The fierce second wave of the COVID-19 pandemic has pushed the auto sector in India into the slow lane.
However, for prospective car buyers, the financing picture continues to be rosy. Banks, particularly government-owned lenders, continue to offer cheaper loans, almost at par with their home loan interest rates. Punjab & Sind Bank tops the list of cheapest car loan lenders with an interest rate of 7 percent for a loan of Rs 10 lakh with a seven-year tenure, as per data from Bankbazaar.com. It is followed by Central Bank of India and Bank of Baroda, which charge 7.25 percent.
Unlike home and education loans, car loans offer no tax benefits. While these qualify as ‘good’ loans as they result in creation of an asset, it is important to remember that it is a depreciating asset. Therefore, the decision on buying a car and taking a loan for the purpose should be made solely on the basis of you requirements and not discounts on price on lower interest rates in the system.
A note on the table
Interest rates on car loans for all listed (BSE) public and private sector banks have been considered for data compilation. Banks for which data is not available on their website have not been considered. Data collected from respective banks’ websites as on May 13, 2021. Banks are listed in ascending order on the basis of interest rate, that is, bank offering lowest interest rate on car loan (amount Rs 10 Lac) is placed at top and highest at the bottom. Lowest interest rate offered by banks on loan of Rs 10 lakh is shown in the table. EMI is calculated on the basis of interest rate mentioned in the table for Rs 10-lakh loan with a tenure of seven years (processing and other charges are assumed to be zero for EMI calculation). Interest rates mentioned in the table are indicative and may vary depending on banks’ terms and conditions.
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