Are you looking to apply for a car loan? Confused about which bank to choose? Getting a high rate of interest on the car loan? Don’t worry in this guide we will discuss the top 10 banks for car loan in India.
As the quote says, “Time and Tide wait for none.” In today’s world, when everything has become so fast-paced, it requires each individual to go with the time, and time certainly is moving fast. To catch-up with the time that might get wasted because of the commute to different places, it has somewhat become a necessity for people to buy a car or for that matter, any personal vehicle. The case might be that the individual interested in a car might not have sufficient cash. In such a scenario, car loans become a big deal.
Car loan, as the name suggest quite clearly, is a personal loan, which is used to buy the car. Like any other type of loan works, the borrower borrows money from the lender to buy the automobile and is supposed to return the amount of loan with interest. This payment is divided over a certain period of time and is paid on a monthly basis.
Most of the personal loans are unsecured loans. An unsecured loan means that the lender is lending the money on the basis of trustworthiness, and there is no collateral involved. But car loan is a secured loan, and there is a possibility that if the payments are not completed, then the lender will possess the vehicle, and he would sell that vehicle to get his money.
There are some of the things that one should keep in mind before getting the best car loan. These are:
- Insurance of the car: There has been a compulsion on the insurance that banks have made in order to avail auto loans. The amount of loan – The lenders, most of the time, expects the individual to make down payment of 5 % to 80 % upfront, generally known as margin. Finances by HDFC Bank and ICICI Bank are up to 100% of the ex-showroom price. The statutory charges and local duties are not included in the ex-showroom price.
- The time period of loan: 7 years is the maximum time period for which an individual can get a car loan. For such a long period of time, the EMI is going to be lower, but the interest rates are going to be higher. Lower rates are available for a shorter period of time.
- Interest Rate: When an individual is finalizing a car, the interest rates become an important factor. Both fixed and floating or variable rates are offered by the banks that could range from 8.65 % to 11.50 %. It is important to understand that a flat 10% interest rate might cost an individual more than a 15% interest rate, which is charged on balance, which is reducing.
- Processing Time and Fees: The flat amount that ranges from Rs. 3000 to 10000 or as a percentage of the loan amount is charged by banks as a processing fee. The charges for processing are about 0.5 % of the amount of loan.
- Foreclosure charges or Prepayment – Generally, banks impose about 5% to 8% as foreclosure charges or prepayment. An individual might feel to prepay the loan as early as soon as he/she gets extra money; therefore, got with a bank that has lower prepayment charges.
Top 10 Banks For Car Loan In India (2022)
1. SBI or State Bank of India
For brand new cars, which include SUVs and MUVs, SBI finances up to 90 % on the road price. The processing charges are NIL. The foreclosure charges are NIL. The tenure of the car loan is seven years maximum, and the calculation of interest is based on a daily reducing balance. The interest on a car loan for SBI bank is fixed, which is 9.30% to 9.80%. There are various other schemes of car loans, such as for home loan borrowers, there is an SBI Loyalty car loan scheme.
- Lowest Interest Rates & EMI.
- Longest Repayment Tenure (7 years).
- The State Bank of India has designed the car loan product keeping the convenience of the borrowers in mind. For the same, SBI bank offers the longest car loan repayment period of 7 years or 84 months.
Interest Rate: Auto Loan
- 8.40% p.a. (On Applying through YONO)
- 8.65% p.a.
2. HDFC Bank
HDFC Bank provides car loan with varying features like balloon repayment schemes, a step-up loan, top-up loans, and the repayment tenure is also flexible. Different ranges of cars and multi-utility vehicles are financed by the bank for up to Rs. 3 crores. The tenure for the same is up to 84 months. There is also an autopedia mobile app of HDFC Bank that helps the individuals to research, compare, and read different reviews on new cars so that they make an informed decision. The interest rate ranges from 9.75 % to 10.60 %, depending on the segment of the vehicle.
- Offers up to 100% on-road finance.
- Budget-friendly monthly payments.
- Quick loan disbursement.
- Provides optional health cover.
3. Axis Bank
- Avail funding from Rs. 1,00,000 upto 100% on road price fro Up to 8 years.
- Get Car Loan at ROI stating at 9.25% p.a.
Interest Rates and Charges:
For Car Loan with tenure up to 36 months:
|1 Yr MCLR||Spread over MCLR||Effective ROI||Reset||Processing Fee||Documentation Charges|
|8.15%||0.90%- 3.15%||9.05%-11.30%||No Reset||Rs. 3500 – Rs. 5500||Rs. 500|
4. Punjab National Bank or PNB
- Repayment tenure up to 7 years for new cars and 5 years from pre-owned cars.
