Car Loan Interest Rates 2024
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Car Loan Interest Rate- Comparison Across All Banks
| Name of the Bank | Interest Rate (p.a.) |
|---|---|
| State Bank of India | 7.70% onwards |
| ICICI Bank | 7.90% onwards |
| HDFC Bank | 7.95% onwards |
| Jammu Kashmir Bank | RLLR + 0.75% onwards (floating) RLLR + 1.50% onwards (fixed) |
| Canara Bank | 7.30% onwards |
| Indian Overseas Bank | 7.55% onwards (Rack Interest) |
| Karur Vysya Bank | 7.90% onwards |
| South Indian Bank | 8.80% onwards |
| IDBI Bank | 7.50% onwards (floating) |
| Karnataka Bank | 8.05% onwards |
| Federal Bank of India | 8.50% onwards |
| Punjab and Sind Bank | 7.00% onwards |
| Tamilnad Mercantile Bank | 8.25% onwards |
| Punjab National Bank | 7.30% onwards |
| Union Bank of India | 7.40% onwards |
| Lakshmi Vilas Bank | One Year MCLR + 0.35% onwards |
Updated on - 15 Sep 2021
Car Loans- Fixed and Floating Interest Rates
The interest rate on a car loan might be either fixed or fluctuating. A fixed interest rate is one that stays the same throughout the life of the loan. Fixed interest rates are unaffected by market swings. On the other hand, a floating interest rate is a rate that is always altering in response to shifting market trends. You can choose the car loan with the lowest interest rates.
The following table explains the differences between the two types of interest rates:
| Fixed interest rate | Floating interest rate |
|---|---|
| The interest rate is more | The interest rate is less |
| EMIs will remain fixed | EMIs will fluctuate according to MCLR changes |
| Has lower risk | Has higher risk |
| Easy to manage budgets with fixed rates | Challenging to manage budgets as rates keep fluctuating |
| Offers security to customers | Offers savings to customers |
| Ideal for a short loan term (3 to 10 years) | Ideal for a long loan term (20 to 30 years) |
Fixed Interest Rates:
Borrowers often resort to fixed interest rates when the financial market isn't functioning correctly. You should be able to select an interest rate for your car loan at your leisure. If you believe that interest rates will rise soon or that the financial market will not go below a certain level, you should choose a fixed interest rate.
Floating Interest Rates:
Fixed interest rates are more expensive than floating interest rates. Floating rates fluctuate in response to market conditions. A floating interest rate is affected by changes in the base rate or the MCLR. As a result, if the rate rises, your auto loan EMIs may increase as well, which can be inconvenient for you. When the rate falls, though, you might save money for a long time. The main disadvantage of floating interest rates is that they make it challenging to adhere to personal financial plans because rates fluctuate.
Comparison of the best banks’ new car loan
| Name of the Bank | Interest Rate (p.a.) | Loan Amount | Processing Fee |
|---|---|---|---|
| Union Bank of India | 7.40% onwards | Up to Rs.125 lakh | 0.25% to 0.50% of the loan amount |
| IDBI Bank | 7.50% onwards (floating) | Up to Rs.25 lakh | - |
| Axis Bank | 8.65% onwards | Rs.1 lakh onwards | Rs.3,500 to Rs.5,500 |
| State Bank of India | 7.70% onwards | Up to 48 times of monthly income | Nil (Until 31 January 2022) |
| Jammu And Kashmir Bank | RLLR + 0.75% onwards (floating) RLLR + 1.50% onwards (fixed) | Rs.50 lakh | 0.5% of loan amount Min: Rs.1,500 |
| Canara Bank Car Loan | 7.30% onwards | Up to 90% of the car's value | 0.25% of loan amount Min: Rs.1,000 Max: Rs.5,000 |
| Federal Bank Car Loan | 8.50% onwards | Up to 100% of the car's ex-showroom price | Rs.1,500 to Rs.2,500 |
| Bank of Baroda | 7.35% onwards | Up to Rs.100 lakh | 0.5% of loan amount Max: Rs.10,000 |
| Bank of India Car Loan | 7.45% onwards | Rs.200 lakh | 0.25% of the loan amount |
Know More about How to Get a cheap Car Loan for new Car?
