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With air quality in the National Capital Region (NCR) hitting new lows, India’s Supreme Court recently banned the use of 15-year-old gasoline and 10-year-old diesel vehicles in the National Capital Region. The SC has also ordered transportation departments to impound such vehicles if found in Delhi-NCR.
In order to comply with this new law, many people are now getting rid of their older vehicles, whose lifespans have exceeded these limits, and are looking for a new car. Car loans bridge the gap by giving you the money you need to buy your dream car. In return, you pay a fraction of the cost each month in the form of EMIs. However, before opting for a car loan, compare the loan rates of all types of lenders. Car loan interest rates start from 8.5 percent per year depending on your car model, repayment capacity, employer, etc.
|NEW CAR LOAN – RATES|
|Axis Bank||9.25% -11.50%||10,439-10,996|
|Bank of Baroda||8.65% and beyond *||10,294 and beyond *|
|HDFC Bank||9.25% -10.25%||10,439-10,685|
|United Bank of India||8.85% -9.15%||10342-10415|
|Allahabad Bank||8.75% -10.25%||10,318-10,685|
|Vijaya Bank||9.55% -9.70%||10,513-10,549|
|Oriental Bank of Commerce||8.9% -9.25%||10354-10439|
|Union Bank Of India||8.95% -9.2%||10,367-10,427|
|RBL Bank||12% -14%||11,122-11,634|
|Canara Bank||9% to 9.65%||10,379-10,537|
|Indian Bank||9.2% -9.65% ***||10,427-10,537|
|** 50% discount on processing fees based on CIBIL score, valid until 31.03.2019|
|*** Valid until 31.01.2019; Loan amount-5 lakhs
If you also plan to opt for a car loan, keep the following points in mind when choosing a car loan:
- First, contact your existing bank for car loan offers. Many banks offer their existing customers preferential interest rates on car loans. If not, you can visit online credit marketplaces to compare them with the rates offered by other lenders.
- The EMI amount is determined by the loan amount, the term of the loan and the interest payable. Therefore, before lowering your car loan, check your EMI affordability by subtracting your mandatory monthly expenses, including existing EMIs and other contributions, from your monthly income.
- Experts suggest that total loan EMIs should not exceed 40 percent of your net monthly income.
- Always try to opt for a shorter loan period. Although most lenders offer a car loan term of up to seven years, it is better to opt for a shorter term of the loan. Opting for a shorter term will lower your interest costs.
- Choose to partially finance the cost of your vehicle. Many lenders also offer to fund up to 100 percent of the vehicle cost, but if you can partially fund it, try opting for a lower loan amount. By choosing a lower loan amount, you also lower your interest costs.
- Paying the loan amount up front is always a good idea as it lowers interest costs, but keep in mind the fees, limits and other limitations of car loans. Typically, fixed-rate auto loans will charge a prepayment fee, sometimes as much as 5-6 percent of the loan amount outstanding.
- Also consider processing fees charged by lenders to cover the costs incurred in evaluating your loan application. However, during festive seasons, many lenders also cut their processing fees or forgo their processing fees to attract business.