Buying a car is aspirational for some and a necessity for others. Whatever be the case, buying a car is a big financial decision that can use up your savings or necessitate a car loan. A car loan comes at a lower interest rate than an unsecured loan such as a personal loan.
When you are out in the market to shop for a car loan, make sure that you compare various offerings by different banks. Some lenders may have exclusive tie-ups with the dealers and may offer a much faster processing and discounted rates. Some lenders also offer pre-approved car loans to their selected customers or preferential rates to their existing home loan borrowers. Therefore, to get the best deal, you must compare the car loan offers by different lenders.
That said, keep in mind that the applicable interest rates on car loans are decided after factoring in your credit score and income. Most of the banks have linked their lending rates to credit scores. So, a credit score of 750 or above can help you fetch a loan at lower interest rates, and a poor credit score may either not get you a car loan or compel you to settle for a loan with a higher interest rate. Therefore, before you apply for a car loan, do check your credit reports, according to Bankbazaar.
Additionally, keep in mind that some of the cost will have to be borne by you. Most lenders usually fund only up to 80%-90% of the car’s on-road price. While some banks may also fund 100% of the car’s valuation cost subject to terms and conditions, this may not be the case always. Lending institutions typically give loans for tenors of up to 7 years.
Besides interest rates, you should also check about other charges such as processing fees, repayment charges, etc., that vary according to the lender’s policies.
If you are planning to take a car loan, the table below provides a list of public and private sector banks that are currently offering some of the lowest car loan interest rates in the country. It also provides the indicative EMI on a new car loan of Rs 10 lakh for a tenure of 5 years. The table has only taken into account the lowest advertised rate for each lender, and the interest rate applicable to you could be higher depending on your loan amount, credit score, job profile, or any other terms and conditions of your chosen lender.
EMI On New Car Loan Of Rs 10 Lakh For 5-Year Tenure
Disclaimer: Data collected from respective bank websites on November 23, 2021. The lowest advertised interest rates offered by the banks have been considered in the table. Indicative EMIs have been calculated on the basis of interest rate mentioned in the table for Rs 10 lakh loan with tenure of 5 years (processing fee and other charges are assumed to be zero for EMI calculation). The interest rates mentioned in the table are indicative and may vary depending on bank’s T&C.* min Interest as per APR in Qtr ended in Sep 2021; ^ Rack Interest Rate;^^ Festive Offer.
Data compiled by BankBazaar.com, an online marketplace for loans, credit cards and more.