- Generally, banks provide up to 100% of the car’s ex-showroom price or 80% of the car’s road price as a loan.
- The remaining amount must be paid by the borrower as a down payment
- At the moment PNB offers the lowest interest on car loans.
New Delhi: Most commercial banks provide car loans to buy a new car. While car loans make your car purchase affordable, they come with a cost such as processing fees and interest. These costs vary from bank to bank. Car loans are typically issued for a maximum term of 5 years, but some lenders, such as State Bank of India and Punjab National Bank, provide car loans for up to 7 years. A longer term car loan may reduce your EMI, but your overall cost of the loan will increase due to a longer term of office.
Generally, banks provide up to 100% of the car’s ex-showroom price or 80% of the car’s road price as a loan. The remaining amount is to be paid by the borrower as a down payment. A mortgage on your car will remain with the lender until you pay back the full amount borrowed. These loans are issued on the basis of variable interest. According to RBI’s latest mandate, all floating rate loans to private borrowers must be linked to an external benchmark. The option for closing is also available for all auto loans issued on a floating rate basis, with some upfront closing costs. After RBI cut its repo by 115 basis points in the past three months, owning a car has become affordable. Here are the latest interest rates, processing fees charged by various banks for car loans.
Punjab National Bank
At the moment PNB offers the lowest interest on car loans. The interest on PNB car loans varies between 7.10 and 7.45%. This bank finances up to 85% of the road price of the car as a loan. The maximum term of a loan is seven years. The bank charges an administration fee of Rs 1,000 plus GST for car loans up to Rs 6 lakh. For car loans over Rs 6 lakh, the bank charges a fee of Rs 1,500 plus GST. Sometimes PNB will waive processing fees as part of a promotional offer. So you are advised to contact your nearest branch with such offers.
National Bank of India
SBI finances up to 90% of the road price of the car. The interest on SBI auto loans starts from 7.95% and goes up to 11.45% depending on the customer’s earning credit profile. The interest is higher on second-hand tickets. Currently, the bank charges 0.25% to 0.50% of the loan amount as a processing fee.
Bank of Baroda
You can get 90% of the road price of your car as a loan from Bank of Baroda. The interest on the Bank of Baroda car loan starts from 7.10% and goes up to 8.10%. Currently, the bank charges a processing fee of 0.50% of the loan amount, with a minimum amount of Rs 2,500 and a maximum amount of Rs 10,000 plus GST.
HDFC Bank charges between 8.80% -10% interest on auto loans, depending on the vehicle segment. For female customers, it provides car loan at 8.20%. The bank offers a lot of flexibility when it comes to paying off a loan. During the first six months, EMI remains low and from the seventh month EMI becomes regular. The private sector lender also provides an additional loan after nine months of disbursement. HDFC Bank charges Rs 700 as a documentation fee plus stamp duty on an actual basis along with GST as a processing fee.