- Affordable processing fee.
- Affordable rate of interest.
- Floating Rate: NO pre-payment charges.
- Fixed-rate: @2% on the outstanding pre-paid. However, no prepayment charges to be levied:
Where the loans are prepaid by the borrowers from their own sources. Where the borrower shifts to another bank within 30 days from the date of upward revision in the rate of interest or change in other terms of sanction.
Vans, jeeps, multi-utility vehicles, sports utility vehicles, and cars are financed by PNB. Reimbursement of the cost of a new car if purchased out of your own funds is also done by the bank within three months. The interest rates for car loans at PNB for the fixed interest rate is MCLR+0.95 %. The floating interest rate is MCLR+0.60 % to 1.05 %, which is based on credit scores. The present MCLR is 8.45 %. The processing charges for cars up to Rs. 6 Lacs is Rs. 1000 and Rs. 1500 for cars above Rs. 6 Lacs.
5. ICICI Bank
- Minimal documentation.
- Longer loan tenure for up to 7 years.
- Financing for up to 100% of the on-road price.
- Low processing fee.
Also Read: Best Banks For A Personal Loan In India
The car loan offered by the ICICI Bank are for pre-owned cars, new cars, and loans against the car. For the time period of 7 years, the loan amount is 100 % on the ex-showroom price. The fixed interest rate for a car loan at ICICI Bank is 8.65 % to 16.70 %. The minimum charges of processing are Rs. 3500 and maximum processing charges are Rs. 8500. The prepayment charges are 5 % of the principal outstanding, and in cases such as prepayment, the foreclosure charges are 6 %.
6. Magma Fincorp
- Competitive Car Loan Interest Rates.
- Flexible documentation and quick processing.
- End-to-end doorstep service
- Car Loan for personal and commercial-use cars or utility vehicles, both new and used.
- Flexible Loan payment options- in monthly cash installments, auto-debit, ECS (Electronic Clearing Services) or PDC’s (Post Dated Cheques).
- Magma Car Loan interest rates vary from 12% to 16%, depending on various factors. Apply online now so we can offer you the best rate based on your credit-background and our customized schemes.
- 5% of the Principal Outstanding for pre-closures beginning 6 months after the date of the agreement.
Foreclosures are not permitted within 6 months from the date of availing of the car loan. Foreclosures within 6 months are allowed under exceptional circumstances with lock-in period charges.
LATE PAYMENT PENALTY
- 3% per month
CAR LOAN PROCESSING FEES
- Up to Rs. 2.50 lacs: Rs. 3500
- From Rs. 2.51 lacs to 5 lacs: Rs. 4050
- Over Rs. 5 lacs: Rs. 4625
- Zero processing fees on select schemes
The loan payment options are flexible, as provided by Magma Fincorp for a car loan. These options include auto-debit, ECS, cash installments, or postdated cheques. A helpful doorstep service is provided by the NBFC. This service included help for the collection of documents and faster processing in less than 4 hours. For existing customers of Magma, the car loan are offered easily with no income documents. The amount of loan is up to 100 % of the car’s value. The minimum charges of processing are Rs. 0, and the maximum processing charges are Rs. 4625. The prepayment charges are 5 % of the principal outstanding.
7. IDBI Bank
- Min age of the applicant: 18 years
- Max age of the applicant (At loan Maturity): 70 years/retirement age whichever is earlier.
- Min. Annual Income of Rs.2,40,000/-
- Income proof: Salary Slip, Form 16/ ITR, Bank statement showing salary credit
- Min age of the applicant: 18 years
- Max age of the applicant: (At loan Maturity): 70 years
- Min. 2 years in the profession
- Min. Annual Income of Rs.2,40,000/-
- Income proof: for Last 2 years with computation of income / certified financials, Balance Sheet, P & L A/c, Bank statement
Hassle-free documentation: Our representative will guide you through the easy Auto loan application and can make life seems much better.
The interest rates of IDBI Bank for car loan starts from 9.30 % for CIBIL scores of 801 and above. The CIBIL scores of -1 and 1 to 5 are also considered by the bank. The auto loans are, however, not financed to the individuals with CIBIL scores less than 650. The interest rate of IDBI Bank for car loan is 9.30 % to 9.90 %. The amount of loan is up to 90 % of the ex-showroom price. The processing charge is Rs. 1000.
