Indian markets are abuzz with the launch of many new cars with high-end features. With the festive time approaching, most of you may be planning to buy a new car. Here is what you should keep in mind before you make your purchase.
The first step in your car buying journey is selecting a vehicle. It would be best to compare different vehicles and prices before finally buying one. Purchasing a vehicle based on your budget and usage requirements is also important.
Once you have selected a car, financing is the next thing. You can buy a vehicle through self-financing or take a car loan from a bank. While taking a car loan, you need to arrange about 10-15% as a down payment. The rest of the money can be financed from the bank.
Many people prefer a car loan as it usually has a lower interest rate. It is also easy to apply for and avail the loan. Even an individual with a lower credit score can avail a car loan as it is a secured loan and the vehicle itself acts as a security. You don’t need to give any other collateral or security while taking this loan.
When you take a car loan, your vehicle on which the loan is taken will be hypothecated to the bank. You will only get complete ownership after all payments to the financial institution. The interest rate on your car loan is an important factor as it will decide the total cost of your vehicle. The higher the car loan amount, the higher will be your EMI. Similarly, if you choose the shorter tenure, the EMIs will be higher. The longer tenure may have lower EMIs, but the total interest on the vehicle will be higher, according to BankBazaar.
Apart from this, you also need to keep in mind the maintenance cost of the car. You will pay your EMIs and take care of your vehicle’s additional expenses. Take a car loan you are comfortable repaying over a period of time. Don’t buy a vehicle to impress others—factor in the financial cost and your and your family’s requirements for a car.
There are multiple options available in the market for getting a car loan. You should check the car loan interest rates of different banks and car financing firms to find the best deal as per your needs.
If you make a larger down payment, it can reduce the sum you will need to borrow as a loan from the bank, and you will also be able to repay your car loan quickly. A car loan often attracts lower monthly EMIs. Still, a longer and larger amount beyond your repayment capacity may harm your credit score and negatively affect your financial health. The financial institutions have legal powers to confiscate your vehicle if you default on your loan.
Also, some banks offer pre-approved car loans to certain consumers who have a good track record. In such cases, the interest rates are attractive, and buyers can also get such a car loan without too much documentation. Such loans are quickly disbursed with consumer-friendly terms and conditions. But you must re-check such offers before signing the dotted lines of the car loan agreement.
The table below will help you compare the interest rates of different banks and the EMIs for a loan amount of Rs 10 lakh for a 5-year term. You can check and choose as per your needs and convenience.
Interest Rates & EMI on New Car Loan
Compiled by BankBazaar.com
Note: Interest rate on Car Loan (Excluding e-vehicle) for all listed (BSE) Public & Pvt Banks considered for data compilation (excluding small finance banks). Banks for which data is not available on their website, are not considered. Data collected from respective bank’s website as on 19 July 2022. Top 20 Banks with lowest interest rates are listed in ascending order i.e. bank offering lowest interest rate on car loan is placed at top and highest at the bottom. Lowest interest rate offered by the banks irrespective of loan amount is shown in the table. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 10 Lac Loan with a tenure of 5 years (processing and other charges are assumed to be zero for EMI calculation); Interest mentioned in the table is indicative and it may vary depending on the bank’s T&C. ^ Rack Interest Rate.