The demand for four-wheelers in the wake of Covid 19 crisis when people prefer personal mobility solutions in comparison to public transport has already seen a comeback and to boost it further banks and lenders have been going extra-mile this festive season by offering reduced interest rates as well as waiver on processing charges.
And if you too are lured to purchase a car for self and family needs this festive season, here are some of the lenders that offer the cheapest car loan rate provided you have a good credit history and satisfy other conditions to be eligible for the same:
Check the below table for the interest rates
|Bank||Car Loan Rate||Processing charges|
|Punjab & Sind Bank||7.1-7.9 % (Based on credit score)||Full waiver during the festive campaign period|
|Central Bank of India||7.25-7.45% (7 years)||Zero|
|Canara Bank||7.3-9.9%||0.25 percent on the loan amount with a minimum of Rs. 1000 and maximum Rs. 5000|
|Bank of India||7.35%-7.95%||0.25% of limit, minimum Rs. 1000 and maximum Rs. 5000|
|Bank of Baroda||7.35%-10.1%||Rs. 1500 plus GSTupto Dec 31, 2020|
|Oriental Bank of Commerce||7.3% -7.75%||0.5% of loan amount; minimum Rs. 2500, max Rs. 7500|
|Union Bank||7.4-7.5%||Flat charges of Rs. 1000 plus GST|
|PNB||7.55% to 8.8%||Waiver on documentation and processing charges up to December 31|
|Bank of Maharashtra||7.7-8.45%||Fees waived up to November 30, 2020|
The rates are fetched from individual banks' website as on November 7, 2020 and for purchase of new-car and for a maximum tenure of 7 years.
Further these rates are based on the credit score of the borrower, risk rating of the applicant and for some applicants such as women and other armed forces there is provided a rebate in interest rate.
Other Points To Note When Securing Car Loan
1. Secure your credit report and credit score first to bargain for lower rate:
So, as loan rate for different retail loans including car loan is determined basis your creditworthiness which is known via your credit score, first secure your credit report. And usually those with a higher credit score of 750 and above are able to get a competitive or the best rate on offer in comparison to others.
2. LTV ratio of the car loan being funded by the lender needs evaluation too:
Based on the lender's risk bearing capacity and borrower's credit profile, the lender decides on the LTV ratio or the proportion of the car loan i.e. financed by the lender. Rest has to be paid as down payment by the borrower.
And if you pay a higher down-payment you shall be able to negotiate for a better interest rate on car loan.
3. You need to also check for pre-payment and other charges too beforehand:
For floating rate loans there is no pre-payment penalty as per RBI guidelines. But in case of fixed car loan interest rate, this charge could go as high as 5-6% of the outstanding principal amount. So, here we should choose lenders charging least or zero pre-payment charges and do not have various terms and conditions attached to it such as cap on the number of times the loan amount could be repaid during the tenure and amount of pre-payment allowed. By and large, pre-payment in full or partially helps in reducing the overall interest outgo.