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Planning to take a car loan? Know how to get best deals from banks

Priyadarshini Maji
car loan, auto loan, how to get car loan, how to get car loan approved, car loan interest rates, credit score, Axis Bank, Bank Of Baroda, HDFC Bank, United Bank Of India, Allahabad Bank, Vijaya Bank, Oriental Bank Of Commerce, Union Bank Of India, RBL Bank, Canara Bank, Indian Bank

With the air quality in the National Capital Region (NCR) touching new lows, the Supreme Court of India recently outlawed the plying of 15-year-old petrol and 10-year-old diesel vehicles in the National Capital Region. The SC has also directed the transport departments to impound such vehicles if found plying in Delhi-NCR.

To cope up with this new law, many people are now getting rid of their older vehicles, whose life span has exceeded these limits, and are looking to buy a new car. Car loans bridge the gap by giving you the necessary funds to buy your dream car. In return, you pay a fraction of its cost each month in the form of EMIs. However, before opting for a car loan, compare loan rates across all types of lenders. Car loan interest rates start from 8.5 per cent per annum onward, depending on your car model, repayment capacity, employer, etc.

NEW CAR LOAN – RATES
Lender Interest rate EMI (Rs.)
Axis Bank 9.25% -11.50% 10,439-10,996
Bank Of Baroda 8.65% onwards* 10,294 onwards*
HDFC Bank 9.25%-10.25% 10,439-10,685
United Bank Of India 8.85%-9.15% 10,342-10,415
Allahabad Bank 8.75%-10.25% 10,318-10,685
Vijaya Bank 9.55%-9.70% 10,513-10,549
Oriental Bank Of Commerce 8.9%-9.25% 10,354-10,439
Union Bank Of India 8.95%-9.2% 10,367-10,427
RBL Bank 12%-14% 11,122-11,634
Canara Bank 9% to 9.65% 10,379-10,537
Indian Bank 9.2%-9.65%*** 10,427-10,537
**50% concession in processing charges based on CIBIL score, valid till 31.03.2019
***Valid till 31.01.2019; Loan amount-5 lakhs
Tenure-5 years
Source: Paisabazaar.com

If you are also planning to opt for a car loan, consider these points when selecting a car loan:

  • Firstly, check out with your existing bank for car loan offers. Many banks offer preferential car loan interest rates to their existing customers. If not, you can then visit online lending marketplaces to compare them with the rates offered by other lenders.
  • The EMI amount is decided by the loan amount, the tenure of the loan, and the rate of interest payable. Hence, before zeroing down on your car loan, check your EMI affordability by deducting your mandatory monthly expenses, including existing EMIs, and other contributions from your monthly income.
  • Experts suggest the total loan EMIs should not exceed 40 per cent of your net monthly income.
  • Always try to opt for a shorter loan period. Though most lenders offer car loan tenures of up to seven years, it is better to opt for a shorter loan tenure. Opting for a shorter tenure reduces your interest cost.
  • Opt to partially finance your vehicle’s cost. Many lenders also offer to finance up to 100 percent of the vehicle’s cost, but if you can partially finance it, try to opt for a lower loan amount. Opting for a lower loan amount will also reduce your interest cost.
  • Prepaying the loan amount is always a good idea as it reduces the interest cost, but consider the charges, caps and other limitations of car loans. Usually, car loans with fixed interest rates come with prepayment charges, sometimes as high as 5-6 per cent of the outstanding loan amount.
  • Also, be aware of processing fees charged by lenders to cover the cost incurred for evaluating your loan application. However, during festive seasons many lenders also reduce or waive off their processing fees to attract business.