Interest rates on car loans are crucial in determining whether you can afford to buy a new one. Public and private sector banks provide loans for new and used cars at a certain rate of interest (ROI) on equivalent monthly installments (EMI), either after down payment or after full financing, to employees and the self-employed .
Credit score plays a vital role in getting an attractive return on investment on the sum borrowed, which means the higher your credit score, the lower the return on investment and vice versa, and is calculated on the basis of the seniority, the amount of the loan as well as its relationship with the bank. Most banks also allow their existing customers to keep collateral, as well as loans against cars, as a condition of obtaining a loan.
Forbes Advisor India has compiled a list of car loan programs and interest rates currently offered by India’s public and private sector banks to help you better understand the types of plan that would suit your personal financial needs.
Public sector bank interest rates
The Indian government has merged a few public sector banks, so the interest rates of the merged banks will be those of the bank they merge with.
Interest rates on car loans from the majority of Indian banks are as follows:
Bank of Baroda
Bank of India
Bank of Maharashtra
central bank of india
Overseas Indian Bank
Bank of Punjab and Sindh
National Bank of Punjab
National Bank of India
Private bank interest rates on car loans
city union bank
First IDFC Bank
Bank of Karnataka
Karur Vysia Bank
Kotak Mahindra Bank
How do banks calculate interest rates on car loans?
Interest rates on car loans from public and private sector banks in India can be fixed or floating. A fixed interest rate on the loans is fixed for the entire term of the loan. With a variable rate, the ROI of your Easy Monthly Installment (EMI) is calculated based on the “base lending rate” plus the standard premium rate, and the lender’s repo-linked lending rate (RLLR) or the marginal cost of fund-based lending. rate (MCLR).
The ROI of car loans for each bank changes depending on the change in the RBI repo rate (the rate at which the apex bank lends money to public and private banks). In the variable rate, however, the change is reflected after the “reset period” when the interest rate on your EMI is subject to revisions.
Auto loan: things to consider
- Although some banks offer loans against a credit score as low as 300, the minimum credit score required is 701.
- Some banks offer special return on investment concessions to women and existing borrowers as well as salaried account holders.
- While lending loans for used cars, most banks do not consider credit score as a mandatory requirement.
Frequently Asked Questions (FAQ)
What is a used car loan?
A used car loan is to make monthly EMI payments to buy used cars and they are priced lower than new cars.
How does a car loan work?
What is a credit score and is it important to get a car loan?
Should I take out a car loan?