If you’re like most people, you probably don’t spend much time thinking about the interest rates on car loans. After all, it’s not something that most consumers think about until they need to finance their next vehicle. Once you get to that point, though, it’s important to know what you’re getting into. A loan with a higher interest rate means a higher monthly payment and a longer repayment period (or total amount of time your loan will take to pay off). Negotiating your interest rate can seem like a complicated task at first, but it gets easier the more experience you have with it. In this blog post, we’ll explain everything you need to know about car loan interest rates and how to get the best rate possible for your circumstances.
What Is The Car Loan Interest Rate?
When a bank or other lender offers a consumer a loan, they usually charge an interest rate to cover the cost of borrowing the money. This rate is what you’ll pay each month on your car loan, so it’s one of the most important factors in determining how much you’ll end up paying. It’s also the most confusing part of the entire process. Because car loans are negotiated between you and the lender, the interest rate is what the lender offers to you. Interest rate is not set by any government or government agency. It’s not determined by any formula. It’s just an estimate of how much the lender will make from you over the time you’ve agreed to pay back the loan.
Types of Car Loan Interest Rates
There are two main types of interest rates on car loans: fixed and variable.
- Fixed interest rate: A fixed interest rate is what you’ll pay on your loan until it’s paid off. It’s almost always a higher interest rate than a variable rate.
- Fixed rate loans: Fixed rate loans are the most common type of car loan. With a fixed rate loan, the interest rate stays the same throughout the life of the loan.
- Variable interest rate: A variable interest rate fluctuates based on the market. It’s more common on home loans, but it’s used in car loans too.
How To Determine The Best Interest Rate For Your Car Loan?
Finding the right interest rate for your car loan can be really confusing — but it doesn’t have to be. There are a few factors you should keep in mind when comparing rates.
- Your Credit: Choose a loan with a better interest rate if you can prove to the lender that you have a strong credit score.
- Your Payment: The right loan for you is the one that fits in your budget. That means taking into account both the amount you have to pay as well as the interest rate.
- Your Debtors: It’s important to consider how long you have before you’ll have to pay off your car loan. That will have an impact on the best interest rate for your situation.
Best Car Loan Interest Rates in India for 2023
|Name of the Bank||Interest Rate (p.a.)|
|State Bank of India||7.20% onwards|
|Indian Overseas Bank||7.55% onwards|
Jammu Kashmir Bank
|RLLR + 0.75% onwards (floating)
RLLR + 1.50% onwards (fixed)
|Canara Bank||7.30% onwards|
|HDFC Bank||7.95% onwards (Rack Interest)|
|Karur Vysya Bank||7.80% onwards|
|South Indian Bank||Repo Rate + 5.10%|
|IDBI Bank||7.35% onwards (floating)|
|Yes Bank||Contact the bank|
|Karnataka Bank||8.05% onwards|
|Federal Bank of India||8.50% onwards|
|TamilNadu Mercantile Bank||8.25% onwards|
|Punjab National Bank||6.65% onwards|
|Union Bank of India||7.40% onwards|
Car Loan – Follow This Steps While Applying for it
|Apply for a car loan||Compare all offers available||To find the loan that offers you the highest loan amount and the most affordable interest rate|
|Submit Income Proof||Bank Statement (last 6 months) Pay-Slips (last 3 months) IT- Returns (last 2 years)||Lender wants to establish your ability to repay the loan|
|Submit Proof of Address & Identity||PAN Card, Voter’s ID, Aadhaar Card, Passport, etc.||Lender wants to establish your nationality, identity, and permanent address|
|Credit History||PAN Card||Lender wants to check your past credit records and establish if you can be trusted to make regular repayments|
|Information About Vehicle||Sales Receipts from the showroom from where the vehicle was purchased||Lender must confirm that the deal was affected as intended|
|Proof Of Insurance and Driving License||Copies of the vehicle’s Motor Insurance and your Driving License||Lenders must establish that all laws and protocols are followed with regards to the purchased vehicle.|
Also Read: How to Get a Used Car Loan for a Great Rate
What Is The Best Car Loan Interest Rate For You?
So, when you’re comparing interest rates for a car loan, it can be helpful to think about who you are and what you have to offer. Keep in mind that when you’re comparing rates, it’s important to compare apples to apples. Then you’ll have a better idea of how long it will take you to pay off the loan, what your monthly payments will be, and how much the final payment will be.