Car Loan Interest Rates In Comparison to Banks

Car Loan Interest Rates

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An interest rate is the amount of interest charged over and above the principal amount by the lender from the borrower. In simple words an interest rate is the amount of interest paid by the borrowers for the money they have borrowed from the lender. Interest rate is usually a percentage of the sum borrowed, For eg; a simple 10% interest means if one borrows Rs 100, he will have to pay back Rs 110.

Interest rates on borrowings and deposits may defer considering the purpose and to whom the amount is given. The total interest on an amount borrowed depends on the principal sum, the interest rate, the compounding frequency, and the duration of time over which it is lent, deposited or borrowed. The annual interest rate is the rate over a period of one year.

Car Loan Interest Rates

Car Loan Interest Rates in Comparison to Banks

In today’s article we are going to discuss about Car Loan Interest Rate as per comparison for all banks. Mentioned below are the interest rates, processing fees, loan tenure, prepayment charges of a car loan as per the banks.

1. SBI Car Loan Interest Rates

SBI Yono

SBI is one of the oldest and most trusted banks in India. SBI offers car loans to its customers with the interest rates offered for new and used car by SBI car loans. SBI offers fixed car loan interest rates and are one of the most affordable rates in India.

Interest RatesRanges from 8.40% p.a. for New Car Loan Scheme11.05% to 14.65% p.a. for Used Car Loan Schemes
Loan TenureLoan tenure for new car Loan is up to 7 yearsLoan tenure for used Car Loan is maximum of 5 years
Processing FeeThere is no processing fee for new cars1.25% of the loan amount + GST for used cars and minimum of 3750 + GST and maximum of Rs 10,000 + GST
Loan AmountUp to 90% of the cars On Road Price may be provided
Penal Interest2% p.a.(over and above the applicable interest rate)2% p.a.(over and above the applicable interest rate)

Factors Affecting SBI Car Loan Interest Rates

  • Loan amount: The car loan amount that you will choose will determine the interest rate you will be eligible.
  • Salary of the applicant: Interest rates will be based on your salary. If you have a high salary you will get a low interest rate. So, it is important to consider your debt-to-income ration while applying for a car loan.
  • Credit score: Your credit score history plays a key role in determining your car loan. You must have a credit score of at least 750 or above in order to be eligible for a car loan.
  • Loan tenure: The longer the loan tenure you will choose, the lower will be the rate of interest. On the other hand, the shorter tenure will be a high rate of interest.
  • Applicant’s relationship with the bank: You must have a good relation with your bank and your credit history must be good then only you will get a reasonable interest rate.

Also Read: Cheese – Health Benefits, Uses, and Side-effects

2. HDFC Bank Car Loan Interest Rates

HDFC

HDFC Bank offers Car Loans for its customers at lowest interest rates and flexible tenures.

Interest RatesRanges from 8.80% p.a. for new carsRanges from 13.75% p.a. for used cars
Loan Repayment TenureNew Cars: Loan tenure ranges between 12 months and 84 monthsUsed Cars: Ranges between 12 months and 84 months
Loan AmountYou can avail for the loan up to 3 croresUp to Rs 2.5 crores
Processing Fees1.00% of total loan amount of minimum Rs 5,000 and Maximum Rs 10,00 for new cars1.00% of total loan amount of minimum Rs 5,000 and Maximum Rs 10,00 for used cars
Overdue Interest Per MonthNew Cars: 2% per monthUsed Cars: 2% per month

Factors Affecting HDFC Car Loan Interest Rates

  • Credit Score: One must have a good credit score. A credit score of 725 and above is usually considered to be healthy and can help you close the deal faster. Banks also offers lower interest rates to individuals with a high credit score.
  • Income: Income on the higher side will help you to get lower interest rate. However, the interest rate varies from one person to another.
  • Vehicle’s age and condition: With respect to car loan, vehicles age, condition and vehicle being financed acts as a collateral against the borrowed loan. In case of any defaults, the bank can hold your vehicle to balance the outstanding/pending dues. This is the reason why the age and condition of the vehicle are often taken into consideration while determining the rate of interest.
  • Good relationship with the bank: Maintenance of good relationship with the bank is very important for the applicants. If you have a good record with the bank you are availing for the car loan, you may get a discount on the interest rate offered to you.

Also Read: HDFC Bank Savings Account

3. Canara Bank Car Loan Interest Rates

Canara Bank

Canara Bank is an Indian public sector bank under the control and ownership of Ministry of Finance, Government of India. Canara Bank offers car loans which is known as Canara Vehicle Loan. Canara bank offers attractive interest rates and easy EMI option.

