New Car Loan Interest Rates
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New Car Loan Interest Rates

Team CARS24
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Latest News
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New Car Loan Interest Rates

Team CARS24
editor

In today’s day and age, purchasing a car has become more of a necessity than a luxury. Those who do not own a car have restricted movement and are dependable on others when they need to go out for work or leisure. With a fast-growing number of organizations, such as banks, that offer finance options, purchasing a vehicle is something that’s far from a Herculean task. One can not only easily obtain a new car loan at attractive interest rates but even get a used car loan and return the borrowed sum through EMIs. Here are a few salient features of new car loans.

  • The maximum loan amount that one might get is based on either the ex-showroom price of the on-road price of the vehicle one intends to buy.
  • Some of the popular banks that offer car loans include HDFC Bank, Axis Bank, ICICI Bank, State Bank of India, and Punjab National Bank. 
  • The interest rate that is levied on the car loan is based on various factors such as the loan amount, occupation, and the organization you are working with.
Interest Rate9.25%
Processing FeeMin 0.22% of loan amount
Loan Tenure3 years to 7 years
Prepayment chargesNIL
Loan to ValueUpto 100% of ex-showroom price

New Car Loan Interest Rate Comparison for All Banks

Processing fees – Most of the banks charge a processing fees of Rs 250 to Rs 20,000, depending on the amount you borrow.

Insurance premium – It must be noted that it is compulsory to take a car insurance policy in order to cover any damages. However, the coverage offered by insurance policies can vary from one insurance company to others. The insurance policy being offered by the dealership you’re buying the car from might not be the best. Hence, it is a good idea to compare the insurance rates and features before deciding the policy you wish to buy.

Prepayment and foreclosure – In case you want to fully or partially pay back the loan. most banks charge a prepayment penalty. Still, it’s a good idea to pay back earlier than usual and save yourself from the interest. Banks typically levy prepayment or foreclosure penalty of zero to 5%.

Down payment – Banks offer car loan either at 80% of on-road price or 100% of ex-showroom price. However, 80% of on-road is almost equivalent to 95% of ex-showroom price. You are advised to fund maximum down payment as it reduces your burden of high monthly payments.


Bank
Car Loan Interest RatesLowest EMI Per Lakh For Max TenureMaximum Loan Amount
HDFC Bank Car Loan Rates8.10% Fixed ₹ 1,564 for 7 years100% of ex-showroom price
SBI Car Loan Rates8.00% Floating ₹ 1,559 for 7 years85% of on-road price
ICICI Bank Car Loan Rates9.30% Fixed ₹ 1,624 for 7 years100% of ex-showroom price
Axis Bank9.25% Fixed ₹ 1,622 for 7 years100% of on-road price
IndusInd Bank10.65% Fixed ₹ 2,157 for 5 years85% of ex-showroom price
Kotak Bank11.50% Fixed ₹ 2,199 for 5 years90% of ex-showroom price
PNB8.75% Floating ₹ 1,596 for 7 years85% of on-road price
Union Bank of India8.60% Floating ₹ 1,589 for 7 years85% of on-road price
Central Bank of India9.00% Floating ₹ 1,609 for 7 years90% of on-road price
Andhra Bank9.40% Fixed ₹ 1,629 for 7 years85% of on-road price
IDBI Bank9.30% Fixed ₹ 1,624 for 7 years90% of ex-showroom price
Federal Bank9.15% Fixed ₹ 1,617 for 7 years90% of ex-showroom price
Bank of India9.50% Floating ₹ 1,634 for 7 years85% of on-road price
Bank of Maharashtra9.25% Floating ₹ 1,622 for 7 years85% of on-road price
Corporation Bank9.55% Floating ₹ 1,637 for 7 years85% of ex-showroom price
Indian Bank9.65% Floating ₹ 1,642 for 7 years85% of on-road price
OBC9.05% Floating ₹ 1,611 for 7 years85% of on-road price
Bank of Baroda8.90% Floating ₹ 1,604 for 7 years85% of on-road price
United Bank of India9.10% Floating ₹ 1,614 for 7 years85% of on-road price

New Car Interest Rates and Charges

New Car Loans with tenure up to 36 months

In case you need to take a new car loan for a tenure of up to 36 months, you’ll have to pay a processing fee of roughly Rs 3,500 to Rs 5,550 and another Rs 500 in documentation charges.

1 Yr MCLRSpread over MCLREffective ROIResetProcessing FeeDocumentation Charges
7.45%1.30%- 3.55%8.75%-11.00%No ResetRs. 3500 – Rs. 5500Rs. 500

New Car Loans with tenure over 36 months

As we’ve been saying, new car loan tenure can be decided between 3 to 7 years and hence, if you decide to take a loan for over 36 months, you’ll have to pay a processing fee of Rs 3,500 to Rs 5,500, along with documentation charges of Rs 500.

