Indian markets are abuzz with the launch of many new cars with premium features. As the holidays approach, most of you may be thinking of buying a new car. Here’s what you need to keep in mind before making your purchase.
The first step in your car buying journey is to select a vehicle. It would be better to compare different vehicles and prices before buying one. Buying a vehicle based on your budget and usage needs is also important.
Once you’ve selected a car, financing is the next thing. You can buy a vehicle through self-financing or take out a car loan from a bank. When you take out a car loan, you should plan for around 10-15% down payment. The rest of the money can be financed by the bank.
Many people prefer a car loan because it usually has a lower interest rate. It is also easy to apply for and avail the loan. Even someone with a lower credit score can benefit from an auto loan because it is a secured loan and the vehicle itself acts as collateral. You do not need to give any other guarantees or guarantees when you take out this loan.
When you take out an auto loan, your vehicle on which the loan is taken out will be mortgaged to the bank. You will only get full ownership after all payments to the financial institution. The interest rate on your auto loan is an important factor as it will determine the total cost of your vehicle. The higher the auto loan amount, the higher your EMI will be. Likewise, if you choose the shorter duration, the EMIs will be higher. The longer tenure may have lower EMIs, but the total interest on the vehicle will be higher, according to BankBazaar.
Apart from this, you also need to keep in mind the maintenance cost of the car. You will pay for your EMIs and cover the additional expenses of your vehicle. Take out a car loan that you are comfortable repaying over a period of time. Don’t buy a vehicle to impress others, consider the financial cost and your and your family’s car needs.
There are several options available in the market to get a car loan. You should check car loan interest rates from different banks and auto finance companies to find the best deal for your needs.
If you make a larger down payment, it can reduce the amount you need to borrow as a loan from the bank, and you can also pay off your car loan quickly. A car loan often attracts lower monthly EMIs. Nevertheless, a longer and larger amount beyond your ability to repay can harm your credit score and negatively affect your financial health. Financial institutions have the legal power to confiscate your vehicle if you fail to repay your loan.
Additionally, some banks offer pre-approved auto loans to select consumers who have a good track record. In such cases, interest rates are attractive and buyers can also get such a car loan without much documentation. These loans are quickly disbursed with consumer-friendly terms and conditions. But you should double-check these offers before signing the dotted auto loan agreement.
The table below will help you to compare the interest rates of different banks and EMIs for a loan amount of Rs 10 lakh for a term of 5 years. You can check and choose according to your needs and convenience.
Interest Rate and EMI on New Car Loan
Compiled by BankBazaar.com
Note: Interest rates on car loan (excluding e-vehicle) for all listed public and private banks (ESB) taken into account for the compilation of data (excluding small financing banks). Banks whose data is not available on their website are not taken into account. Data collected from the respective bank’s website as of July 19, 2022. The top 20 banks with the lowest interest rates are listed in ascending order, i.e. the bank offering the interest rate the lowest on the car loan is placed at the top and the highest at the bottom. The lowest interest rate offered by banks, regardless of the loan amount, is shown in the table. The EMI is calculated on the basis of the interest rate mentioned in the table for a loan Rs 10 Lac with a term of 5 years (processing fees and others are assumed to be zero for the calculation of the EMI); The interest mentioned in the table is indicative and may vary depending on the general conditions of the bank. ^ Rack Interest Rates.