Base Rate of Union Bank of India - 9.65%
|New Car Interest Rates - FIXED|
|For all Applicants inclusive of BSNL employees||10.10%|
|Loan Processing Charges||0.50% of the loan amount or a Maximum of Rs 6000 inclusive of service tax.|
|Loan Tenure||Maximum Tenure - 84 Months|
|Quantum of Loan||Up to Rs 75 lakhs|
|Foreclosure Charges||NIL - If loan is closed from own sources. 2% of the balance for the past 12 month, if funds are got from another bank or third party.|
|Security||Hypothecation of the vehicle. Bank’s lien to be noted in the RTO.|
|Loan Margin||15 % of on-road price|
|Guarantee||Guarantee from spouse is required. If unmarried, then third party guarantees is required|
Established in 1919 in Bombay, the Head Office branch, Union Bank of India carries the privilege of being inaugurated by the Father of the Nation, Mahatma Gandhi. Union Bank of India currently functions with over 4200 branches across India, with uninterrupted profits shown for the past 96 years. Union Bank of India believes in prudent management and plays a very important role in the development of the country, by contributing to the different sectors of the economy. The bank has a diverse array of products and has involvement in the following sectors - exports, agriculture, infrastructure, industries, trading etc. Union Bank uses the latest technology to provide state-of-the-art banking services with all its branches being computerised. The bank’s businesses are run using the Core Banking system installed to improve connectivity between its branches.
Union Miles is one of the best auto financing schemes available in the market, which is cost-effective and high on returns. Union Bank finances all models of cars and four-wheelers at attractive interest rates. Customers can choose to pay back with flexible loan tenures ranging up to Rs 75 lakhs. The processing fee charged by the bank is quite low, with no charge levied for pre-closure of car loans. Union Bank process a car loan application quickly and sanctions them within two working days, provided all the necessary documents have been submitted and the required eligibility criteria has been met. Hypothecation of the new vehicle is compulsory for all Union Bank car loan borrowers.
Union Bank of India offers car loan with fixed interest rates to customers in India. Depending on the type of applicant, Union Bank provides different interest rates. The interest is calculated on a monthly reducing balance basis by the bank. Any individual at the age of 18 and above with a valid driving license can avail a Union Bank car loan. Single or joint applications along with the spouse can be made for a car loan with Union Bank.
Union Bank customers can easily repay a car loan using equated monthly installments or EMIs. The principal amount and the interest rate constitute the EMI amount, which has to be paid back by the borrower on a monthly basis. In the beginning of the loan tenure, customers would be paying EMIs carrying more interest rate amounts than the actual principal. There is a variation in the EMI amount towards the later end of the tenure, with more principal being added and the interest charges being significantly lowered. The EMI for a Union Miles car loan can be repaid back using the following methods - a) ECS Debit facility, b) Standing Instructions from the Union Bank account to the loan amount, c) internet banking or d) Post-dated Cheques (PDCs).
The EMI for a Union Bank of India 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. Union Bank of India charges a fixed interest rate of 10.10% for all types of applicants. This is calculated depending on the base rate, which is currently 9.65%.
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 10.10% 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, 673, out of which the interest will be around Rs. 4673.
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 10.10% from Union Bank of India (Calculations based on EMIs paid in advance):
|Year||EMI Amount||Interest Amount||Principal Amount||Balance Due|
|2015||Rs. 25,342||Rs. 6,548||Rs. 18,794||Rs. 3,81,206|
|2016||Rs. 1,01,369||Rs. 35,508||Rs. 65,861||Rs. 3,15,345|
|2017||Rs. 1,01,369||Rs. 28,540||Rs. 72,829||Rs. 2,42,516|
|2018||Rs. 1,01,369||Rs. 20,834||Rs. 80,535||Rs. 1,61,980|
|2019||Rs. 1,01,369||Rs. 12,312||Rs. 89,057||Rs. 72,924|
|2020||Rs. 76,027||Rs. 3,103||Rs. 72,924||Rs. 0|
The total interest to be paid towards a Union Bank of India Car Loan for an amount of Rs. 4, 00,000 would be Rs. 106845.
Some of the important factors affecting Union Bank of India car loans have been explained below. Banks might sanction or reject applications based on these factors.
Down Payment - The down payment amount given 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 translates to the amount of debts that a borrower has, to the income earned on an annual basis. Banks consider this to be a major criteria 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.
Loan Tenure - Lending institutions might offer low interest rates for car loans with shorter loan tenures. Since the borrower has made a huge lump sum down payment, the procured 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 huge burden of paying extra interest charges.
Market Fluctuations - The interest rate might vary based on market fluctuations and changes too. 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.
Prospective borrowers must always keep in mind that their CIBIL scores play an integral part in determining the interest rate for their car loans. Any applicant should have regular payment cycles and should not be overburdened by liabilities. Holding a good score always ensures that the bank gives the lowest interest rates. Banks will mostly not consider giving low interest rates for customers presenting a bad score and might even increase the rate significantly. The car loan will cost the customer more, than the actual amount he intended to invest. Since the CIBIL score represents the customer’s financial profile, it is important that customers have a clean credit history and a high score with regular payments and lesser outstanding liabilities.
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