ParticularsCharges
Interest RatesRanges from 7.35% onwards to 9.90% p.a.
Loan Repayment Period84 months for new cars and 60 months for pre-owned cars
Loan AmountMinimum loan up to Rs 10,00,000 and Maximum loan amount up to Rs 25,00,000 and above for new cars and 75% of the agreed price or 75% of the value of the car, as assessed by an automobile engineer or Rs 15,00,000 whichever is lower    
Processing Fee0.25% on the total loan amount with a minimum of Rs 1,000 and a maximum of Rs 5,000
Foreclosure ChargesNo foreclosure charges are levied in case the loan is closed before the tenure
FinancingDepending on the price of the car, 80%, 85%, and 90% of the on-road price of the car can be availed as a loan
Prepayment ChargesNo prepayment charges

Factors Affecting Canara Bank Car Loan Interest Rates

Canara Bank car loan interest rates for purchasing new and used car depends on the fixed rate of interest. Below are the some of the methods to be eligible for car loan interest rate.

  • Credit score: If you have a good credit score you are likely to get a lower interest rate.
  • Applicant’s salary: If your salary is on the higher side you will get a lower rate of interest. High income applicants are always a safe bet according to banks. Since their salary are high their chances of paying back loan on time are high.
  • Loan tenure: If the applicant will choose longer tenure, your interest rate will be lower and vice versa.
  • Vehicles age and condition: Vehicles’ age also play a relative role in interest rate. If you choose to purchase a used car, the condition and overall value of the car will play a significant role in determining your eligible rate of interest.
  • Good record with the bank: If you will have a good credit score or good record history with the bank, you will mostly definitely get a good deal of interest.

4. ICICI Bank

ICICI Bank

ICICI Bank offers car loans interest rates for both new and pre-owned cars. The interest rate for new cars depends on factors like loan tenure, relationship with the bank, category of the car etc. On the other hand, interest rate for used car is determined by factors like loan tenure, age of the vehicle, and nature of the loan such as refinance, top-up, etc.

FeaturesNew Car LoanPre-Owned Car Loan
Interests RatesRanges from 8.00%Ranges from 12% – 13%
Loan AmountUp to 100% of the on-road priceUp to 80% of the car’s valuation
Loan TenureUp to 7 yearsUp to 5 years
Processing Fee0.5% of the loan amount2% of the loan amount or Rs 15,000, whichever is lower
Prepayment Charges5% on the outstanding principal or interest5% on the outstanding principal or interest
Overdue Payment Charges2% charged per month on the outstanding EMI2% charged per month on the outstanding EMI

Factors Affecting ICICI Bank Car Loan Interest Rates

Your eligible interest rate for new and used cars depends on a few factors:

  • Credit Score: Your credit history will play an important role for deciding the rate of interest charged on your loan that you have borrowed. If you have a good credit score, your will be eligible for a lower interest rate.
  • Income of the applicant: Income plays a very pivotal role when applying for any loan. It is good to Maintain a low debt-to-income ratio between your earnings and spends. As far as the lender is concerned, this indicates that you will not find any difficulty while repaying of your loan.. This also reduces the possibility of defaulting on the EMI.
  • Loan tenure: The longer your loan tenure will be, the lower rates of interest will be.
  • Car segment: The type of car you are looking to purchase will also be an important factor in determining your interest rates. Cars can be distinguished on their types, model, and price. A sedan, a hatchback, a premium car and an SUV will attract different rate of interest.
  • Age of the car: If you choose to buy a used car, the age and condition of the car will play an important role in your eligibility and interest rates. An old car means a shorter life of the car.
  • Customer relation: ICICI Bank is concerned with the relationship of a customer with the bank. If you have a good relation with the bank such as in credit history with the bank it factors into your interest rates. The average quarterly balance you maintain with the bank will also play a great role in your car loan.

5. YES Bank Car Loan Interest Rates

Yes Bank

Yes Bank offers attractive and outstanding interest rates, flexible repayment options, as well as tenure of the loan amount range from 1 to 7 years.

The car loan interest rate at Yes Bank is based on various eligibility criteria. Yes Bank attractive car loan interest rates, assures customers of the loan amount of up to 90% of the car’s actual value. For more details about you can visit your nearest branch.

Interest RateRanges from 9.7% p.a.
Loan AmountFrom Rs 1 lakh to 5 crores
Loan TenureUp to 7 years
Processing FeeRs 10,000 or up to 1% of loan, whichever is lower for new cars and Rs 6,000 or 2% of loan, whichever is lower for used car
FinancingUp to 100% of the on-road price of the car
Prepayment Charges3% to 6% of the outstanding loan amount
Late Payment Charges2% charged per month

Factors Affecting Yes Bank Car Loan Interest Rates

  • Income: The income of an applicant plays an important role determining the interest rate for Yes Bank car loan. The income eligibility criteria can be improved by adding a co-borrower with a good credit history.
  • Down Payment: Individuals making lump-sum down payments can get an advantage of getting lower interest rates for their car loans.
  • Loan Tenure: If a borrower opt for longer loan tenure then the rate of interest will be on a high side, whereas if the borrower opt for shorter tenure the rate of interest will be lower.
  • Credit Score: It is important for one to have a good credit score when they apply for a car loan. Depending on your credit score, the bank will offer a high or low interest rates.