Effective ROIProcessing FeeDocumentation Charges
8.75%-11.00%Rs. 3500 – Rs. 5500Rs. 500

New Car Loan Charges

Many banks offer a loan amount of up to 100 per cent of the on-road price of the vehicle. Mostly, in new car loan charges, there are hardly any hidden charges, which means you won’t have to pay much any front. You can have a look at the new car loan charges-

TypeCharges
Cheque Bounce / Instrument Return ChargesRs. 500 per instance
Cheque / Instrument Swap ChargesRs. 500 per instance
Duplicate Statement Issuance ChargesRs. 500 per instance
Duplicate Repayment Schedule Issuance ChargesRs. 500 per instance
Duplicate No Dues Certificate / NOCRs. 500 per instance
Penal Interest2% per month
Loan Cancellation / Re-bookingRs. 2,500 per instance
Foreclosure Charges5% of the Principal Outstanding
Part Payment charges5% of the Part Payment amount
Stamp DutyAt actuals
Issuance of Credit ReportRs. 50 per instance
Documentation ChargeRs 500/ Instance
Registration Certification Collection ChargeRs 200/ Instance

Additional Benefits on New Car Loan Interest Rate

  • It must be noted here that there is no need of a mortgage when it comes to a car loan as the loan is secured against the car itself and hence, one doesn’t need to put on stake any other asset.
  • You can benefit from the convenience of car ownership while you continue to pay for it in easy instalments
  • Low vehicle loan rates enable you to use the extra savings in alternate investments that offer high returns, thereby offsetting the interest you pay on the car loan to some degree.

New Car Loan Eligibility Calculator

For knowing if you’re eligible for a car loan, you can easily use an online car loan eligibility calculator and get an idea of the maximum amount you can borrow from a bank. Following are the factors that go on to determine your loan eligibility –

  • The amount you can easily pay as EMI without affecting any of your usual expenditure?
  • If you are paying EMIs for any existing loan or are even paying house rent, it will reduce your eligibility
  • Choose the loan tenure. Car finance is available for 3 to 7 years and you can decide based on the EMI you’ll be comfortable paying
  • CIBIL Score – Good CIBIL Score indicates good repayment record and vice versa. If you have a bad repayment record, chances of your loan application being rejected increase. Also, even if you do get a loan, it’ll be at higher interest rates. For vehicle loans, the required CIBIL Score is at least 700.
  • The eligibility of someone to take a car loan is also a function of interest rates of car. In case the interest rate is higher, it will reduce your loan eligibility at the same income level. This is because the interest will become a bigger part of the EMI. Hence, you should use a car loan EMI calculator to get to know the amount you need to apply for.

Lowest EMI for New Car Finance

Easy Monthly Installments (EMI) is the money you need to pay to the lender every month in order to pay back the borrowed amount, along with the interest, over the decided tenure. The EMI comprises both the principal amount and the interest component. It must be noted that the interest component on the EMI is higher in the early months and it reduces with each EMI. Again, a car loan EMI calculator can help you figure out the monthly EMI at the desired interest rate for a particular tenure.

Car Loan EMI depends upon loan amount, interest rate and loan tenure

  • Loan amount – In case you apply for a higher loan amount, your EMI will be also higher.
  • Interest rate – Higher the interest rate, higher will be the EMI amount over a particular tenure.
  • Loan tenure – Higher the loan tenure, lower will be the EMI

Tips

In order to obtain the best interest rate on new car loan when applylin online, go through the tips mentioned below.


Do’s
Don’ts
Check best discount and offers– Make sure you check the best offers and cheapest car loan interest rates that are often being offered to employees of a reputed companiesDo not apply for loan amount more than what you are eligible for– Applying for an amount higher than your eligibility may lead to rejection of your loan application
Compare car loan rates based on loan amount– There are some banks which offer car loan at a lower interest rate for a higher amount. The loan amount can vary by the value of the car used for calculating LTV. Banks either use the on-road price of the car of its ex-showroom price. This results in quite a difference in the loan amount that the bank offers as the on-road price is always higher than the ex-showroom price. Do not apply with multiple banks – Simultaneous loan applications gets recorded in your CIBIL report and can hurt your chances of getting a loan
Carefully decide type of insurance – You need to decide between comprehensive, third-party and zero depreciation insurance.  Do not rely only on the dealer – The loan offered by your dealer may not be the lowest interest rate or best loan. Hence, do look at other options. It’s a good practice to check the interest rate at which your existing bank is willing to offer you a loan.

FAQs

Q: Why do I need car loan?

A: These loans are usually taken to buy a new car or used car, given at fixed rate. If you have a low CIBIL score, then you should not apply in multiple banks as each rejection will drop your CIBIL score.

Q: How can I apply?

