519/-, and the total payment made by you at the end of the loan term will be Rs.10,30,519.
In the following exemplification, we can get an idea of how EMI is calculated for a loan amount of Rs. 6 lakhs for a loan term of 3 years at an interest rate of 10.45%. EMI per month is calculated from Oct 2016 to Sept 2018.
|EMI||Principal||Interest Amount||Total Payment (Principal + Interest)||Balance Due|
|Oct 2016||Rs. 14,262||Rs. 5,225||Rs. 19,487||Rs. 5,85,738|
|Nov 2016||Rs. 14,387||Rs. 5,101||Rs. 19,487||Rs. 5,71,351|
|Dec 2016||Rs. 14,512||Rs. 4,976||Rs. 19,487||Rs. 5,56,839|
|Year||Principal||Interest Amount||Total Payment||Balance Due|
|2015||Rs. 43,161||Rs. 15,301||Rs. 58,462||Rs. 5,56,839|
|2016||Rs. 1,84,321||Rs. 49,527||Rs. 2,33,848||Rs. 3,72,519|
|2017||Rs. 2,04,532||Rs. 29,316||Rs. 2,33,848||Rs. 1,67,987|
|2018||Rs. 1,67,987||Rs. 7,399||Rs. 1,75,386||Rs. 0|
In this scenario, loan EMI per month would be around Rs. 19,487 and the Total Interest Payable would be Rs. 1,01,544. Therefore, you will have to pay Rs. 7,01,544 as total payment towards the loan, by the end of the loan tenure.
Interest rate stipulated by the bank usually remains the same in most cases, but there are some factors that can influence the car loan interest rate offered by SBT. This could not just affect the loan amount offered to a borrower but also the amount of EMI to be paid per month. These in turn determines the amount that is given as a loan to the prospective customer, along with the EMI to be paid. Few of these factors are given below.
One of the first steps taken by leading Indian Banks like State Bank of Travancore for arriving at a decision regarding the creditworthiness of a prospective borrower is to check out his/her credit score that is provided by CIBIL. The CIBIL TransUnion Score is a 3 digit number that ranges between 300 to 900. An individual having a CIBIL Score of 700-750 and above is considered highly eligible for a loan, by most banks. The credit record of an applicant is reflected by his/her CIBIL score and this is an important factor that affects the interest rate levied on a car loan. Most NBFCs and banks and scrutinize the applicant’s CIBIL score while processing their loan applications and weigh this against other factors in order to come to a loan approval decision. Higher scores ensure greater probability of procuring car loans at an attractive interest rate. Higher CIBIL scores portrays a lower risk on loan defaults and thus, borrowers with a high CIBIL score can avail loans more easily compared to those with low CIBIL scores.