Best In this festive season, many companies have launched new vehicles in the Indian car market and are preparing to launch many more in the coming days. If you are planning to buy a car, there are many options. However, it is usually seen with the working class or the middle class that one has to take a loan to buy a car. If we look at the interest on a car loan, it is higher than that on a home loan. Due to this, the actual price of the car increases by about one and a half times for the loan takers. Therefore, it is better to study well while taking a loan as to where the loan is being given at what interest rate; where your loan will be cheaper and where it will be costly.
In this article, we are telling you how much is the interest on taking a car loan of Rs 5 lakh for 5 years, what will be the monthly EMI, which bank is providing car loan at zero processing fee and what are the things to keep in mind before taking a loan. Let us know all the important aspects one by one.
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How much is the interest on car loan in which bank
| Loan rates and processing fees for buying a new car | |||
| Name of the Bank | Interest Rate (%) | EMI means installment (Rs) Loan amount- Rs 5 lakh Tenure – 5 years |
Processing Fees (% as per loan amount) |
| Union Bank Of India | 8.70 – 10.45 | 10,307 – 10,735 | ₹ 1,000 |
| Punjab National Bank | 8.75 – 10.60 | 10,319 – 10,772 | 0.25% (Rs. 1,000 – Rs. 1,500) |
| Bank Of Baroda | 8.95 – 12.70 | 10,367 – 11,300 | Upto Rs 2,000 |
| Canara Bank | 8.70 – 12.70 | 10,307 – 11,300 | 0.25% (Maximum Rs 2,500) |
| Bank of India | 8.85 – 12.10 | 10,343 – 11,148 | 0.25% (Rs. 1,000 – Rs. 5,000) |
| UCO Bank | 8.45 – 10.55 | 10,246 – 10,759 | Nil |
| State Bank Of India | 9.05-10.10 | 10,391-10,648 | NIL |
| IDBI Bank | 8.80 – 9.65 | 10,331 – 10,294 | ₹ 2,500 |
| Maharashtra Bank* | 8.70 – 13.00 | 10,307 – 11,377 | 0.25% (Rs. 1,000 – Rs. 15,000) |
| Indian Overseas Bank** | 8.85 – 12.00 | 10,343 – 11,122 | 0.50% (Rs 500 – Rs 5,000) |
| ICICI Bank | 9.10 onwards | 10,403 onwards | Up to 2% |
| HDFC Bank | 9.20 onwards | 10,428 onwards | Up to 0.50% (Rs 3,500 – Rs 8,000) |
| Karnataka Bank | 8.88 – 11.37 | 10,350 – 10,964 | 0.60% (Rs 3,000 – Rs 11,000) |
| Federal Bank | 8.85 onwards | 10,343 onwards | ₹2,000 – ₹4,500 |
| Punjab and Sind Bank*** | 8.85 – 10.25 | 10,343 – 10,685 | 0.25% (Rs. 1,000 – Rs. 15,000) |
| South Indian Bank | 8.75 onwards | 10,319 onwards | 0.75% (Max: Rs. 10,000) |
| IDFC First Bank | 9.00 onwards | 10,379 onwards | Upto Rs 10,000 |
| City Union Bank | 9.90-11.50 | 10,599-10,996 | 1.25% (Min: Rs 1,000) |
| *0.25% interest rate concession for existing housing loan borrowers and corporate salary account holders. | |||
| **0.50% interest rate concession to borrowers with credit scores of 800 and above. Interest rate concession of 0.25% to borrowers having credit scores of 750-799. | |||
| ***Concession of up to 50% on fee processing for PSB Apna Vahan Sugam. | |||
| Rates and charges as of 17th September 2024 | |||
| Source: Paisabazaar.com | |||
,Note: The list of car loan interest rates has been prepared by Paisa Bazaar.com. The details of all the banks included in the list are till 17th September. Before deciding to take a car loan, confirm the exact information related to the interest rate from the official website and branch of the bank because many car manufacturing companies are giving festive season offers. Apart from this, some companies are also changing the prices when new vehicles come in the market, which is also affecting the bank car loan rates.,
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By keeping these things in mind, you can save money
Keep in mind that the loan interest rate depends on the applicant’s credit score. If your credit score is above 750, i.e. better, then you are more likely to get a loan at a lower interest rate.
Some banks offer a rebate of 0.25% in car loan interest rates to existing housing loan customers and corporate salary account holders.
Punjab & Sind Bank is offering up to 50% discount on processing fees to car buyers under the PSB Apna Vahan Sugam scheme.
These banks have zero processing fees on car loans
Most banks charge processing fees for car loans. However, some banks charge zero. That is, there is no processing fee. SBI and UCO Bank included in the list are offering car loans to people at zero processing fees. Union Bank of India is charging Rs 1000, IDBI Bank is charging Rs 2500 and banks like Bank of Baroda, Federal Bank, IDFC First Bank are charging from Rs 2000 to Rs 10000. Many banks like Canara Bank, Central Bank of India, Bank of India are charging processing charges up to 1.25% of the loan amount.
What will be the EMI on a loan of Rs 5 lakh for 5 years from SBI
Loan amount: Rs 5 lakh
Interest rate: 10.10 percent average
Loan tenure: 5 years
Processing fee: Between Rs 3,500 and Rs 8,000
Monthly EMI: Rs 10648
Total interest in 5 years: 1,38,888 Rs
Original price of the car: 6,38,888 Rs
What will be the EMI on taking a car loan from HDFC Bank
Loan amount: Rs 5 lakh
Interest rate: 9.20 percent average
Loan tenure: 5 years
Processing fee: Nil
Monthly EMI: Rs 10,428
Total interest in 5 years: 1,25,667 Rs
Original price of the car: 6,25,667 Rs
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Keep these things in mind while taking a loan
While taking a loan, do compare the interest rates and other offers of different banks. There is no need to take a loan on someone’s advice or from the bank in which you have an account. Choose the bank which has a better offer.
While taking a car loan, ‘Zero Down Payment’ is one such offer which attracts almost all the customers. But try to avoid it. Without making a down payment, the loan will be more expensive for you and you will have to pay more interest on it.
Taking a loan for a long period is not a good idea. Here your interest keeps increasing. A tenure of 3 to 5 years is good. Try to finish the loan as soon as possible.
After buying a car, customers often modify it according to their needs. Such as a better music system, new accessories. In today’s era, many banks and NBFCs also provide loans for such expenses after buying a car, but this is not a good option.
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Documents required for car loan application
Bank account statement
2 passport size photographs
Identity Proof (Passport, PAN Card, Voter IT Card or Driving License etc.)
Address Proof (Ration Card, Driving License, Passport, Telephone Bill, Electricity Bill or Life Insurance Policy etc.)
Salary slip, Form 16
In case of non-salaried/professional/business person, audited balance sheet, two years profit and loss statement, shop and establishment certificate/sales tax certificate/SSI registered certificate/copy of partnership
In case of people involved in agriculture or related activities, Khasra/Chitta (showing cropping pattern)-Patta/Khatauni (showing land holding) with photo. All land should be on freehold basis and ownership proof should be in the name of the loan taker.
(Source: Bank Bazaar, Banks’ websites, Tax Guru)
