Get The Best Car Loan Interest Rate In 7 Steps

Best Car Loan Interest Rate

Best Car Loan Interest Rate

In a country like India, having a car isn’t just about transportation, it is a symbol of progress, luxury, and accomplishment. Owning a car is every Indian’s dream, however, acquiring one can be expensive. To afford a new vehicle, you might need a car loan. The question is, how can you find the best car loan interest rate?

With so many options available, finding the lowest car loan interest rate can be the fuel for a smooth journey. In this comprehensive guide, let’s explore the specifics of car loan interest rates of all banks. From interest rate comparisons to understanding the features of new and used car loans, loan tenure, processing fees, loan amounts, and prepayment charges. We have got you covered!

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Comparison Of Car Loan Interest Rates In India

There are several things you should consider, before availing a car loan. The car loan interest rate determines how much extra you pay on top of the car’s price. Whether you are a first-time car buyer or refinancing, understanding this number is crucial. The following table compares the current interest rates for car loans provided by top banks with EMI per ₹1 Lakh for a tenure of 5 years.

Bank Name Interest Rates (p.a.) Tenure EMI per Rs. 1 Lakh
SBI 7.95% – 8.70% 5 years ₹1,538 – ₹1,580
Axis Bank 8.50% – 11.25% 5 years ₹1,562 – ₹1,729
HDFC Bank 8.80% – 10.00% 5 years ₹1,574 – ₹1,637
Bank Of Baroda 7.35% – 9.10% 5 years ₹1,529 – ₹1,586
Canara Bank 7.30% – 9.90% 5 years ₹1,526 – ₹1,654
ICICI Bank 8.82% – 12.75% 5 years ₹1,576 – ₹1,783
Corporation Bank 7.40% – 7.50% 5 years ₹1,529 – ₹1,534
IDBI Bank 8.40% – 9.00% 5 years ₹1,558 – ₹1,589
Indian Bank 8.20% – 8.55% 5 years ₹1,551 – ₹1,567
Central Bank of India 7.25% – 7.50% 5 years ₹1,524 – ₹1,534
Union Bank Of India 7.40% – 7.50% 5 years ₹1,529 – ₹1,534
Punjab National Bank 9.40% – 9.90% 5 years ₹1,596 – ₹1,626

Note: The interest rate mentioned and the actual rate you will be offered can change depending on the individual circumstances, the bank, your credit score, and the tenure of the car loan.

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An Overview of Car Loans

Overview of Car Loans

Before deciding on a bank or a lender, there are a few fundamental characteristics of a car loan. Although the numbers may differ somewhat, the general value remains the same. Here is a table that reads the general value of car loan interest rates for all banks, tenure, loan amount, prepayment, and processing charges.

Properties New Car Loan Used Car Loan
Loan Amount Up to 100% of the ex-showroom cost Maximum 80% of the car’s valuation
Interest Rate Approximately 7.25% to 14.00% p.a. Approximately 10% to 18% p.a
Loan Tenure Up to 7 years Up to 5 years
Processing Fee Starts with 0.20% of the loan amount Maximum 2% of the loan amount
Prepayment Charge 0.5% – 5% on the outstanding principal or interest for the remaining term of the loan, whichever is lower.

Also Read: A Detailed Guideline for Getting the Best Car Loan

Features and Benefits Of Car Loans

Unlike other loans, car loans interest rates are fixed, which means that the interest rate will not change over time. Furthermore, they have a fixed repayment period, where you will pay the same amount every month until you close the loan.

Here are some common features of a car loan interest rates of all banks:

  • Loan amount eligibility: The loan amount you get will depend on your credit score, the amount of the down payment, and the term of the loan repayment.
  • Interest rate: The interest rate will depend on your credit score, the amount of the loan, and the term of the loan.
  • Loan tenure: The loan term is the length of time that you will have to repay the loan. The tenure, in general, will be between 3 and 7 years.
  • Down payment: The money you will pay in advance for the car is known as the down payment. Typically, the down payment ranges from 10% to 20% of the car’s purchasing price.
  • Monthly payments: Throughout the loan tenure, monthly payments will be made. The principal amount, interest, and any other fees related to the loan are all included in the monthly installments.

Also Read: Avail a Car Loan In Bangalore With Low Interest Rates 

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7 Steps To Apply For A Car Loan

Steps To Apply For A Car Loan

A common way of financing the purchase of a new or used car is to apply for a loan. It makes the car more cheap by allowing you to spread the expense over time. There are a few important steps to consider while applying for a car loan, but the process involved can vary slightly based on the lender. The whole process can be broken down into seven steps, these are as follows:

Fix your budget:

Determine how much you can spend on a car, including the down payment and monthly installments.

Credit score check:

You have a better chance of getting a minimum interest rate on car loans if you have a high credit score. So, make sure your credit score is good because it can impact loan approval and interest rates.

Choose the right lender:

Research various banks, and online lenders and find the cheapest car loan interest rate. Compare different banks, terms, loan amounts, and processing fees.

Necessary documents:

Depending on the lender’s requirements, prepare the necessary documents such as identity, address proof, income proof, and employment ID. The loan application form should also be filled and submitted.

Loan Approval:

Once your application is reviewed and approved, you will receive a loan offer with the interest rate, loan amount, and tenure specified.

Vehicle inspection & valuation:

For used cars, lenders might request an inspection and evaluation to estimate the loan amount. Do remember to  thoroughly read the loan agreement terms and conditions before signing.

EMI setup:

Set up the EMI payment schedule and make the down payment, if necessary. you can also use Car Loan EMI Calculator to calculate

Your Car:

After completing the formalities, it’s time for your car to hit the road.

Also Read: How to Get a Used Car Loan for a Great Rate

To Conclude

Making the most cost-effective financial option when choosing the best car loan interest rate will have a long-term effect on your budget and financial goals. You can make an informed decision by comparing interest rates, understanding loan features, and considering factors like loan tenure, processing fees, loan amount, and prepayment charges. With the right car loan, you can pave the way to your dream ride and financial freedom, regardless of the model (brand-new or a reliable used car) you want to buy.

Happy Driving!

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