In the festive season of Navratri, Dussehra, and Diwali, car buyers look forward to enticing loan offers from banks and financial institutions. These special schemes feature reduced interest rates on car loans, processing fees are waived, and exclusive freebies and discounts are offered. However, it's crucial to scrutinise the terms carefully. Due diligence will help you navigate the market and find the perfect car within your budget.
Compare rates, save big
When shopping for a car loan, go beyond brochures and advertisements, and don't rely solely on dealership offers. Expand your search to include banks, online lenders, and loan aggregator websites. These online tools allow you to compare rates, terms, and conditions, providing a clear picture of the financing options available.
Data from Paisabazaar.com reveals that for a new car loan of Rs 5 lakh for a tenure of five years, the top 15 banks offer interest rates ranging from 8.45 percent to 9.10 percent. Here's a rundown of the banks offering the most competitive interest rates this festive season. These are indicative rates and the actual rates may vary because of the customer's credit profile, income, etc.
UCO Bank
Public sector lender UCO Bank charges 8.45 percent for a new car loan of Rs 5 lakh, for five years. The EMI (equated monthly installment) will work out to Rs 10,246. The processing fee is waived off.
Union Bank of India
Union Bank of India charges 8.7 percent for an identical loan, with the EMI amounting to Rs 10,307. The processing fee is Rs 1,000.
Canara Bank
Union Bank of India charges 8.7 percent and the EMI comes to Rs 10,307. The processing fee is waived.
Bank of Maharashtra
Bank of Maharashtra charges 8.7 percent for a new car loan of Rs 5 lakh, payable over five years. The EMI comes to Rs 10,307. The bank offers a 0.25 percent concession on the interest rate for existing home loan customers and corporate salary account holders. The processing fee is 0.25 percent of the loan amount, subject to a minimum of Rs 1,000 and a maximum of Rs 15,000.
Punjab National Bank
Punjab National Bank charges 8.75 percent for the same loan, and the EMI comes to Rs 10,319. The processing fee is 0.25 percent of the loan amount, subject to a minimum of Rs 1,000 and a maximum of Rs 1,500.
| INTEREST RATES AND PROCESSING FEES ON A CAR LOAN | |||
| Bank | Lowest interest rate p.a. offered by the bank (%) | EMI on a Rs 5 lakh car loan for five years (Rs) | Processing fees (% of loan amount) |
| UCO Bank | 8.45 | 10,246 | Nil |
| Union Bank of India | 8.7 | 10,307 | Rs 1,000 |
| Canara Bank | 8.7 | 10,307 | Nil |
| Bank of Maharashtra* | 8.7 | 10,307 | 0.25% (Rs 1,000 - Rs. 15,000) |
| Punjab National Bank | 8.75 | 10,319 | 0.25% (Rs 1,000 - Rs. 1,500) |
| South Indian Bank | 8.75 | 10,319 | 0.75% (Max: Rs 10,000) |
| IDBI Bank | 8.8 | 10,331 | Rs 2,500 |
| Bank of India | 8.85 | 10,343 | 0.25% (Rs 1,000 - Rs 5,000) |
| Indian Overseas Bank** | 8.85 | 10,343 | 0.50% (Rs 500 - Rs 5,000) |
| Federal Bank | 8.85 | 10,343 | Rs 2,000 - Rs 4,500 |
| Punjab and Sind Bank | 8.85 | 10,343 | 0.25% (Rs 1,000 - Rs 15,000) |
| Karnataka Bank | 8.88 | 10,350 | 0.60% (Rs 3,000 - Rs 11,000) |
| Bank of Baroda | 8.95 | 10,367 | Up to Rs 2,000 |
| State Bank of India | 9.05 | 10,391 | NIL |
| ICICI Bank | 9.1 | 10,403 | Up to 2% |
| *0.25% concession on the interest rate for existing home loan customers and corporate salary account holders. | |||
| **0.50% concession on the interest rate for borrowers with a credit score of 800 and above, and 0.25% concession for borrowers with a credit score of 750-799. | |||
| Processing and other charges are assumed to be zero for EMI calculation | |||
| Rates and charges as of 1st October 2024 | |||
| Source: Paisabazaar.com |
South Indian Bank charges 8.75 percent on a new car loan of Rs 5 lakh with a tenure of five years. The EMI works out to be Rs 10,319. The processing fee is 0.75 percent of the loan amount, subject to a maximum of Rs 10,000.
IDBI Bank
IDBI Bank charges 8.8 percent for the same loan, and the EMI works out to be Rs 10,331. The processing fee is Rs 2,500.
Bank of India
Bank of India charges 8.85 percent, with the EMI amounting to Rs 10,343. The processing fee is 0.25 percent of the loan amount, subject to a minimum of Rs 1,000 and a maximum of Rs 5,000.
Indian Overseas Bank
Indian Overseas Bank charges 8.85 percent, with the EMI amounting to Rs 10,343. The bank offers a 0.50 percent concession on the interest rate to borrowers with a credit score of 800 and above and a concession of 0.25 percent to borrowers with a score of 750-799. The processing fee is 0.50 percent of the loan amount, subject to a minimum of Rs 500 and a maximum of Rs 5,000.
Federal Bank
Federal Bank charges 8.85 percent for a new car loan of Rs 5 lakh for five years, with the EMI amounting to Rs 10,343. The processing fee is a minimum of Rs 2,000 and a maximum of Rs 4,500.
Also read | Borrower Blues: Home loan customers may have to wait till December for RBI to lower interest rates
Punjab and Sind Bank
Punjab and Sind Bank charges 8.85 percent, with the EMI amounting to Rs 10,343. The processing fee is 0.25 percent of the loan amount, subject to a minimum of Rs 1,000 and a maximum of Rs 15,000.
Karnataka Bank
Karnataka Bank charges 8.88 percent, and the EMI comes to Rs 10,350. The processing fee is 0.60 percent of the loan amount, subject to a minimum of Rs 3,000 and a maximum of Rs 11,000.
Bank of Baroda
The state-owned Bank of Baroda charges an interest rate of 8.95 percent. The EMI in this case will amount to Rs 10,367. The processing fee is up to Rs 2,000.
State Bank of India
The State Bank of India, India’s largest bank, levies an interest rate of 9.05 percent on a new car loan of Rs 5 lakh, with a five-year tenure. The EMI comes to Rs 10,391. The processing fee has been waived.
ICICI Bank
This private bank charges an interest rate of 9.10 percent, and the EMI comes to Rs 10,403. The processing fee is up to 2 percent of the loan amount.
Also read | How to invest in gold wisely during the festive season
Avoid financial stress with careful car loan planning
Before finalising a car loan, assess your financial readiness. Consider processing fees, prepayment charges, and ensure your monthly payments are manageable. Remember, your EMIs shouldn’t affect your monthly budget. As a thumb rule, keep your total EMIs under 30 percent of your take-home income for financial stability.
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