Do your research and get rates from more than one lender before taking a car loan. Since most of the commercial banks provide car loans to purchase a new car. While car loans make your purchase of a car affordable they come at some cost like processing fee and interest. These costs vary from bank to bank.
As New car models regularly hit the Indian market and it is tempting to buy a new car, be it an upgrade, a first car or another car for the family. Whatever be the reason, a car loan makes the purchase easier. ost of the commercial banks provides car loans to purchase a new car. While car loans make your purchase of a car affordable they come at some cost like processing fee and interest. These costs vary from bank to bank. Typically car loans are issued for a tenure of up to 5 years but some lenders like State Bank of India and Punjab National Bank issue car loans for up to 7 years. A longer-term car loan although reduces your EMI your overall cost of the loan goes up due to higher interest.
Car loans are usually of 3-5 years but some lenders may offer loans for up to 7 years too. A loan for longer may mean smaller equated monthly installments (EMIs), which makes the car seem more affordable, but overall, you pay more as interest. Don’t forget that a car is a depreciating asset, so taking a bigger loan may not be the best thing to do. But if you take a car loan for a short duration, the EMIs will be heavy and non-payment will mean a blot on your credit report. Try to strike a balance.
The condition of the loan amount would be different for the different lenders. for the full ex-showroom price of the car, while others may offer a loan up to 80%. In the latter case, you will have to pay the remaining amount yourself.
But interest rate and tenure are not the only two factors to consider. Also, take a look at the processing fee and some other charges such as for prepayment or documentation. Look out for special or festival offers.
State Bank of India
It offers the lowest interest rate on car loans. Also, SBI finances up to 90% of the on-road price of the car. Interest rate on SBI car loans starts from 8.3% and goes up to 12% depending on the earning, credit profile of the customer. Recently, SBI has reduced its external benchmark-linked loan rate by 25 basis points.
Bank of Baroda
You can get 90% of the on-road price of a new car as a loan from Bank of Baroda. Currently, the bank is charging a flat processing fee of Rs 500 plus GST. Interest rate on Bank of Baroda car loan starts from 8.65%.
Punjab National Bank
This bank finances up to 85% of the on-road price of the car as a loan. The maximum loan tenure is seven years. Interest rate on PNB car loan starts from 8.55%. The bank charges a processing fee of Rs 1,000 plus GST for car loans up to Rs 6 lakh. For car loans of more than Rs 6 lakh, the bank charges a fee of Rs 1,500 plus GST.