Headquartered in Kolkata, UCO Bank was established in 1943 as a commercial bank under the Government of India. Currently, the UCO Board of Directors has representation from the Reserve Bank of India and the Government of India, along with prominent businessmen and economists. UCO Bank has a widespread reach with 45 Zonal offices across the country and a network of over 2500 computerised branches servicing customers with specialized solutions in India and abroad. With a dedicated team of professionals and far-sighted vision, UCO Bank has established its authority in various financial sectors of the economy inclusive of Trade and Commerce, Agriculture, Industry, Infrastructure and Services. UCO Bank also participates in various green initiatives, contributing towards the protection of our environment. Aiming to cater to its clientele with world-class products and exceptional customer service, UCO Bank’s wide retail portfolio consists of deposits, loans, advances and card services.
The UCO Car scheme targets customers who want to avail affordable auto financing for their new cars. UCO Bank finances up to 85% of the on-road price and offers car loans at a competitive interest rate. Customers can enjoy the option of making flexible repayments with lower monthly installments. UCO Bank also provides the “UCO Rin Jeevan Suraksha” insurance plan to cover the cost of the car loan, in case of accidental or natural death of the borrower. The bank charges a low processing fee of 1% for car loans and also provides a 100% fee waiver on the same. UCO Bank does not impose any maximum age limit for borrowers, when the avail a UCO Bank car loan.
Salaried employees, self-employed professionals, agriculturists, businessmen, ex-staff of UCO Bank, business firms, pensioners and Non-resident Indians are eligible to avail a UCO Bank car loan. The interest rate for a UCO Bank car loan is decided depending on the base rate of the bank and currently is 10.20%. UCO Bank offers this as a floating interest rate, which will vary according to the revision in the base rate. The interest rate is calculated on a daily reducing balance basis on the outstanding loan amount.
|New Car Interest Rates - FLOATING|
|Loan Tenure of up to 7 years||Interest Rate = 10.20%|
|Loan Processing Charges||1% of the loan amount / Maximum of Rs 1500|
|Loan Tenure||Maximum Tenure - 84 Months|
|Quantum of Loan||Up to 85% of the on-road price. The road tax and insurance is included here. No cap on the maximum limit.|
|Insurance||Life Insurance for the borrower - UCO Rin Jeevan Suraksha|
Borrowers can choose to repay back a UCO Bank car loan using an EMI or an equated monthly installment. An equated monthly installment is the total of the principal amount taken by the borrower and the interest rate charged by UCO Bank. The repayment for the car loan will be done over the selected loan tenure. Borrowers have to repay a certain amount every month and initially the monthly installment will consist majorly of the interest and will only carry a small portion of the principal amount. As the loan term advances, the interest amount will sufficiently reduce, with the principal amount increasing towards the end of the loan tenure. Loan repayments via monthly installments will work out to be cost-effective for a borrower in the long term.
The EMI for a UCO 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. UCO Bank charges a floating interest rate of 10.20% for all types of applicants. This is calculated depending on the base rate of the bank.
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 10.20% 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, 04, 720, out of which the interest will be around Rs. 4720.
In the following example, for a car loan amount of Rs. 4,00,000 to be repaid in 60 months at an interest rate of 10.20% from UCO Bank (Calculations based on EMIs paid in advance):
|Year||EMI Amount||Interest Amount||Principal Amount||Balance Due|
|2015||Rs. 25,399||Rs. 6,612||Rs. 18,786||Rs. 3,81,214|
|2016||Rs. 1,01,595||Rs. 35,867||Rs. 65,728||Rs. 3,15,486|
|2017||Rs. 1,01,595||Rs. 28,841||Rs. 72,755||Rs. 2,42,731|
|2018||Rs. 1,01,595||Rs. 21,063||Rs. 80,533||Rs. 1,62,198|
|2019||Rs. 1,01,595||Rs. 12,453||Rs. 89,142||Rs. 73,057|
|2020||Rs. 76,196||Rs. 3,140||Rs. 73,057||Rs. 0|
The total interest to be paid towards a UCO Bank Car Loan for an amount of Rs. 4, 00,000 would be Rs. 107976.
There are multiple factors affecting the interest rate given to car loan customers by UCO Bank. Some of the common factors playing a key role have been listed below -
Market Fluctuations - UCO Bank offers car loans at floating interest rates which change according to market fluctuations. Depending on the inflation rate, interest rates might go up or down, with the bank revising as per the changes. If the inflation is low, then the interest rates get lowered and vice versa. Borrowers must be financially prepared for this when they avail a car loan and must plan as required.
Car Model - Banks sometimes give different interest rates for different car models. The bank looks at the resale value and the popularity of the car model when it offers car loans at a particular interest rate. In most cases, while availing a car loan hypothecation of the new vehicle is required. If the borrower is unable to repay the loan, then since the car is kept as security, the bank might seize the vehicle and sell it to get back the loan amount. Every time a borrower opts for a car loan, the car model and repayment capacity should always be kept in mind to avoid unnecessary complications.
Down Payment - Banks look into the down payment amount done by a prospective borrower, when a car loan is availed. Though the down payment amount can be decided by the borrower according to the financial situation, banks always prefer individuals who make higher down payments. Mostly this ensures that banks offer the best interest rates to borrowers. With the interest rate being lower, this reflects on the monthly installment as well, which in turns becomes significantly less.
Income - Banks generally approve car loans for customers who meet a certain income criteria. UCO Bank requires that depending on the type of applicant, the necessary income criteria has to be met. The borrower’s income is generally given weightage because the loan has to be conveniently repaid without any arrears and disruptions. The borrower should be able to sustain the new car loan along with other debts and liabilities, with the current income shown. Depending on the income factor, banks might offer a better interest rate for borrowers in general.
CIBIL score is a key factor when it comes to car loan interest rates. The score held by an individual plays a major role in determining the interest rate offered by a lender for a new car loan. Prospective borrowers should always carry a good score regardless of their income and other outstanding liabilities. A good score ensures that the customer gets the best deals with regards to interest rates. Low credit score reflects poorly on the individual’s financial capabilities and money management abilities. In this scenario, banks might not give an attractive rate and might even increase the interest rates.