Union Bank Car Loan Interest Rates

6 June 2019 – RBI reduces repo rate to 5.75% by 25 bps

Union Bank Car Loan Interest rate for new car loans is 9.05% and for used car loans is 12.05%. For borrowers who are BSNL customers, the interest rates for new car loans are 8.65% and 8.90% and for used car loans is 11.15%. The interest is applied on the loan according to the reducing balance method at monthly rests.

The interest rate on your Union Bank Car Loan will be fixed after considering factors such as your income, loan tenure, credit score, down payment, and so on.

Union Bank Car Loan

Factors affecting Union Bank of India Car Loan Interest Rates

Some of the significant factors that can affect Union Bank of India car loans have been explained below. Banks might sanction or reject applications based on these factors:

• Loan Tenure: Lenders might offer low interest rates for car loans with shorter loan tenures. If the borrower makes a big lump-sum down payment, the loan amount will be lower, thereby shortening the loan tenure. Shorter loan tenures ensure that customers are able to save on monthly installments through the tenure and they do not have to bear the burden of paying high interest charges for a long period.
• Down Payment: The down payment made by a customer also defines the interest rate that the bank will be offering for a car loan. The higher the down payment amount, the lower the interest rate and vice versa. Customers should always pay a good lump sum before they start their car loan. There are dual benefits attached to this, the first being that the interest rate is lowered and second being that the monthly installment amount also comes down considerably.
• Income-to-Debt Ratio: The income-to-debt ratio refers to the debts of a borrower divided by his or her income earned on an annual basis. Banks consider this to be a major criterion when they sanction a car loan. If the income-to-debt ratio is good for an applicant, then the lender will give better interest rates.
• Market Fluctuations: The interest rate can vary based on market fluctuations. For example, if the Reserve Bank of India lowers its repo rate, then lending institutions might offer relatively lower interest rates. This would benefit the customers and it would be an ideal time to avail a car loan. Inflation rate also contributes to the increase and decrease of a car loan interest rate.
• Credit score: Prospective borrowers must always keep in mind that their CIBIL scores play an integral part in determining the interest rate for their car loans. All applicants should have regular payment cycles and should not be overburdened by liabilities. Holding a good score typically ensures that the bank gives the lowest interest rates. Banks generally increase the interest rate significantly for customers with a low credit score.

FAQs

1. Are the Union Bank Car Loan interest rates fixed or floating rates?

Union Bank charges floating interest rates for car loans.

2. I am interested in buying a pre-owned car that is 2 years old. Can I avail a car loan from Union Bank to buy this car?

Yes, Union Bank provides loans to buy used cars that are not older than 3 years.

3. Who is eligible to apply for Union Miles - Special Scheme for BSNL Employees?

This loan can be availed only by a permanent employee working at BSNL or an employee who is on a permanent deputation from Department of Telecom (DOT) to BSNL with a salary account at Union Bank of India and with a regular income flow. It can be taken by an individual singly or along with their spouse.

4. What is the margin for Union Bank Car Loan schemes?

Under Union Miles Car Loan scheme, the margin is 15% of on-road price for a new car loan and 40% of the used car’s valuation cost for a used car loan. Under Union Miles - Special Scheme for BSNL Employees, the margin is 15% of on-road price for a new car loan and 33% of the used car’s valuation cost for a used car loan.

5. Do I need to provide a guarantee to apply for a Union Bank Car Loan?

Yes, the bank requires a guarantee from the spouse of the borrower. If the applicant is unmarried, then a third party can give the guarantee. If the applicant is an NRI, 1 or 2 local residents have to provide a guarantee. If the applicant is a company, then a director or promoter has to give a guarantee.

6. Do I need to furnish a security while applying for a Union Bank Car Loan?

Yes, the security will be the hypothecation of the car that is bought with the loan from the bank. One will also have to give the bank’s lien to the Road Transport authorities.