This Diwali, if you are planning to buy a car and want to take a loan for it, then taking a loan without thinking of interest rates can make you expensive. Before taking a car loan from the bank, several important things should be kept in mind, from which you will not only get a cheaper loan but also many more benefits.
Most people who buy cars are confused about how much loan they can get from the bank. Banks look at your income before giving a car loan. The loan is easily available when the EMI of a car loan is around 20% of the monthly salary. For example, if the monthly income of the person taking the loan is Rs 25,000, then the EMI of the car loan should not exceed Rs 5,000. Apart from this, banks also check the credit score. If you have a better credit score then banks give loans as soon as possible.
Do not pay attention only on the interest rate
Car loans should not be taken only by looking at the difference of interest rates. Suppose you want to take a car loan of 4 lakh rupees. A bank loans 80% of the cost of a car for 5 years at an interest rate of 9%. At the same time, the second bank lends at an interest rate of 9.25%. It may seem that there is a big difference in interest rates between the two banks, but this difference in rupee terms is not much. Therefore, keep in mind the loan process fees and pre-payment charges. Because many times banks lending at lower interest charges higher process fees and pre-payment charges.
Processing fees are fixed on a car loan. On a loan of up to 2.5 lakhs, the processing fee is around 2500 and with this, you have to pay 350 rupees for documentation, while on a loan of 4 to 5 lakhs, banks charge 4 to 5 thousand rupees for processing fees and 350 rupees for documentation. Huh. Before taking a loan, also compare processing fees between banks. This also varies from bank to bank. Take the loan from the bank in which the processing fee, documentation charge and late payment charge are the lowest.
Before taking a car loan, it is necessary to decide the loan term. You can decide this period according to your monthly income. After the monthly expenses, you can decide the duration of the loan according to how much money you have left from which you can pay EMI. The loan should be taken for as short a duration as possible, the loan should not be dragged too long. Never under the pressure of a bank representative, decide the loan term.
Loan should not be taken from any bank just by looking at the interest rate. Car loans are for 5 to 8 years. On increasing income, you want to prepay the loan as soon as possible by pre-payment. Then you come to know that the bank is charging you a pre-payment penalty of 4 to 5%. At the same time, many banks do not charge pre-payment penalty. If you feel that you can make a pre-payment in the near future, then choose a bank from where you do not have to pay a penalty on pre-payment.
Take care of offers as well
Due to Diwali, many big banks of the country including SBI, HDFC, and ICICI Bank are offering special offers. Under these offers, the bank is giving a discount on the processing fee in addition to the loan at a lower rate of interest. Therefore, before taking a loan, keep in mind the special offers given by the bank.
See which bank is offering loans at what interest rate
|Bank||Interest Rate||How much loan|
|Central Bank||6.85-7.80||Up to 90% of the Cost of the Car|
|Union Bank of India||7.15-7.50||Up to 85% of the Cost of the Car|
|Bank of Badoda||7.25-10.25||Up to 85% of the Cost of the Car|
|Canara Bank||7.30-9.90||Up to 85% of the Cost of the Car|
|Bank of India||7.35-8.05||Up to 85% of the Cost of the Car|
|State Bank of India||7.70-11.20||Up to 85% of the Cost of the Car|
|Punjab National Bank||7.55-7.80||Up to 85% of the Cost of the Car|
|UCO Bank||7.70||Up to 85% of the Cost of the Car|
|IDBI Bank||8-8.60||Up to 100% of the Cost of the Car|
|Bank of Maharastra||7.70-8.95||Up to 85% of the Cost of the Car|
|ICICI Bank||8.00||Up to 85% of the Cost of the Car|