6. Axis Bank

Axis Bank

Axis Bank offers car loans up to 100% on-road price of your dream vehicle. Car loans starts from Rs 1 lakh and interest rates starts at 8.55% p.a.

Interest Rates8.55% p.a. for new car and 8.60% p.a. for used cars
Processing FeeNew Car: Rs 3,500 to Rs 5,500 Used Car: 1% of the loan amount or 6,000 whichever is lower
Penal Interest2% per month
Part Payment Charges5% of the principal outstanding
Foreclosure Charges5% pf the principal outstanding
Loan Cancellation Charges/ RebookingRs 2500 per instance
Documentation ChargesRs 500 per instance

Factors Affecting Axis Bank Car Loan Interest Rates

  • Income: You will have to earn a minimum salary on a monthly basis in order to be eligible for the car loan scheme offered by Axis Bank.
  • Loan amount: Your loan amount will determine the rate of interest. The higher the loan amount, higher will be the rate of interest.
  • Repayment tenure: The shorter the loan repayment tenure will be the lower the rate of interest will be.
  • Relationship with the bank: Good relation and a good credit history will help you to get lower interest rate.

7. Punjab National Bank Car Loan Interest Rates

PNB

Punjab National Bank is a prominent name in the Indian banking industry. It is a public sector bank that has caters to national and international customers to give effective banking facilities to its customers for their banking needs. Punjab National Bank Car Loan interest rates charges floating as well as fixed interest rates. The interest rates depend on various factors such as credit score, repayment schedule, monthly income, occupation etc.

ParticularsDetails
Rate of InterestNew Cars: 7.55% – 7.80% For Used Cars: 8.55% – 8.80%
Loan TenureMaximum 7 years for new cars Maximum 5 years for used cars
Processing FeeRs 1,000 to Rs 1,500/ 0.25% of the loan amount
Loan AmountRs 1 crore 25 times the net monthly income, whichever is lower
Prepayment Charges2% of the outstanding pre-paid for fixed rate
MarginFor New Cars: 15% of on-road price10% in case of tie up with dealers For Used Cars: 25% of on-road price

Details of Punjab National Bank Car Loan Floating and Fixed Interest Rates

Types of BorrowersFloating Interest Rates
For women and pride borrowers8.9% p.a.
For Others
Credit score of 750 and higher8.9% p.a.
Credit score of 700 to 7499.1% p.a.
Credit scores lesser than 7009.35% p.a.
Types of BorrowersFixed Interest Rates
For all borrowers9.25% p.a.
For pride borrowers9.25% p.a.

Factors Affecting PNB Car Loan Interest Rates

Some of the factors for the eligibility of car loan interest rates of PNB are as follows:

  • Income: The minimum net income specify by the bank is Rs 20,000 per month. Customers have to meet this requirement because the requirement is mandatory so that the banks are assured of the customer’s ability to repay their loan. If the customers does not meet this requirements then their loan might get rejected, if not the rate of interest charges will be very high. Customers can also include their parent’s salary or spouse’s salary to meet this requirement, who are earning to their income.
  • Loan tenure: Customers must opt for shorter tenure because sometimes longer tenures are seen to be financially risky by the banks.
  • Debt-to-income-Ratio: Customers who have previously availed loans are currently in the process of repaying other loans are believed to constitute a higher risk by the bank. This is because the customers income is already being used to repay other loans and if these repayments are not made on time, then there is a chance that banks would not be very eager to provide new loans to them, so maintenance of a low debt-to-income-ratio is very important.
  • Credit score: Maintenance of a good credit score is one of the great factors for the eligibility of car loan interest rates.
  • Relationship with the lender: PNB offers additional concession and benefits for those who already have a working relationship with the bank.

8. Bank of Baroda

Bank of Baroda

With Bank of Baroda, you will be able to avail car loans up to Rs 100 lakhs at attractive interest rates. Own your dream car with car loans from Bank of Baroda. With BOB Car Loans you can buy a hatchback, sedan, MUV, SUV, sports car or luxury car. BOB auto loans are available to salaried employees, businessmen, professionals, corporates as well as NRIs and PIOs.