A: There are multiple ways to do that. You can directly visit the bank branch and meet the sales person, contact a loan agent or apply online at any bank or NBFC’s website. You can also compare interest rates of all banks online at MyLoanCare and apply directly at the bank with lowest rates and charges.

Q: What are the extra charges?

A: Apart from rate of interest, there are two types of charges being charged by the banks.
– Car loan processing fee: This is charged when you apply for the loan. The processing fee charged is upto Rs. 3,000 of the loan amount and could be reduced if you can bargain.
 – Car loan pre-closure fee: This is charged when you close your loan before the completion of loan tenure. Prepayment penalty charged may be up to 5% of the outstanding amount.

Q: Is CIBIL Score for car loan important?

A: CIBIL score is very important. Good CIBIL score indicates good repayment record and hence banks can offer you higher loan amount at low rate of interest for car loan. Bad CIBIL Score will result in either loan at higher interest rate or rejection of the loan application. So, make all your payments on time and maintain your CIBIL in order to get best car loan rates.
– Ex-showroom price is the price of the car including excise duty but excluding local duties and statutory charges.
– On road price is the price you pay for the car including the ex-showroom price and cost of registration, insurance, octroi, municipal entry tax, road tax and any accessories. The on road price tends to be 15-25% more than the ex-showroom price and may vary from city to city.

Q: Do I need to open a bank account to service my car loan?

A: Yes, you need to have at least one functional bank account in your name to get a car loan. It is even better if you have an account with the same bank from which you would like to get a loan.

Q: Can I apply jointly with my spouse?

A: Yes, you can apply for loan jointly with a co-applicant (either your spouse or your parents). This helps you to increase your eligibility. Hence you may get higher loan amount as your co-applicant’s income also gets added to your income. In co-applicant cases, the total income is taken into consideration for calculating the eligibility.

Q: Does it affect my co-applicant if I default in loan?

A: Yes, if you fail to pay the loan on time then it will also affect your co-applicant. Default in loan will affect his/her CIBIL rating as well.

Q: What are the main factors that affect interest rate?

A: Interest on car loan depends upon factors like down payment, loan tenure, credit report and your net income. High income with good CIBIL and maximum down payment can lend you loan at low interest rate.

Q: Can I do balance transfer on car loan?

A: Yes, if you are getting lower rate of interest, then you can opt for refinance car loan or balance transfer and reduce your monthly burden.

Q: Can I get top up?

A: Yes, you can get car loan top up but you need to carefully go through all the terms and conditions before opting for this service.

Q: How can I prevent rejection of my loan application?

A: Banks or NBFCs give car loan to those borrowers about whom they are sure that he/her can repay the loan. You need to know few things if you don’t want your application to get rejected:
– Job stability or occupation stability is important. You need to be stable in your current job as too many job changes can impact negatively at the time of loan approval.
– You should not be having too many loans running at one time. Banks can reject your application if you are already paying too many EMI’s at same time.
– Don’t give your landline number for tele-verification if you know that nobody is there at home when you are at work. A typing mistake in apartment number can also put negative impact on lenders.
– Last but not least, practice strong credit discipline. Even a single delay in payment of your dues on other loans may adversely affect your CIBIL score and hence, your chances of getting a loan.
Banks or lenders keep on adding these small things and reject your loan application.

Q: What should I do if my car loan application gets rejected by bank?

A: In case your application gets rejected, here are some options you can look at-
– If you have a spouse who is working, you can re-apply for a loan after adding him/her as a co-applicant. This will boost the combined salary levels.
– Re-apply for a car loan after clearing your old debts first.
– Balance transfer of your existing loans so that the rate of interest on loans can come down and additional loan can be availed.

Q: Can I get a loan for the full cost of my car?

A: Most lenders offer only 80% to 90% of the total cost of the vehicle. in loans However, there are a few banks that may cover the entire cost of the car.

Q: What is the car loan repayment tenure?

A: Mostly, the tenure of the car loan ranges from 3 years to 7 years, based on the loan amount and customer’s repayment capabilities.

Q: Is a guarantor mandatory for a new car loan?

A: If you do not meet the eligibility criteria set by the lender, then you are required to have a guarantor

Q: What is the minimum amount of loan we can apply for?

A: Most lenders allow you to apply for a minimum loan of Rs. 1 Lac.

Q: Is there a provision to pre-pay the entire loan amount?

A: A small fee in the form of pre-payment penalty will be chargeable by the bank in case you decide to pre-pay the loan amount and save interest payments. Usually, pre-payment of loan is allowed after 6 months.

Q: Are all cars financed by the loan institutions?

A: Yes, loan institutions finance all cars, irrespective of their segment, shape and size.

Q: Can additional loan be availed over my allotted second-hand car loan?

A: Yes, it’s possible to re-finance of borrow an additional loan over an allotted second-hand car loan. This service is provided by most lenders. Ideally, you can avail 80%- 85% of the car’s valuation amount.