BOB Car Loan Interest Rate: With the festive season on, there are a plethora of offers and deals to choose from. And, when it comes to buying a car this season, there are discounts and freebies coming along with your new vehicle. If you are thinking to go for a financing option, most banks are either waiving off the processing fees or charging a nominal fee on car loans. Here, we look at the Bank of Baroda (BOB) car loan scheme and its features, interest rate, processing fee and EMI calculation.
Since October 1, all retail loans including car loans given by banks have to be linked to an external benchmark such as the RBI repo rate. BOB has also linked its lending rate to repo rate called Baroda repo linked lending rate (BRLLR).
Current RBI Repo Rate is 5.15 per cent and the BOB’ Mark-Up ( varies across banks) is 2.95 per cent, therefore BRLLR is 8.10 per cent. Actual lending may not happen at BRLLR as the bank may add a Strategic Premium (SP) of 0.25 per cent and then add a Margin, which will depend on the borrower’s credit profile or credit score.
BOB car loan interest rate
As per the bank’s website, the BOB car loan interest rate, therefore, is in the range of BRLLR+SP+0.25 per cent to BRLLR+SP+ 2.00 per cent, which effectively will be 8.6 per cent to 10.35 per cent, depending on the borrower’s credit score.
Additionally, existing home loan borrowers with a good credit history are eligible for a concession of 0.25 per cent on their car loan interest rate.
EMI calculation
On a loan of Rs 7.2 lakh for 5 years at 8.6 per cent, the EMI comes to about Rs 14,807, while over the 7-year tenure, it is Rs 11,439. For calculating car loan EMIs, you may use the car loan EMI calculator on websites of banks.
Car loan and credit score
Many banks have started offering a better rate of interest to those borrowers who have a decent credit score as per the bank’s standard. In the case of BOB, the credit score or CIBIL Bureau score of the borrower is looked at. The minimum credit score required for the BOB car loan is 725.
Processing Charges
As per the website of the BOB, for a car loan, there will be unified processing charges of Rs 500 plus applicable GST till December 31. Otherwise, the processing fee was 0.50 per cent of the loan amount, with minimum and maximum capped at Rs 2,500 and Rs 10,000 per loan sanctioned. There are no pre-closure charges and the loan can be repaid in full without prepayment charges.
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Eligibility
The minimum age of the borrower should be 21 years, while the maximum age cannot exceed 70 years after the repayment period is over. The repayment period or tenure for car loans is up to a maximum of 84 months.
Loan Amount
Banks may either provide loan amount equal to the ex-showroom price of the car or on the on-road price. The on-road price will be more as it will include other costs that owner bears such as cost of accessories, registration, road tax, insurance etc. BOB finances up to 90 per cent of the car’s on-road price, while the balance 10 per cent is the margin money that the borrower has to pay. For example, if the on-road price comes to Rs 8 lakh, the loan amount will be Rs 7.2 lakh and the borrower needs to pay Rs 80,000.
Eligibility based on Repayment Capacity
The maximum loan amount that the bank can sanction will depend on your repayment capacity. The bank will add the car loan EMI ( proposed) to your existing EMIs and then sanction the car loan amount depending on your gross monthly income (GMI). For example, for someone with GMI Rs.50000 and above but less than Rs 1.5 lakh, the total deductions including proposed EMI should not exceed 70 per cent of GMI. Below are the eligibility based on repayment capacity:
Total deductions including proposed EMI should not exceed ( For salaried)
- GMI less than Rs.50000 – 60%
- GMI Rs.50000 & above but less than Rs.150000 – 70%
- GMI Rs.150000 and above – 80%
Total deductions including proposed EMI should not exceed ( For others)
- Average Annual Income(last 2 years) less than Rs.6 lakh – 60%
- Average Annual Income (last 2 years) is Rs.6.00 lakh and above – 80%
What to do
Car loan is not a constructive debt as the value of the car depreciates over time. Try to arrange funds from own sources and keep the loan amount to a minimum to keep interest cost lower. Also, prepay the loan when you have surplus funds. While choosing the tenure, go for shorter tenure even though the EMI will be higher than on tenures with longer repayment period. The interest cost will be more if you choose a longer tenure in a loan.
