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Owning a car was once a luxurious commodity to have. But in today’s economically developing world, a car is a necessity and convenience to travel from one corner of the ever-expanding city to the other.
Though everybody may not have enough cash to purchase the car with a lump-sum payment, numerous lenders can help you realise your dream of buying the car through a car loan.
Applying for a car loan is now hassle-free, easy, and paperless. Just make a few clicks, and you can submit the car loan application form online. Almost every bank today offers car loans at attractive interest rates. Based on one’s affordability, it is now quite easy to take a car loan and then pay EMIs without really biting into a person’s finances.
|Bank Name||Car Loan Interest Rate|
|State Bank of India||7.70% p.a. onwards|
|ICICI Bank||7.00% p.a. onwards|
|Indian Overseas Bank||7.25% p.a. onwards|
|Jammu Kashmir Bank||7.30% p.a. onwards|
|Canara Bank||7.40% p.a. onwards|
|HDFC Bank||7.50% p.a. onwards|
|Karur Vysya Bank||7.55% p.a. onwards|
|South Indian Bank||7.55% p.a. onwards|
|IDBI Bank||7.90% p.a. onwards|
|Yes Bank||7.95% p.a. onwards|
|Karnataka Bank||8.20% p.a. onwards|
|Federal Bank of India||8.25% p.a. onwards|
|Union Bank of India||MCLR + 0.35% onwards|
|Central Bank of India||Repo Rate + 4.80% onwards|
|Lakshmi Vilas Bank||RLLR + 0.75% onwards|
Certain eligibility conditions should be met to go for a car loan, and one must make sure they have a proper understanding of that. Let’s see what these factors that will decide if you are eligible to buy a car are:
|Age||21 – 60 years||18 – 65 years|
|Annual income||Rs 25,000||Minimum turnover of Rs 40 lakh|
|Loan Tenure||Up to 7 years||Up to 7 years|
|Loan to Value Ratio||Up to 100%||Up to 100%|
Try the ClearTax Car Loan EMI Calculator to find out the EMI you will have to pay every month for a given loan amount. Just enter the values for the fields, such as the principal loan amount you are looking for (P), the loan tenure (N), and the rate of interest ®, to find the EMI you will have to pay to clear the loan.
Before you apply for a car loan at a bank, we suggest that you keep the following things in mind.
Do your research
Research the rates, fees, and the other terms and conditions offered by multiple banks and lenders to understand the market and then choose the lender where you will submit your car loan application.
A slight difference in the interest rate and other terms may result in a huge difference over time.
Similarly, get quotations from different dealers for your desired vehicle. Further, some of these dealers may have a tie-up with the banks and may offer the same vehicle at a discounted price. Approaching multiple dealers can help you find and get the best deal for your car.
Provide complete documentation
Upon deciding the lender, you will approach, go through their website and keep the documents you need to submit with the loan application ready. Check for the validity of your driver’s license and other documents and get it renewed if the expiry is nearing.
Do not give the lender any chance to delay/disapprove the loan just because your documents aren’t up to the mark.
Choose the repayment tenure wisely
Use our car loan EMI calculator and figure out the EMI you have to pay for a given loan amount and repayment tenure. With this tool, you will figure out the approximate loan tenure you are comfortable with and the EMI you can handle every month.
With this homework, you will negotiate the loan repayment tenure and EMI matters confidently with the bank representative. Do not forget to consider the total cost of car ownership when you are at it.
A longer tenure may seem appealing from the EMI perspective but will cost you a lot more in interest payment.
Consider the total cost of owning the car
As stated earlier, the total cost of ownership is an important factor when purchasing a car. But many people fail to see the big picture.
To figure out the total cost of owning a car, you will have to consider the fees and charges applicable, the nature of the fees and charges, the interest rate, the down payment, the total money you will pay to the bank from the start of the loan until the time you completely pay off the debt, the fuel cost, the car insurance premiums, the tax you pay, and many other expenses.
Every bank may have set a different processing fee and documentation charges. Some lenders levy a penalty if you wish to close the loan account well before the loan tenure. All these factors play an important role while choosing the lender.
Check for offers and discounts
Most lenders provide festival offers and discounts during Indian festivals, such as Dasara and Deepavali. There may be many other occasions when the lenders or the car dealers come up with discounts and offers.
At times, there can be 0% finance schemes as well. Look out for such offers to save some pennies.
Car loans can be availed through different modes.
The bank you choose will collect your documents and initiate the application processing, which includes checking your CIBIL score, the value of the asset (vehicle), eligibility conditions, and more, and then give a decision on your loan application based on the evaluation results.