Overview About Tamilnad Mercantile Bank Car Loan
Initially known as the Nadar Bank, Tamilnad Mercantile Bank (TMB) was incorporated in 1921 in Tuticorin, Tamil Nadu, India. It was renamed as Tamilnad Mercantile Bank in 1962 and has its headquarters in Tuticorin. It currently has over 400 branches across India and focuses primarily on rural development.
The Bank has a wide portfolio of financial products and services, including various term deposits and loans. Home loans, Auto loans for two wheelers and four wheelers, personal loans, education loans, etc. are provided to customers at attractive rates of interest. Car loans offered by TMB can be availed in order to purchase new or used cars for both personal and professional use. Quick processing, higher loan quantum, simple documentation, lower interest rates make the TMB car loan scheme a highly sought after product.
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Tamilnad Mercantile Bank Car Loan Interest Rates 2017
Tamilnad Mercantile Bank offers attractive interest rate on its car loan scheme with highly flexible repayment option. This can be availed by individuals and legal entities like Corporations, Trusts, Partnership Firms and Hindu Undivided Families (HUF). The loan quantum offered by the bank is really high - it is up to Rs. 150 lakhs for purchase of new cars. Interest applicable on the loan is dependent on the loan tenure chosen by the borrower.
Tamilnad Mercantile Bank Car Loan Interest Rates 2017 Table
|Interest Rate (Annual)
- For loan tenure below 36 Months - 11.40% (BR + 1.00%).
- For a loan tenure above 36 months and up to 60 Months - 11.65% (BR + 1.25%).
- Current Base Rate (BR) - 10.40%
|Maximum Loan Amount
||Maximum loan amount offered to a borrower is Rs. 150 lakhs for purchase of a new car.
|Minimum & Maximum Car Loan Tenure
||Minimum Tenure - 12 months
Maximum Tenure - 60 Months ( 5 years)
||1% of the sanctioned loan amount.
|EMI per Lakh
||Rs. 2,207-* (for a 5 year loan tenure at 11.65 % interest)
* Estimated Value
How to calculate my Tamilnad Mercantile Bank Car Loan Interest Rates
One of the best features of availing a car loan is that you can repay the amount in easy installments to the bank. An Equated Monthly Installment (EMI) is the sum of the principal and the interest that has to be paid by the borrower on a monthly basis once the loan has been availed by him/her. This is also affected by the repayment tenure chosen by the borrower. After a specific period in the loan tenure, there will be a reduction in the amount of interest paid out by the borrower, and only the principal amount will be part of the monthly EMI. There is a basic formula used for this calculation, which is as follows:
EMI (E) = [P x r x (1+r) ^n]/ [(1+r) ^n-1]
P = The loan amount/ Principal
R = The rate of interest charged on the loan amount, per month. In order to get the monthly rate of interest, the formula used on the annual interest rate is 11.65/ (12 x 100). Tamilnad Mercantile Bank offers an interest rate depending on the loan tenure chosen by the borrower.
n = Number of monthly installments i.e. the number of years opted for the repayment of loan.
For example: If you take a car loan for Rs. 5,00,000 at an interest rate of 11.65% with a loan tenure of 5 years, the projection of EMI and interest payable would be as follows - EMI payable per month would be Rs.11,034/-, total interest that has to be paid will be Rs.1,62,040/-, and the total payment that you will have to make at the end of the loan tenure would be Rs.6,62,040.
In the following example, you will get a clear idea of break-up of EMI on a loan amount of Rs. 15 lakhs for a loan term of 3 years at an interest rate of 11.65%. EMI per month is calculated from Oct 2016 to Sept 2018.
The first three months the projection will be as follows:
||Total EMI Payment (Principal + Interest)
The following projection shows the total yearly EMI and repayment schedule for the loan term of 3 years, beginning from October 2015:
||Total EMI Payment
In this scenario, loan EMI per month would be around Rs. 49,571 and the Total Interest Payable would be Rs. 2,84,559. Therefore, the total payment that you will have to make by the end of the loan tenure is Rs. 17,84,559.
Factors Affecting Tamilnad Mercantile Bank Car Loan Interest Rates
- Base Rate Fluctuations - The applicable car loan interest rate in Tamilnad Mercantile Bank will vary with changes in the Base Rate, since the interest rate is closely interlinked to this factor. Market fluctuations, inflation, repo rate cuts by RBI, Bank’s arbitration, etc. can affect the Base Rate. Inflation leads to a rise in interest rates and borrowers have to be prepared for this situation when they avail a car loan.