## Loan for a Used Car
Banks charge different interest rates for used car loans based on several factors such as the duration of the loan, the vehicle's age, and so on.
Obviously, everyone wants a car loan with the best interest rates. Hence, let us go through some of the factors that affect your interest rates:
Credit Score If your credit score is above 750, banks are more likely to provide you a low-interest vehicle loan. This is because a good credit score tells a bank that lending to you is less hazardous because you've been on time with your payments in the past, as shown by your credit score. So, if you want a cheaper interest rate on your auto loan, maintaining a solid credit score is a smart idea. A good credit score may also provide you with additional perks, such as expedited approvals and pre-approved deals.
Repayment Period The length of time you pay back your auto loan will affect your interest rate. Your EMIs will be smaller if you opt for a longer term, but you will pay more interest throughout the loan. On the other side, while the EMIs will be greater, you will be able to pay off the loan earlier if you choose a shorter term. Banks will usually charge a cheaper interest rate on a car loan if you choose a shorter-term because the loan will be paid off faster.
Loan Amount The amount of auto loan you take out will have an impact on the interest rate you pay. You may be able to acquire a cheaper interest rate if you choose a more considerable loan amount and vice versa. This, though, will differ from one bank to another. Relationship with the bank — Banks with whom you have an excellent payment and transaction history may provide auto loans with reduced interest rates. As a result, evaluate the interest rates offered by your current bank before approaching other banks for auto loans.
Income If your income is more, you may qualify for a lower interest rate because a higher income indicates a greater ability to repay.
Is it possible to negotiate a lower interest rate on my car loan with the bank?
You can negotiate a reduced interest rate on auto loans if you have an excellent credit score, a greater salary, and a good connection with the bank. However, whether or not to execute the application will be totally at the discretion of the bank.
Will auto loan interest rates be fixed or variable?
On auto loans, banks provide both fixed and floating interest rates. Fixed interest rates mean that the interest rate would remain constant throughout the loan term. In contrast, floating interest rates imply that the interest rate will fluctuate depending on various circumstances. Check with banks to see what kind of interest rates they provide before taking out a car loan. Select the rate of interest that suits your needs the best.
If I have 700 as a credit score, will it have an impact on my vehicle loan eligibility or the interest rate I pay?
Your credit score is the first point banks look at when you apply for a car loan. Most banks tend to lend to those who have a credit score of at least 750. Getting a car loan may be difficult with your credit score, and if you do get one, you may be charged a higher interest rate.
Will a larger down payment results in a cheaper interest rate?
If you put down a larger down payment, you'll only need a smaller auto loan. Because you will be repaying the loan sooner, you may be able to secure a reduced interest rate.
Is there a bank that offers women borrowers reduced interest rates on auto loans?
Yes, some banks provide a discount on auto loan interest rates for female borrowers.
Is the interest rate on a car loan affected by the type of vehicle?
The type of car has no bearing on the interest rate of an auto loan, but the price of the vehicle does. Luxury cars, for example, may have a cheaper interest rate because the loan amount is often larger. However, some banks may demand a higher interest rate for a larger loan amount.
Will making a prepayment lessen my auto loan interest rate?
Yes, because a prepayment significantly reduces loan amount, the bank may offer you a cheaper interest rate if you make one. However, before you prepay your loan, make sure you fully grasp the process because banks may charge you a penalty. Also, whether or not you should make a prepayment depends on a variety of criteria, including the interest rate, the stage of your loan payment, and so on.
What are my options for obtaining a car loan with the minimum interest rate?
In case you can negotiate a lower interest rate on a car loan if you have a good credit score, i.e., above 750, make a larger down payment, select a shorter repayment term, and have a regular source of income. The majority of banks will gladly acknowledge your request. However, before you start negotiating with other banks, double-check with your current one. They are likely to recognize your request because they are already familiar with your transaction records.
Should I choose a fixed or floating interest rate?
When you choose an auto loan with a fixed interest rate, you will pay the same amount of interest throughout the loan term. If you choose a floating rate of interest, however, the interest you pay might well be higher or lower depending on whether the interest rate rises or falls. If you believe there is a probability that the interest rate will increase in the future and you do not want to take any risks, a fixed interest rate is advisable.