Interest RateRanges from 8.40% p.a.
Loan AmountMaximum 1 crore can be availed
Loan TenureUp to 7 years
Processing FeeThere is no processing fee
Foreclosure ChargesNil
FinanceUp to 90% of the on-road price of the car may be financed

9. Federal Bank

Federal Bank

Federal Bank is a private sector bank in India. The bank has a huge customer base not only in India but also overseas and has been offering banking facilities to its customers by providing them unique and corporate banking solutions for their various banking needs. Federal Bank provides loans to its retail as well as corporate customers. Retail loans include many loan products like home loans, car loans, personal loans etc. Federal Bank car loan interest rate ranges from 9.15% p.a.

ParticularsNew CarPre-Owned Car
Interest Rates9.15% p.a.14.95% (One Year MCLR 9.15% p.a.)
Loan Repayment Tenure84 months84 months
Foreclosure ChargesNILNIL
FinancingUp to 100% of car’s ex-showroom priceUp to 100% of car’s ex-showroom price
Pre-payment ChargesNILNIL charges for individual borrowers

Factors Affecting Federal Bank Car Loan Interest Rates

Credit Score: A credit score of 725 or above is typically considered good.

Income-to-debt-ratio: You must maintain your debt-to-income-ratio. The higher income and less debts will be at a lower risk for a money lender or bank. The more money you owe, the less likely you are to get a lower rate of interest.

Loan Duration: The less tenure you will choose, you will face a lower rate of interest. A longer tenure means having to pay higher rate of interest.

Vehicles Age: The rate of interest is higher for used cars then the new cars. The condition of the used car plays an integral role in determining the rate of interest.

10. Union Bank of India

Union Bank of India

Union Bank of India is known to be one of the largest government-owned banks in India. Union Bank of India offers a car loan to candidates who are willing to buy a car but facing problem towards finance. You can get a vehicle loan at Union Bank at an average interest rate.

FeaturesNew Car LoanUsed Car Loan
Interest Rates7.40% p.a. onwards10.40% p.a. onwards
Loan AmountNo CeilingUp to Rs 20 lakh
Loan TenureUp to 7 yearsUp to 5 years
Processing FeeRs 1,000 + GSTRs 1,000 + GST

Factors Affecting Union Bank of India Car Loan Interest Rates

  • Credit Score: Holding a good credit score typically ensures that the bank gives the lowest interest rates. Banks generally increase the interest rate significantly for customers with low credit score.
  • Down Payment: The down payment made by the customers also determines your rate of interest that the bank will be offering. The higher the down payment amount, the lower the interest rate and vice versa.
  • Loan Tenure: Lenders will offer low interest rates for car loans with shorter loan tenures. If the borrowers make a big down payment, the loan amount will be lower, thereby shortening the loan tenure.
  • Income-to-debt-ratio: If the income-to-debt ratio is good for an applicant, then the lender will give better interest rates.
  • Market Fluctuations: The interest rate can vary based on market fluctuations. For eg; if the Reserve Bank of India lowers its repo rate, then lending institutions may offer relatively lower interest rates.
FAQs

1. What are the documents required for applying car loan?

Ans: The documents one required to apply for a car loan are as follows:

  • ID proof
  • Address proof
  • 2 passport size photographs
  • Income proof
  • Bank statement of last 6 months
  • Income Tax Returns for the

2. How can I get a car loan with lower interest rates?

Ans: Your interest rates depends on various factors, if you have a good credit score you will be eligible for lower interest rate, if you choose shorter loan repayment tenure, if you have a good credit history with the bank and have a steady source of income, you can become eligible for lower interest rate on a car loan.

3. Does car loan comes with both fixed and floating rate of interest?

Ans: Yes, car loans are available with both fixed and floating rate of interest.

4. What are the differences between fixed and floating rate of interest?

Ans: The differences between fixed and floating rate of interest are as follows:

Fixed Interest RateFloating Interest Rate
Interest rate is higherCheaper than fixed interest rates
EMIs will remain constantEMIs will change according to changes in market trends
Easy to prepare budgets with these ratesTough to maintain budgets as rates keeps on changing
Good for a short loan tenureGood for a long loan tenure

5. Should I go for a fixed or a floating rate of interest?

Ans: Its up to you which you want to choose, but if you go for a fixed rate of interest, the interest that you will be paying towards your loan amount will remain unchanged throughout the loan tenure. However, if you go for a floating rate of interest, the interest that you will be paying may be higher or lower based on the MICLR changes. So, a fixed interest rate is recommended if you don’t want to take any risk of the increasing of the interest rate in future.

6. Can I negotiate with the lender for lower rate of interest towards my car loan?

Ans: Yes, you can obtain for a lower rate of interest if you have a good credit score, higher income, good relationship with the bank and good credit history.

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