Though like most debt instruments, car loan interest rates are linked to the base rate dictated by RBI directives, the rate does differ slightly from bank to bank. Additional factors that may affect the interest rate on car loans include the loan amount, loan tenure, your credit history and your reputation with the bank. Currently car loans are available on interest rates ranging from 10% - 15% but there are a few banks that offer it for as low as 9.55%.
In today’s world, owning a car is not a luxury, but a necessity. Not having a car of your own restricts you and your family from living life to the fullest- going to work, outing for leisure or maintaining a good social and professional life. With growing number of institutions that offer vehicle loans, owning a car is no longer just a dream. Loans are available for new cars as well as used cars which enable you to buy your car and pay the borrowed amount through easy monthly EMIs.
A loan is secured against the car itself. There is no need to mortgage any other asset to procure a loan.
You get to use the car while paying for it in affordable and low installments.
Low vehicle loan rates enable you to invest your surplus savings in alternate investments with high interest rates.
Processing fees - Most banks charge processing fees of Rs. 250 to up to Rs. 20,000. To get the lowest fee, comparison of vehicle loan rates, offers and cashback applying online through MyLoanCare.
Insurance premium –It is mandatory to take a car insurance policy to cover any damages to the car in case of an accident. However, the coverage and premium of various insurance policies can be different from each other. The insurance policy bundled with your car purchase might not necessarily be the best insurance policy. Hence, it is advisable to compare the insurance terms, before choosing an insurance policy for your car.
Prepayment and foreclosure – When you want to repay a partial amount of loan before time, it is called part prepayment. In case you decide to pay the entire loan amount before time, it is called foreclosure. Banks typically levy prepayment or foreclosure charges in such situations and these can range from Nil to Upto 5%. So, check carefully if the low interest rate car loan you get comes with high prepayment or foreclosure charges. Note that some loans cannot be repaid before time.
Down payment – Banks offer car loan either at 80% of on-road price or 100% of ex-showroom price. However, 80% of on-road is almost equivalent to 95% of ex-showroom price. You are advised to fund maximum down payment as it reduces your burden of high monthly payments.