- CIBIL Score - A high CIBIL Score is a major factor that could greatly influence the car loan interest rate applicable on your Tamilnad Mercantile Bank Car Loan. Once an application for car loan is submitted, the Bank will check the applicant’s credit history and CIBIL score. Even though there are other factors that affects a car loan application, its sanction and provision of an interest rate on the same, CIBIL Score is of primary importance. If the Bank decides to offer the loan to an applicant with an average credit report, then the interest rate applicable on the same might be higher than normal so as to negate the risk involved in doing so.
- Loan Tenure: The tenure of the car loan as chosen by the borrower is a very significant element that affects his/her car loan interest rate. If you opt for a car loan with a shorter repayment tenure, i.e, less than 36 months, TMB offers a lower interest rate on the loan. However, if you opt for a loan tenure higher than 36 months and lasting up to a maximum period of 60 months, then the interest rate applicable is 0.25% higher than normal. This is because a shorter loan tenure indicates lower risk in defaulting on the loan and quicker repayment of the same.
- Down payment or percentage of the loan margin paid by the customer for the car also greatly affects the interest rate offered on the loan by the Bank. The higher the down payment the greater is the probability of getting a favorable interest rate on your car loan. This is because this indicates the repayment capacity of the borrower and since the loan amount reduces to a great extent the Bank will be convinced to sanction the loan at a lower rate of interest.
- Age is also an important factor that plays an important role in increasing your chances of getting a lower car loan interest rate from the Tamilnad Mercantile Bank. If the applicant fall within the upper half of the age criteria set by the bank in order to be eligible for the car loan, and have other favorable factors in terms of loan amount and loan tenure, he/she can negotiate with the bank for a lower rate of interest. The reason behind this is that borrowers who are older are a high risk factor in terms of repayment capacity, income stability, etc. so several banks hesitate from providing a loan to them. Even if the loan is offered to this category of applicants the interest rate will be higher.
- Car Model - In some cases, the model of the car chosen by the borrower might affect the car loan interest rates offered by the bank. Almost all banks stipulate the mandatory hypothecation of the new vehicle as security in exchange of the credit borrowed, the car model will also be considered while making the decision on the interest rate to be offered to the borrower. The resale value of the car as well as its popularity are factors that are considered while weighing the car loan amount to be sanction and the interest rate to be levied on the same. This is because, in the unfortunate event that the borrower is defaulting on the loan, the bank might seize the car and sell it to retrieve the loan amount. In this scenario, the make and model of the car, its affordability, etc. plays an important role.
- Income: The borrower's income is another factor that is scrutinized thoroughly by the bank in order to arrive at a decision regarding car loan approval and for determining interest rate. The debt-to-income ratio of an applicant will project his/her creditworthiness and repayment capacity. Therefore, applicants who do not have sufficient income to cover his/her existing debt outflows will not get a car loan approval and even if they do, the interest rate on the same will be very high. The credit history of an individual clearly indicates his/her credit outflows and all the repayments due and this can be compared by the Bank against his/her annual income.
How CIBIL Score Affects Tamilnad Mercantile Bank Car Loan Interest Rates
Tamilnad Mercantile Bank thoroughly scrutinizes the debt-to-income ratio of an applicant, his/her credit history, etc. in order to arrive at a decision regarding sanction of a car loan. CIBIL Score is the primary component in this initial verification process and it determines whether an applicant gets a car loan approved at an affordable rate of interest. CIBIL Score represents the credit history of the applicant and shows his/her credit dues, repayment trends, defaulted payments if any, income earned, etc. This is used to better understand a customer’s repayment capacity, spending patterns, creditworthiness and so on in order to process the application further. If the applicant has a poor credit rating, then the bank will either reject the loan or offer the car loan at higher rate of interest. An applicant should review his/her credit history and make remedies for any outstanding credit so as to improve your CIBIL score and get a favorable loan decision and interest rate from the Bank.
Key Points to Note About Tamilnad Mercantile Bank Car Loan Interest Rates
- A high loan quantum is offered to customers by TMB on new cars and for used cars. The maximum amount of the loan provided is Rs.15 lakhs.
- A 15% loan margin is applicable on the ‘on road price’ of new cars. 30% loan margin is applicable on the value of a used car (purchase value or market value, whichever is the lowest).
Maximum loan tenure is 60 months, during which loan can be repaid in EMIs. EMI should not cross 40% if the applicant is a salaried individual and for others the Average Debt Service Coverage Ratio should be 1.50:1 or above.
- Prepayment charges applicable on the loan amount is 0.25%. However, this is applicable only if another bank takes over the existing car loan from the bank. If the car loan is repaid by the borrower from his own personal savings then prepayment charges will not be levied on the same.
- If the borrower defaults on the car loan repayment, then the Bank will levy a penalty interest rate of 2% on the outstanding loan amount, over and above the existing interest rate.