8. Sundaram Finance
- Car loans offered by Sundaram Finance involves a Hassle-free process and minimum waiting period.
- Attractive rates of interest are available on Car Loan provided by Sundaram Finance along with Low EMIs.
- You can avail customized insurance options with Sundaram Car Loan.
- Imported cars are considered on a case-to-case basis.
Funding of up to 100 % is offered by Sundaram finance on the ex-showroom price of all models of imported or Indian cars. The installments for car loan are of 12 to 60 months, and the flexible monthly installment of 5+2 years is also provided by Sundaram finance. The interest rate for a car loan at Sundaram finance is 8.75 % to 11 %. The charges of processing are Rs. 3500. 3 % of the outstanding amount of loan is the foreclosure charge.
9. Bank of Baroda
- Bank of Baroda offers up to 90% auto loan financing of the on-road price of the car you wish to purchase. However, the upper limit on the car loan amount for private use vehicles is Rs.100 lakh (Rs.1 crore).
- The interest rate on the car loan is calculated on the daily reducing balance and is based on the credit score or CIBIL Bureau score of the applicant. The minimum credit score required for the loan is 725.
- The repayment period or tenure for a car loan is up to a maximum of 84 months and is determined by the EMI amount.
Various luxury cars, SUV, MUV, Sedan, Sports car, or Hatchback can be chosen for the car loan from Bank of Baroda. The bank offers car loans up to 1 Crore, and this offer is valid for all PIOs and NRIs. Though, for any kind of car loan from Bank of Baroda, the individual needs a CIBIL score of 725+. The interest for a car loan at Bank of Baroda is SP+MCLR+0.25 % to MCLR +SP+2 %. The present 1-year MCLR is 8.65 %. The foreclosure charges are NIL. The maximum processing charges are Rs 10000 or 0.5 % of the amount of loan.
10. Federal Bank
- Funding up to 100% of ex-showroom price
- Repayment period up to 84 months
- Competitive interest rates
- Free Personal accident insurance up to Rs. 10.00 lakhs for individuals
- Nil Pre-closure charges for individuals
- Can be availed for buying a new car, used car and new two-wheelers
- Reimbursement within 1 month of car purchase date
Free personal insurance is given by Federal Bank and that too of Rs. 10 Lacs. The bank offers car loans up to 100% for used cars, the ex-showroom price for buying a new car, reimbursement of car loans, and new two-wheelers. The foreclosure charges or Prepayment charges are NIL. The interest rate for car loans at the Federal Bank starts at 9.2 %. The processing charges, which is minimum, is Rs. 1500 and the maximum processing charge is Rs. 2500.
Features of Best Car /Auto Loans
Car loans commonly help those individuals who are earning a monthly salary. These loans are available for a fixed period with different interest rates. Generally, there are 2 types of interests available they are fixed interest and floating interest. Nowadays, the interest rate on car loans is changing as compared with other loans. These loans are considered as secured loans because of which lenders are willing to take the risk by offering money towards the customer.
The following are certain factors that will affect the car loan:
Those people who earn a salary can get a loan about three times that of their annual income. Those people who are self-employed can get a loan of about five to six times their annual income.
You have to make sure that the price of the car will be covered with the loan amount while taking a loan. Often, the banks cover about 80-90% of the car price. Then also you should calculate the car loan EMI amount that you are eligible to get and the original price of the car.
Other charges and Market interest rates:
Market demand for the car is a major determiner regarding the availability of the car loan. Process fees, charges, and processing requirements, etc. also determines the availability of car loans.
Tenure of the Vehicle Loan.
The bank provides a vehicle loan from anywhere within 1-7 years. You’ll have to opt for a time period depending upon your repayment capacity.
If you opt for lower tenure, then you’ll have to pay less interest. As the tenure is less, the loan amount that you have to pay reduces fast because of the high EMIs, and thus you’ll only have to pay less interest. A vehicle without any loan amount will be easy to re-sell in case you want to buy a bigger car. This is because of less paperwork and ready transfer of ownership of the car.
Documentation Needed for the Loan
The following are certain documents that need to submit while taking a bank loan :
- Proof of identity such as PAN (Permanent Account Number) Card, Passport, Driving License, etc.
- Address proof such as Voter ID Card, Passport, or Aadhar Card.
- Age proof and a recent passport size photograph.
- Income proof such as salary slips, 6 months’ salary bank account statement and latest income tax return statement.
New Announcement about Car Loans.
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